Unexplained cash deposit addition deleted where regular books and corroborative records supported the cash trail, barring section 115BBE application.

Cash deposits supported by regular books, cash book, ledger, purchase and sales records, and stock register could not be treated as unexplained money under section 69A when those records were neither rejected nor doubted; the residual addition was therefore unsustainable and deleted. Because the substantive addition failed on merits, section 115BBE also could not be applied to the assessed amount on the facts of the case. The assessee succeeded and the consequential tax treatment was set aside.

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Issues: (i) whether the addition of Rs. 8,18,000 as unexplained cash deposit could be sustained under section 69A of the Income-tax Act, 1961; (ii) whether section 115BBE of the Income-tax Act, 1961 could be applied to the assessed amount.

Issue (i): whether the addition of Rs. 8,18,000 as unexplained cash deposit could be sustained under section 69A of the Income-tax Act, 1961.

Analysis: The assessee produced books of account and supporting records including cash book, ledger, purchase bills, sales bills and stock register. The cash deposits were partly explained by cash in hand, sales and withdrawals already accepted by the assessment authority, and the books and documentary evidence were not rejected or doubted. On these facts, the residual addition was found unsustainable.

Conclusion: The addition under section 69A was deleted and the issue was decided in favour of the assessee.

Issue (ii): whether section 115BBE of the Income-tax Act, 1961 could be applied to the assessed amount.

Analysis: The rate provision was examined in light of the date from which it was considered applicable to the relevant transaction. The assessed amount, having been deleted on merits, did not survive for taxation under that provision in the manner adopted below.

Conclusion: The application of section 115BBE was held to be inapplicable on the facts of the case.

Final Conclusion: The assessee succeeded and the addition made on account of cash deposits, along with the consequential tax treatment, was set aside.

Ratio Decidendi: Where cash deposits are supported by regular books and corroborative records that are neither rejected nor doubted, an addition for unexplained money cannot be sustained merely on the basis of the deposits; consequential rate provisions cannot survive independently once the substantive addition fails.

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