Demonetisation cash deposits supported by books and business records cannot be taxed as unexplained money.

Cash deposits made during the demonetisation period are not taxable as unexplained money where books of account, cash flow, and contemporaneous business records establish an identifiable source. The assessee's cash-oriented business showed no abnormal variation in sales, cash sales, or deposits across relevant years, and the cash book supported availability of cash on 08.11.2016. Deposits explained as business receipts and collections from debtors were examined against the factual record and the specified bank notes framework, and the addition under section 69A read with section 115BBE was deleted because the source was not unexplained.

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Issues: Whether cash deposits made during the demonetization period were liable to be treated as unexplained money under section 69A of the Income-tax Act, 1961 read with section 115BBE of the Income-tax Act, 1961.

Analysis: The assessee's business was found to be cash-oriented, and the record reflected no abnormal variation in sales, cash sales, or cash deposits across the relevant years. The cash book and allied details were accepted as evidencing availability of cash in hand as on 08.11.2016, and the deposits were explained as arising from business receipts and collections from debtors. The stated explanation was examined in the light of section 3 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017, and the surrounding factual matrix showed that the source of the deposits was supported by contemporaneous records rather than being unexplained inflow.

Conclusion: The cash deposits could not be assessed as unexplained money under section 69A of the Income-tax Act, 1961 read with section 115BBE of the Income-tax Act, 1961, and the addition was directed to be deleted.

Final Conclusion: The assessee succeeded on the substantive tax issue, and the assessment addition based on demonetization-period cash deposits was set aside.

Ratio Decidendi: Where cash deposits during the demonetization period are supported by books of account, cash flow, and business records showing an identifiable source, they cannot be brought to tax as unexplained money merely because they were received in specified bank notes.

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