Double taxation of recorded sales receipts under section 68 is impermissible when business income is already accepted.

Sale proceeds that are duly recorded in the books, supported by sales, stock and cash records, and already accepted as business income cannot be brought to tax again as unexplained cash credit under section 68 of the Income-tax Act, 1961. Here, the assessee's jewellery sales were reflected in the audited accounts and the stock movement reconciled with the reported turnover; the Assessing Officer also accepted the book results without rejecting the books under section 145(3). On these facts, the same receipts could not be doubly assessed as cash credits, so the addition was unsustainable and the Revenue's challenge failed.

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Issues: Whether the addition of Rs. 98 lakh, representing cash sales recorded in the books and already assessed as business income, could again be taxed as unexplained cash credit under section 68 of the Income-tax Act, 1961.

Analysis: The assessee was engaged in jewellery and the impugned cash formed part of sales recorded in the sales register, stock register, cash book and audited financial statements. The stock movement was found to reconcile with the reported sales, and the Assessing Officer had accepted the book results, sales turnover and business profits without invoking section 145(3) of the Income-tax Act, 1961 or rejecting the books. The addition was made only by treating the same sale proceeds as unexplained cash credit, despite the receipts already standing credited as business income. On these facts, once the sales and corresponding profits were accepted and supported by primary records, the same amount could not be taxed again under section 68.

Conclusion: The addition was unsustainable and was rightly deleted. The Revenue's challenge failed.

Final Conclusion: The assessment of the impugned sum as unexplained cash credit was held to be impermissible because it duplicated taxation of sale receipts already accepted as business income, and the Revenue appeal was rejected.

Ratio Decidendi: Sale proceeds that are duly recorded in the books, supported by primary evidence, and already accepted as business income cannot be brought to tax again as unexplained cash credit under section 68 of the Income-tax Act, 1961.

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