Explained cash deposits during demonetisation were accepted on records showing milk and agricultural income, and the addition was deleted.

Cash deposits made during the demonetisation period were treated as explained because the assessee produced cash book, bank statements and supporting records showing that the deposits arose from milk sales and agricultural income. The material also showed no substantial increase in deposits compared with earlier years, undermining the addition. On that basis, the partial sustenance of the addition by the first appellate authority was found unjustified, and the cash-deposit addition was deleted.

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Issues: Whether the cash deposits made during the demonetisation period were unexplained money liable to addition under the Income-tax Act, 1961.

Analysis: The assessee produced the cash book, bank statements and other records showing that the deposits represented proceeds from milk and agricultural income. The deposits were also found not to show any substantial increase vis-a -vis earlier years. On that material, the partial sustenance of the addition by the first appellate authority was not justified.

Conclusion: The addition made on account of cash deposits was deleted and the assessee succeeded on the merits of the appeal.

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