Recorded cash sales cannot be taxed again as unexplained cash credits when supported by books, invoices and stock records.

Cash deposits shown as proceeds of recorded sales during the demonetisation period could not be taxed again as unexplained cash credits where the sales were reflected in audited books, supported by invoices and stock records, and the books were not rejected under section 145(3). On those facts, the receipts had already entered the profit and loss account, so a further addition under section 68 would amount to double taxation of the same income. In the absence of material showing bogus sales or unsupported cash receipts, the addition and the consequential application of section 115BBE were held unjustified and the deletion was upheld in favour of the assessee.

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Issues: Whether cash deposits shown to arise from recorded cash sales during the demonetisation period could be taxed as unexplained cash credits under section 68 and subjected to tax under section 115BBE of the Income-tax Act, 1961.

Analysis: The sales were reflected in the audited books of account, supported by invoices and stock records, and the Assessing Officer had not rejected the books under section 145(3) of the Income-tax Act, 1961. The recorded sales had already entered the profit and loss account, so treating the same receipts again as unexplained cash credits would amount to taxing the same income twice. No material was brought to show that the sales were bogus or that the cash receipts were not supported by stock and trading records.

Conclusion: The addition under section 68 and the consequential application of section 115BBE were not justified, and the deletion of the addition was upheld in favour of the assessee.

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