Cash deposits from fireworks sales during demonetisation were accepted as explained business receipts, defeating the section 69A addition.

Cash deposits in specified bank notes during demonetisation were explained as business receipts from fireworks sales, supported by books of account, audited financial statements, sales details, debtor particulars, stock position, and GST/VAT returns. The tribunal noted that the Assessing Officer accepted part of the deposits but rejected the balance mainly for lack of customer confirmations and adverse enquiry, without producing contrary material or pointing to any defect in the books. It also observed that taxing the deposits again would amount to double taxation of the same turnover. On that reasoning, the section 69A addition was held unsustainable.

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Issues: Whether the addition made under section 69A on account of cash deposits in specified bank notes during the demonetisation period was sustainable when the assessee explained the deposits as business receipts from sales of fireworks and supported the explanation with books of account, sales details, debtor particulars, stock position, and tax returns.

Analysis: The assessee was engaged in the fireworks business and had accounted for the disputed deposits as business receipts arising from sales made around Diwali, with collections received from sundry debtors. The books of account, audited financial statements, sales pattern, stock position, and GST/VAT returns supported the explanation. The Assessing Officer accepted part of the deposits but rejected the balance mainly for want of confirmations from customers and adverse enquiry, without bringing contrary material to disprove the explanation or showing any defect in the books. The addition would also result in taxing the same business turnover again after the receipts had already been accounted for as sales.

Conclusion: The explanation for the cash deposits was accepted and the addition under section 69A was not sustainable.

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