Unexplained cash deposits upheld under section 69A, but special tax rate under section 115BBE was not sustained.

Unexplained cash deposits were sustained as income under section 69A because the assessee failed to prove the alleged link with sale proceeds of silver bullion disclosed under IDS 2016; the explanation lacked evidence of purchase, sale, quantity, parties, or other supporting material, and was rejected on human probabilities. However, section 115BBE was held inapplicable for rate purposes on the relevant facts and period, so the assessment had to be recomputed under the normal provisions. The result was partial relief: the addition for unexplained cash deposits remained, but the special tax rate mechanism did not apply.

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Issues: (i) Whether the addition made under section 69A of the Income-tax Act, 1961, on account of cash deposits alleged to represent sale proceeds of silver bullion disclosed under IDS, 2016, was justified. (ii) Whether invocation of section 115BBE of the Income-tax Act, 1961, for rate purposes was justified.

Issue (i): Whether the addition made under section 69A of the Income-tax Act, 1961, on account of cash deposits alleged to represent sale proceeds of silver bullion disclosed under IDS, 2016, was justified.

Analysis: The assessee claimed that the cash deposits arose from sale of silver items allegedly declared under IDS, 2016, but failed to establish the purchase, sale, quantity, parties, or supporting evidence for the alleged transactions. The onus to explain the source and nature of the deposits remained on the assessee, and the explanation was found unsubstantiated. The surrounding circumstances were assessed on the touchstone of human probabilities, and the explanation was not accepted.

Conclusion: The addition under section 69A of the Income-tax Act, 1961, was upheld and the issue was decided against the assessee.

Issue (ii): Whether invocation of section 115BBE of the Income-tax Act, 1961, for rate purposes was justified.

Analysis: The application of section 115BBE was held to be inapplicable on the facts for the relevant period, and the assessment was directed to be recomputed under the normal provisions.

Conclusion: The application of section 115BBE of the Income-tax Act, 1961, was not sustained and the issue was decided in favour of the assessee.

Final Conclusion: The addition on account of unexplained cash deposits was sustained, but the special tax rate mechanism was set aside, resulting in partial relief to the assessee.

Ratio Decidendi: An unexplained cash deposit can be sustained as income where the assessee fails to discharge the burden of proof, but the special rate provision cannot be applied unless its statutory preconditions for the relevant period are satisfied.

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