Explained cash deposits during demonetisation accepted where business records showed regular receipt, banking and transfer flow.

Cash deposits made during the demonetisation period were held to be explained where the assessee produced the agency agreement, RBI circulars and contemporaneous customer records showing receipt of cash in the ordinary course of money transfer business, next-day bank deposit and transfer to the Vodafone M-Pesa account. On that factual record, the source and nature of the deposits were accepted and the proposed addition as unexplained money under section 69A was deleted.

---

---

Issues: Whether the cash deposit of Rs. 9,16,000 made during the demonetisation period was unexplained money liable to addition under section 69A of the Income-tax Act, 1961.

Analysis: The assessee produced the agency agreement with Vodafone M-Pesa Limited, the relevant RBI circulars, and the customer register showing that the cash was received in the normal course of the money transfer business, deposited in the bank account on the next day, and then transferred to the Vodafone M-Pesa account. The documented flow of funds and the contemporaneous records supported the explanation regarding the nature and source of the deposits.

Conclusion: The cash deposits were satisfactorily explained and did not warrant addition under section 69A of the Income-tax Act, 1961. The addition sustained by the appellate authority was deleted and relief was granted to the assessee.

---