Demonetisation cash deposits may escape section 69A where modest savings and surrounding facts support the explanation.

Cash deposits during the demonetisation period were examined under section 69A, with the assessee's explanation tested against surrounding facts, the modest quantum involved, and CBDT Instruction No. 3/2017 on household savings. Where the cash deposits were small, the assessee also had commission income, and the available cash explanation was reasonably supported by the overall facts, the deposit need not be treated as unexplained money. The operative effect is that a demonetisation-period cash deposit is not automatically taxable as undisclosed income when the factual explanation for cash in hand is plausible and supported by the record.

---

---

Issues: Whether the cash deposit of Rs. 2,82,500 made during the demonetisation period could be treated as unexplained money under section 69A of the Income-tax Act, 1961.

Analysis: The assessee had deposited cash in a bank account during the demonetisation period. The amount was compared with the guidance in CBDT Instruction No. 3/2017 dated 21.02.2017, which contemplated household savings up to Rs. 2,50,000 in the case of an individual not having business income. The assessee also had commission income from a gas agency, and the total cash deposits were only Rs. 2,82,500. On the overall facts and the smallness of the amount, the cash availability explanation was accepted.

Conclusion: The cash deposit was not unexplained money and could not be treated as undisclosed income of the assessee; the addition under section 69A was deleted.

Ratio Decidendi: A cash deposit made during the demonetisation period cannot be treated as unexplained income where the surrounding facts and modest quantum reasonably support the assessee's explanation of available cash in hand.

---