Demonetisation cash deposits and section 69A relief: only part of the surplus was accepted as explained source.

Cash deposits during the demonetisation period were examined under section 69A, with the assessee relying on filed returns and a cash flow statement showing accumulated surplus from house property income, other sources, and reduced personal drawings. The material indicated some source for the deposits, but the entire accumulated surplus could not be accepted as cash on hand. In the peculiar facts, only a reasonable portion of the claimed surplus was treated as explained, and the addition was restricted to 50% of the sustained amount.

---

---

Issues: Whether the cash deposits made during the demonetisation period were wholly unexplained under section 69A of the Income-tax Act, 1961, and to what extent the addition could be sustained.

Analysis: The assessee had filed returns for the relevant years and produced a cash flow statement showing an accumulated surplus from income from house property, other sources, and reduced personal drawings. The available material indicated some source for the deposits, though the entire accumulated surplus could not be treated as cash on hand. In the peculiar facts of the case, only a reasonable portion of the claimed surplus was accepted as explained source.

Conclusion: The addition under section 69A was restricted to 50% of the sustained amount, and the balance was treated as explained. The assessee succeeded only to that extent.

---