Presumptive taxation accepted for demonetisation cash deposits, limiting addition on alleged unexplained income as business receipts.

Cash deposits made during demonetisation were treated as regular business receipts where the assessee had declared business turnover and the record reflected acceptance of presumptive taxation. On that basis, the deposits were not sustained as fully unexplained income. The addition was therefore confined to computation on a presumptive basis, with only partial sustenance of the Revenue's adjustment.

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Issues: Whether the assessee's cash deposits during demonetisation were to be treated as unexplained income or as regular business receipts, and whether the income was liable to be computed on a presumptive basis.

Analysis: The assessee had declared business turnover and the assessment record showed acceptance of the case for presumptive taxation under section 44AD of the Income-tax Act, 1961. On that basis, the cash deposits were treated as emanating from regular business receipts rather than as fully unexplained. The Revenue sought only partial sustenance of the addition to the extent of applying the presumptive rate to the deposits.

Conclusion: The cash deposits were directed to be subjected to computation at 11.5%, and the addition was not sustained in full.

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