Documentary proof of cash source defeats unexplained money addition; Chapter VI-A deduction allowed subject to verification.

Documentary evidence showing receipt of advance consideration under an agreement to sell explained the cash deposits made during the demonetisation period, and the revenue brought no material to prove any unexplained source. On that basis, the addition under section 69A for unexplained money was deleted. The assessee's Chapter VI-A deduction claim was accepted in principle, but the Assessing Officer was required to verify eligibility before allowing the benefit. The result was partial disturbance of the assessment with overall relief to the assessee.

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Issues: (i) Whether the addition made under section 69A of the Income-tax Act, 1961 on account of cash deposits during the demonetisation period was sustainable; (ii) Whether the assessee was entitled to deduction under Chapter VI-A of the Income-tax Act, 1961.

Issue (i): Whether the addition made under section 69A of the Income-tax Act, 1961 on account of cash deposits during the demonetisation period was sustainable.

Analysis: The assessee produced the agreement to sell and connected material showing receipt of consideration, including cash, under a property transaction. The cash deposits in the bank accounts were found to have a plausible source from advance consideration received under the agreement to sell. The lower authorities had not brought any further material to establish any other unexplained source, and the documentary evidence supported the assessee's explanation.

Conclusion: The addition under section 69A was not sustainable and was directed to be deleted, in favour of the assessee.

Issue (ii): Whether the assessee was entitled to deduction under Chapter VI-A of the Income-tax Act, 1961.

Analysis: The claim for deduction was found to be allowable in principle, but the record required verification by the Assessing Officer before granting the benefit.

Conclusion: The assessee was held entitled to the deduction subject to verification and appropriate allowance by the Assessing Officer, in favour of the assessee.

Final Conclusion: The assessment additions were disturbed in part and the matter of deduction was remitted only for verification, resulting in overall relief to the assessee.

Ratio Decidendi: Where documentary evidence explains the source of cash deposits and the revenue brings no material to rebut that explanation, an addition for unexplained money cannot stand; a deduction claim may be allowed in principle subject to verification of eligibility.

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