Additional evidence and de novo verification drove remand of cash deposit and interest additions in a demonetisation dispute.

Additional evidence was admitted because month-wise cash details, cash book extracts, profit and loss account, and interest ledger entries were material to determine the source of demonetisation-period cash deposits and the tax treatment of interest receipts. The cash deposit addition was remitted for de novo verification where business cash sales and regular deposits prima facie supported the assessee's explanation. The interest addition was also remitted because the records indicated the receipts had already been netted against interest expenditure, raising a double-addition issue. The substantive additions were therefore set aside for fresh adjudication after verification of the new material, with remaining grounds treated as infructuous.

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Issues: (i) Whether the addition made on account of cash deposits during the demonetization period as unexplained money required fresh adjudication in view of additional evidence; (ii) Whether the addition of interest income constituted double addition when the amount was already reflected in the books and required reconsideration on the basis of additional evidence.

Issue (i): Whether the addition made on account of cash deposits during the demonetization period as unexplained money required fresh adjudication in view of additional evidence.

Analysis: The cash deposit summary showed that the assessee had substantial cash sales and regular cash deposits in the months preceding demonetization, supporting the explanation that the deposits were linked to business receipts. The material produced before the appellate forum, including month-wise cash details and cash book extract, was treated as crucial for deciding the source of deposits. Since these documents had not been verified by the revenue authorities, the additional evidence was admitted under Rule 29 and the matter was set aside for verification and fresh decision.

Conclusion: The addition on account of cash deposits was set aside to the Assessing Officer for de-novo adjudication and the issue was allowed for statistical purposes, in favour of the assessee.

Issue (ii): Whether the addition of interest income constituted double addition when the amount was already reflected in the books and required reconsideration on the basis of additional evidence.

Analysis: The profit and loss account and interest ledger showed that the disputed interest receipts had already been accounted for by netting them against interest expenditure. On that basis, the same income could not again be brought to tax as income from other sources. However, as the supporting ledger details were produced for the first time before the appellate forum and had not been verified by the revenue authorities, the additional evidence was admitted and the matter was remitted for fresh examination.

Conclusion: The interest addition was also set aside to the Assessing Officer for de-novo adjudication and the issue was allowed for statistical purposes, in favour of the assessee.

Final Conclusion: The appeal succeeded only to the extent that the substantive additions were remanded for fresh consideration after admission of additional evidence, while the remaining grounds were treated as infructuous.

Ratio Decidendi: Where additional evidence is material to the correct determination of the source of deposits or the taxability of an income item, and the revenue has not had an opportunity to verify it, the matter may be remitted for de-novo adjudication after admitting such evidence under the tribunal's procedural powers.

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