Explained cash deposits from business sales cannot be taxed as unexplained credits when books, stock records, and sales evidence support them.

Cash deposits during the demonetization period were treated as sufficiently explained by business receipts from festive and marriage season sales. Audited books, stock summaries showing opening and closing inventory, and unaltered VAT returns supported the assessee's explanation, while no defect in the accounts or evidence of inflated sales was found. On these facts, the deeming addition under section 68, with section 115BBE, was held unsustainable and was deleted in favour of the assessee.

---

---

Issues: Whether the addition of Rs. 52 lakhs made on account of cash deposits during the demonetization period under section 68, read with section 115BBE, was sustainable.

Analysis: The assessee explained that the cash deposits arose from business sales during the festive and marriage season. The stock summary for the relevant year showed substantial opening and closing stock across the months, supporting the availability of business inventory for sales. The VAT returns were not revised after demonetization, and no defect was pointed out in the audited books of account. There was also no finding that sales had been inflated to explain the deposits. On the overall facts, the explanation regarding the source of cash deposits was accepted as credible.

Conclusion: The addition was unsustainable and was directed to be deleted, in favour of the assessee.

Final Conclusion: The cash deposits were held to be sufficiently explained from business receipts, and the impugned addition could not be sustained.

Ratio Decidendi: Where cash deposits are supported by audited records, stock position, and a plausible business explanation, and the revenue points out no defect in the books or evidence of inflated sales, an addition for unexplained cash credits cannot be sustained.

---