Section 68 cash deposits during demonetisation were explained by sales and debtor realisation, so the addition was deleted.

Cash deposits during the demonetisation period were held not to justify an addition under Section 68 where the assessee's books were not rejected, purchases were accepted, and the deposits were explained through cash sales and realisation from old debtors in the glass bangle business. The appellate record, including the VAT order for the relevant year, supported the existence of genuine trading receipts and the cash component claimed. The Revenue's reliance on piecemeal deposits and comparison with earlier years was insufficient to displace the explanation on the surrounding facts, so the addition was deleted.

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Issues: Whether the addition made under Section 68 of the Income-tax Act, 1961, on account of cash deposits during the demonetisation period was sustainable.

Analysis: The books of account were not rejected and the purchases stood accepted. The cash deposits were explained as arising from cash sales and realisation from old debtors in the assessee's glass bangle trade. The appellate record, including the VAT order for the relevant year, supported the existence of sales and the cash component claimed. The Revenue's objection that deposits were made in piecemeal fashion and exceeded earlier years was not sufficient to displace the explanation when the surrounding trading facts supported genuine receipts.

Conclusion: The addition under Section 68 of the Income-tax Act, 1961, was rightly deleted and the Revenue's challenge failed.

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