Unexplained cash deposits during demonetisation were sustained where the assessee failed to prove their source with credible evidence.

Cash deposits made during demonetisation were sustained as unexplained income because the assessee did not prove, with credible evidence, the nature and source of the funds. The record showed that it was registered with AICTE as an unaided private institution, not a Central or State Government college, and its explanation that the notes were received as fees or collected from students for remittance to the university was unsupported. Failure to file a valid return in time, non-compliance with notices, and absence of corroborative material left the burden under section 68 undischarged, so the addition taxed under section 115BBE was upheld.

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Issues: Whether the addition made by treating the excess cash and special bank notes deposited during demonetisation as unexplained cash credit could be deleted on the ground that the assessee was entitled to receive such notes as fees for a government college.

Analysis: The assessee failed to establish that it was a Central or State Government college. The material on record showed that it was registered with AICTE as an unaided private institution. It also failed to file a valid return within time, did not comply with repeated notices, and did not produce corroborative evidence to substantiate the source and nature of the cash deposits. In the absence of credible proof, the explanation that the deposits represented student collected for remittance to the university was not accepted. The burden to explain the source of the deposits remained on the assessee and was not discharged.

Conclusion: The addition as unexplained income under section 68, taxed under section 115BBE, was rightly sustained and the assessee's challenge failed.

Final Conclusion: The tax authorities' treatment of the cash deposits as unexplained income was upheld and the appeal was dismissed.

Ratio Decidendi: Where the assessee fails to prove the nature and source of cash deposits with credible evidence, the revenue is entitled to treat the amount as unexplained income and assess it accordingly.

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