Cash deposits during demonetisation require contemporaneous, probable explanation before unexplained income additions are sustained.

Addition under section 68 challenged cash deposits made during demonetisation; the material legal point is that an assessee must provide a satisfactory, contemporaneous explanation, acceptable on the touchstone of human probabilities, to prove that withdrawn cash remained intact and unutilised for later redeposit. Concurrent findings that explanations (cash held for tax, partner disputes, business difficulties) were vague and unsupported led to rejection of the claimed source. Mere identity of withdrawal and deposit entries does not conclusively explain source; absence of contemporaneous evidence or immediate unavoidable cash need undermines the defence.

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Issues: Whether the addition of Rs. 1,72,83,364/- as unexplained cash credit under Section 68 of the Income-tax Act, 1961 in respect of cash deposits during the demonetisation period is justified.

Analysis: Both the Assessing Officer and the Commissioner (Appeals) found that the assessee failed to provide a cogent, convincing or contemporaneous explanation for accumulation of large cash balances over an extended period; the cash flow indicated continued bank withdrawals despite claimed cash-in-hand; no specific business necessity or contemporaneous evidence supported retention of withdrawn cash for redeposit; mere existence of prior withdrawals from disclosed bank accounts does not, without proof that such withdrawn cash remained unutilised, automatically explain subsequent redeposits; the authorities' conclusions rest on appreciation of facts and probabilities consistent with established tests including the touchstone of human probabilities.

Conclusion: The addition of Rs. 1,72,83,364/- under Section 68 is upheld and the assessee's appeal is dismissed (decision against the assessee).

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