Unexplained Cash: burden to discredit books required; addition deleted where contemporaneous records reconciled with stock and returns.

Whether unexplained cash additions based on demonetisation-period deposits were justified turned on evidentiary burden and reliability of books. The tribunal applied the principle that where contemporaneous books, sales registers, stock records, VAT returns and audit reports are produced and not rejected, the department must demonstrate unreliability before treating recorded receipts as unexplained cash; absent such adverse findings and given reconciliation with stock and filings, re-adding assessed business receipts would amount to impermissible double taxation, and the addition was therefore deleted.

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Issues: Whether the addition of Rs. 2,97,00,000/- as unexplained cash and taxed under the relevant provisions, based on cash deposits during the demonetisation period, was justified where the sales were recorded in books of account and accepted by the Assessing Officer.

Analysis: The issue required examination of whether the assessee had discharged the initial evidentiary burden by producing contemporaneous books, sales registers, stock records, VAT returns and audited accounts showing the cash sales and corresponding stock outgo. Where such primary evidences are produced and the Assessing Officer did not reject the books of account or the trading results under applicable law, the department must demonstrate that the books or the supporting material are unreliable before treating recorded receipts as unexplained cash. On the facts, the sales entries, reconciliation with stock movement, VAT filings and tax audit reports were not discredited by the revenue, and prior tribunal and High Court authorities establish that re-adding amounts already assessed as business receipts would result in double taxation. The tax treatment under the special charging provision could not be sustained in the absence of findings rejecting the accounts or showing their unreliability.

Conclusion: The addition of Rs. 2,97,00,000/- as unexplained cash is deleted and the appeal is allowed in favour of the assessee.

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