Cash sales and bank deposits supported by records shift the burden to revenue; section 68 addition could not stand.

Where an assessee supports demonetisation-period cash deposits with ITR, books, bank statements, sales bills, transaction details and buyer-wise particulars, the burden shifts to the revenue to rebut that evidence with cogent material; additions based only on suspicion or presumed improbabilities are not justified. The note also states that an addition under section 68 cannot survive once primary evidence shows the genuineness of cash sales and receipts, and that section 269ST was not applicable to receipts relating to the assessment year 2017-18 because the restriction was said to have come into force from 01.04.2017. The appellate deletion of the addition was therefore affirmed.

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Issues: (i) Whether the assessee had satisfactorily explained the cash deposited in the bank during the demonetization period by proving the genuineness of the cash sales. (ii) Whether the addition made under section 68 of the Income-tax Act, 1961, and the consequent disallowance sustained by the Assessing Officer could stand. (iii) Whether section 269ST of the Income-tax Act, 1961, was applicable to the cash receipts in question.

Issue (i): Whether the assessee had satisfactorily explained the cash deposited in the bank during the demonetization period by proving the genuineness of the cash sales.

Analysis: The assessee placed on record ITR, financial statements, cash book, bank statements, sales bills, transaction details, and buyer-wise particulars. The material showed substantial cash sales from identifiable persons with PAN, further supported by details of other identifiable purchasers. The explanation was not rebutted by contrary evidence, and the rejection by the Assessing Officer rested on suspicion, comparison with prior figures, and presumed improbabilities.

Conclusion: The assessee satisfactorily explained the cash deposits and proved the source through documentary evidence; the issue is decided in favour of the assessee.

Issue (ii): Whether the addition made under section 68 of the Income-tax Act, 1961, and the consequent disallowance sustained by the Assessing Officer could stand.

Analysis: Once the assessee discharged the initial burden by producing primary evidence, the onus shifted to the Assessing Officer to disprove the documents or establish that the receipts were not genuine. No independent material was brought to discredit the record produced by the assessee, and the addition was made on assumptions and presumptions rather than proof.

Conclusion: The addition under section 68 could not be sustained and the deletion made by the appellate authority is upheld in favour of the assessee.

Issue (iii): Whether section 269ST of the Income-tax Act, 1961, was applicable to the cash receipts in question.

Analysis: The receipts related to the assessment year 2017-18, whereas the restriction under section 269ST was stated to have come into force only from 01.04.2017. On that basis, the provision was not attracted to the impugned cash transactions.

Conclusion: Section 269ST was held to be inapplicable to the case.

Final Conclusion: The appellate authority's deletion of the addition was affirmed, and the revenue's challenge failed on all substantive issues.

Ratio Decidendi: Where an assessee produces primary documentary evidence explaining cash sales and cash deposits, the burden shifts to the revenue to rebut that evidence with cogent material; an addition cannot be sustained merely on suspicion or presumptions.

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