Recorded business cash receipts in books were not unexplained money merely because specified bank notes were deposited during demonetisation.

Where business sales are accepted and the corresponding cash receipts are recorded in the books, cash deposited during demonetisation as specified bank notes by debtors or agents is not treated as unexplained money merely because of the form of deposit. The analysis notes that the books were not rejected, the sales were accepted, and part of the cash deposits had already been explained, so the revenue had to dislodge the assessee's explanation through proper enquiry. On those facts, addition under section 69A and consequential tax under section 115BBE were held unsustainable.

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Issues: Whether cash deposits of specified bank notes during demonetisation, claimed to be sale realisations received through debtors or agents and recorded in the books of account, could be treated as unexplained money under section 69A and taxed under section 115BBE.

Analysis: The assessee's sales were accepted and the books of account were not rejected. The record showed that the cash deposits arose from business receipts and past trade practice, with part of the cash deposits already accepted by the revenue as explained. The only dispute related to the portion deposited in specified bank notes by third parties during the demonetisation window. The relevant statutory regime also showed that specified bank notes were capable of being dealt with up to the appointed day under the Specified Bank Notes (Cessation of Liabilities) Act, 2017, and the burden remained on the revenue to dislodge the assessee's explanation by proper enquiry. Mere deposit of such cash by third parties, without rejection of the sales or the books, did not justify treating the amount as unexplained money.

Conclusion: The addition under section 69A and the consequential tax under section 115BBE were not sustainable, and the issue is decided in favour of the assessee.

Ratio Decidendi: Where business sales are accepted and the corresponding cash receipts are recorded in the books, specified bank notes deposited during demonetisation by debtors or agents do not become unexplained money merely because the deposits were made in SBN form.

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