Cash sales during demonetisation supported by books could not be taxed again as unexplained income under section 68.

Cash deposits made during the demonetisation period, where supported by recorded cash sales in the books and audit under section 44AB, could not be treated as unexplained income under section 68. The tribunal noted that no defects were found in the books, purchases, or genuineness of the business, and the deposits were ordinary business receipts already credited and offered to tax. Recharacterising the same receipts again as unexplained cash would amount to impermissible double addition. The absence of retail customer identity records was not fatal for a fruit trader, and the addition was deleted.

---

---

Issues: Whether cash deposits made during the demonetisation period, stated to arise from cash sales recorded in the books of account, could be treated as unexplained income under section 68 of the Income-tax Act, 1961.

Analysis: The cash sales were accepted as part of the assessee's regular business, and the corresponding entries were recorded in the books of account and supported by audit under section 44AB. The authorities below did not point out defects in the books, purchases, or the genuineness of the business. The source of the deposits was therefore found to be ordinary business receipts already credited in the books and offered to tax. Treating the same receipts again as unexplained cash would amount to double addition, which was held to be impermissible. The absence of retail customer identity records was also held not to be fatal in the case of a fruit trader.

Conclusion: The addition under section 68 was held to be unjustified and was deleted.

---