ITAT Bangalore, recently ruled that if the source of a cash deposit can be traced back to identifiable withdrawals from disclosed bank accounts, the explanation cannot be rejected just because there was a time gap between the withdrawals and the subsequent deposit. On this ground, ITAT Bangalore provided relief to Mrs Nagarathna from Vijayanagar, Bangalore, who got a tax notice for depositing Rs 25 lakh in cash in her bank account.
Mrs Nagarathna, who lives in Bangalore and works with BESCOM, made the cash deposit of Rs 25 lakh at the Corporation Bank, Nrupathunga Road branch, on June 29, 2016. The Income Tax Assessing Officer (AO) from Koramangala got suspicious and decided to reopen her file. The AO found out that Nagarathna had sold a property a few weeks before this cash deposit. So, the tax officer concluded that Nagarathna must have sold this property for cash and deposited the proceeds into her bank account.
