Cash deposits treated as business turnover; section 69A addition deleted where sales receipts and profits were explained.

Cash deposits explained as business receipts from unrecorded sales were treated as part of turnover, not unexplained money under section 69A. The assessee supported the explanation with month-wise purchase and sales details, party-wise breakups, and bank statements, while the books were not rejected and the purchases were not doubted. On those facts, the deeming fiction under section 69A was considered inapplicable. The reasoning also noted that taxing the deposits again would result in double taxation of the same amount as business income and under the special rate provisions. The addition was deleted and the revenue's challenge failed.

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Issues: Whether the addition of cash deposits as unexplained money under section 69A of the Income-tax Act, 1961 was sustainable when the assessee explained the deposits as business receipts from unrecorded sales and disclosed gross profit thereon.

Analysis: The assessee furnished month-wise purchase and sales details, party-wise breakup, and bank statements to explain that the cash deposits represented sale proceeds used for business payments. The books were not rejected and the purchases were not doubted by the Assessing Officer. On these facts, the deeming fiction under section 69A was held inapplicable because the source of the deposits was explained as business turnover and not unexplained money. The addition of the entire cash deposits would also lead to taxing the same amount twice, once as business income and again under the special rate provisions.

Conclusion: The addition under section 69A was deleted and the revenue's challenge to the relief granted by the first appellate authority failed.

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