Unexplained cash deposit addition fails where books, stock records, and VAT evidence support recorded cash sales.

Cash deposits cannot be treated as unexplained income under section 69A where they are recorded in regular books and are supported by invoices, stock register, VAT returns and the VAT assessment order. The assessee's cash sales and stock position were corroborated, and no defect or infirmity was found in the books of account. In the absence of any factual error or evidence that the sales were bogus, the consequential taxation under section 115BBE was also unsustainable, and the deletion of the addition was upheld in favour of the assessee.

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Issues: Whether the addition of cash deposits as unexplained income under section 69A and the consequential taxation under section 115BBE were justified when the assessee's sales, stock position, books of account and VAT records supported the source of cash.

Analysis: The cash deposits were reflected in the regular books of account maintained in the ordinary course of business, and no defect, error or infirmity was found in those books. The assessee supported the explanation with invoices, stock register, VAT returns and the VAT assessment order, all of which corroborated the cash sales and the availability of stock. The Revenue was unable to point out any factual error in the appellate findings or show that the sales were bogus.

Conclusion: The addition under section 69A and the consequential tax treatment under section 115BBE were not sustainable, and the deletion of the addition was upheld in favour of the assessee.

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