Unexplained deposits cannot be re taxed when contemporaneous agricultural receipts and prior assessed cash sales explain the funds.

Tribunal reduced addition under section 69A after finding part of the specified bank note deposits was supported by contemporaneous agricultural receipts and an assessed cash sale, preventing double taxation; the unexplained balance was sustained. A separate addition for alleged fictitious sundry creditors was deleted where the assessing officer had compared incorrect ledger figures (debtors treated as creditors). Operative legal points: contemporaneous documentary receipts can displace unexplained deposit additions and manifest clerical ledger misclassification warrants deletion of resultant additions.

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Issues: (i) Whether the addition of Rs. 8,40,000 made under section 69A of the Income-tax Act, 1961 by treating deposits of specified bank notes as unexplained is justified; (ii) Whether the addition of Rs. 4,00,000 made as unexplained/ fictitious creditors (sundry creditors) is sustainable.

Issue (i): Whether the source of deposit of Rs. 8,40,000 (SBNs deposited on 25.11.2016) was satisfactorily explained to displace addition under section 69A.

Analysis: The deposited SBNs comprised (a) alleged "old mini savings" entry of Rs. 8,00,000 in the assessee's cash book and (b) cash sale of Rs. 41,548 recorded on 25.11.2016. The assessee did not advance the claim before the assessing officer that the Rs. 8,00,000 represented agricultural receipts of the assessee and family members; documentary agriculture receipts in the paper book show three receipts totaling Rs. 10,04,502 received before 08.11.2016 attributable to the assessee. The cash sale of Rs. 41,548 had already been included in assessed business income and re-taxing the same amount as undisclosed income would result in double taxation. The tribunal accepted Rs. 4,00,000 as available old savings from assessee's agricultural receipts and Rs. 40,000 as explained from the assessed cash sale, while upholding the remaining unexplained portion.

Conclusion: Addition under section 69A is deleted to the extent of Rs. 4,40,000 and sustained to the extent of Rs. 4,00,000. This conclusion is favourable to the assessee to the extent indicated.

Issue (ii): Whether the addition of Rs. 4,00,000 as unexplained creditors based on change in ledger figures is tenable.

Analysis: The assessing officer computed the addition by arithmetically comparing balance-sheet figures, but the figures relied upon were of sundry debtors in the audited balance sheets, not sundry creditors. The assessee demonstrated the mistaken treatment and the revenue accepted the position.

Conclusion: The addition of Rs. 4,00,000 made as unexplained/ fictitious creditors is deleted. This conclusion is favourable to the assessee.

Final Conclusion: The appeal is partly allowed by deleting Rs. 4,40,000 from the addition of Rs. 8,40,000 under section 69A and deleting the separate addition of Rs. 4,00,000 made for alleged bogus creditors, resulting in a net restriction of the additions sustained by the revenue.

Ratio Decidendi: Where an assessee establishes contemporaneous receipts (including agricultural receipts) as the source of deposits and a particular cash sale has already been assessed as disclosed income, the department cannot re-tax the same amounts as unexplained deposits under section 69A; manifest clerical misclassification of ledger figures (debtors treated as creditors) warrants deletion of the resulting addition.

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