Business sale proceeds cannot be taxed again as unexplained cash credits merely because deposits included demonetised notes.

Cash deposits made during demonetisation that were shown to be business sale proceeds already embedded in taxed trading receipts could not be treated again as unexplained cash credits under section 68. The Tribunal accepted that the receipts formed part of the assessee's admitted business turnover, that the corresponding income had already been offered to tax, and that the deposits were supported by the trading activity carried on with small and medium traders. On those facts, the addition was held to create double taxation. The consequential application of section 115BBE was therefore unsustainable and the addition was deleted.

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Issues: Whether cash deposits made during demonetisation, said to represent business sale proceeds already accounted for as income, could be added as unexplained cash credits under section 68 and taxed again under section 115BBE.

Analysis: The cash receipts were accepted by both the Assessing Officer and the first appellate authority as business sale proceeds from the assessee's trading activity. The addition was made only because some deposits consisted of demonetised notes. Where the receipts form part of the assessee's admitted business turnover and the corresponding income has already been offered to tax, a further addition on the same receipts as unexplained cash credit would result in double taxation. The record also showed that the assessee had only business income and that the cash deposits were supported by the trading activity carried on with small and medium traders. On these facts, the Tribunal treated the deposits as business receipts and not as unexplained credits.

Conclusion: The addition under section 68 and the consequential application of section 115BBE were held unsustainable and deleted, in favour of the assessee.

Ratio Decidendi: When cash deposits are shown to be business sale proceeds already embedded in the assessee's taxed trading receipts, they cannot again be assessed as unexplained cash credits merely because the deposits included demonetised currency notes.

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