Recorded cash sales cannot be treated as unexplained cash credits when books, stock records and invoices support the transactions.

Cash receipts recorded as sales cannot be taxed as unexplained cash credits under section 68 when they are supported by tax invoices, books of account, stock records and VAT returns, and the books are not found defective. The absence of customer addresses on invoices, by itself, is insufficient to treat the sales as bogus where there is no mismatch in inventory movement or other tangible evidence of undisclosed income. A sales spike during demonetisation does not, without more, justify invoking section 68, and the alternative charge under section 115BBE also does not apply on those facts.

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Issues: Whether the cash sales recorded during the demonetisation period could be treated as unexplained cash credit under section 68 of the Income-tax Act, 1961, and whether the addition of Rs. 6,61,00,000/- was sustainable.

Analysis: The sales were supported by tax invoices, books of account, stock records, and VAT returns. The authorities found no defect in the purchase, sales, or stock registers and no mismatch in the inventory movement. The absence of customer addresses on invoices was considered insufficient, by itself, to dislodge the recorded sales, particularly when the demonetisation event explained the unusual spike in cash sales. The books were not rejected and the receipts were already disclosed as sales in the profit and loss account, so the receipts did not assume the character of unexplained cash credits. In the absence of tangible material showing that the sales were bogus or that any undisclosed source existed, section 68 could not be invoked, and the alternative charge under section 115BBE also had no application.

Conclusion: The addition under section 68 was rightly deleted and the assessee succeeded on the merits of the cash-sales issue.

Ratio Decidendi: Where cash receipts are duly recorded as sales in the books, supported by stock and invoice evidence, and the books are not found defective, such receipts cannot be brought to tax again as unexplained cash credits under section 68 merely because the sales were unusually high during a demonetisation period.

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