Unexplained cash credit: mere acceptance of demonetised notes does not convert receipts into unexplained income; onus remains on tax officer to disprove genuineness.

Whether receipts of specified bank notes during demonetisation could be treated as unexplained cash credit was considered: where the taxpayer (a cooperative credit society) produced records establishing identity of depositors, genuineness of transactions and entries in regular books, the legal principle under Section 68 shifts the burden to the tax officer to disprove source, purpose or genuineness; mere acceptance of demonetised notes, without independent disproof, does not convert those receipts into unexplained income. The appellate deletion of the addition was sustained and the revenue appeal dismissed.

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Issues: Whether the deletion by the Commissioner of Income-Tax (Appeals) of the addition of Rs. 93,75,500 made by the Assessing Officer treating acceptance of specified bank notes during demonetisation as unexplained cash credit was justified.

Analysis: The assessee is a cooperative credit society functioning as an intermediary under the Kisan Credit Card scheme and produced detailed records identifying farmers/members from whom specified bank notes were accepted. The Assessing Officer did not dispute the identity of the depositors, the genuineness of the transactions, or that the receipts were recorded in the regular books of account. Under Section 68 of the Income-tax Act, 1961, once the assessee established identity, creditworthiness and genuineness, the onus shifted to the Assessing Officer to show otherwise. Mere acceptance of specified bank notes during the demonetisation period, without disproving source, purpose or genuineness, does not convert the receipts into unexplained income. The Tribunal found the order of the Ld. CIT(A) to be well reasoned in deleting the addition.

Conclusion: The deletion of the addition of Rs. 93,75,500 is upheld and the Revenue's appeal is dismissed in favour of the assessee.

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