Recorded cash sales cannot be taxed as unexplained money when books and supporting records explain the deposits.

Cash deposits during the demonetisation period were supported by sales bills, cash book, stock register, purchase records and VAT returns, and the books were not rejected or shown to contain bogus sales. Section 69A applies only where money is found not recorded in the books of account, so it cannot be used to tax recorded receipts or create double taxation. On the facts, the explanation for the deposits was held reasonable and fully supported by the record, and the addition under section 69A was deleted.

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Issues: Whether cash deposits made during the demonetisation period, being supported by cash sales and reflected in the books of account, could be treated as unexplained money under section 69A of the Income-tax Act, 1961.

Analysis: The cash deposits were supported by sales bills, cash book, stock register, purchase records and VAT returns. The books of account were not rejected, no discrepancy in stock was pointed out, and no material was brought to show that the sales were bogus or the deposits were outside the books. Section 69A applies only where money is found not recorded in the books of account, and applying it to recorded receipts would amount to double taxation. On the facts, the explanation for the deposits was found to be reasonable and supported by the record.

Conclusion: The addition made by the Assessing Officer under section 69A was rightly deleted and the Revenue's challenge failed.

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