Cash sales supported by books and stock records cannot be rejected as unexplained simply because they arose during demonetisation.

Cash sales supported by audited books, stock records, sale invoices and VAT returns were not rejected merely because complete buyer particulars were absent on every invoice, so rejection of books under section 145(3) was unwarranted. The cash deposits were treated as sale proceeds already recorded in the books, so addition as unexplained cash credit under section 68 failed. Amounts reflected in seized material but already disclosed as additional business income could not be re-characterised as unexplained money under section 69A without a distinct basis, so that addition also failed. Once the substantive additions did not survive, section 115BBE could not be applied independently.

---

---

Issues: Whether the books of account could be rejected under section 145(3) on the basis of alleged bogus cash sales during demonetisation; whether cash deposits of Rs. 22,02,58,445/- could be treated as unexplained cash credit under section 68; whether Rs. 6,30,00,000/- recorded in seized material could be assessed as unexplained money under section 69A; and whether section 115BBE applied to the additions.

Analysis: The books were audited and supported by stock records, sale invoices, VAT returns and seizure material. The absence of full buyer particulars on every invoice, by itself, was not treated as a sufficient defect to reject the accounts. The cash sales were accepted as having been made out of stock in hand, and the cash deposits were held to be the sale proceeds already recorded in the books. The addition of Rs. 6,30,00,000/- was found to have been disclosed as additional business income and was not liable to be assessed again as unexplained money when the underlying receipts formed part of the same transaction trail. Once the substantive additions did not survive, the rate provision under section 115BBE could not be sustained independently.

Conclusion: Rejection of books was unwarranted, the addition under section 68 failed, the addition under section 69A failed, and the consequential application of section 115BBE also failed.

Final Conclusion: The assessment was materially altered in favour of the assessee by deleting the impugned additions and treating the declared receipts as business-related and duly explained.

Ratio Decidendi: Where cash sales are supported by regular books, stock records, invoices and corroborative material, the resulting bank deposits cannot be treated as unexplained merely because they arose during demonetisation; similarly, a receipt already disclosed as business income cannot be re-characterised as unexplained money without a distinct and satisfactory basis.

---