Documentary evidence in cash transactions prevents unexplained income additions where books consistently explain the cash position.

Where documentary evidence - cash flow statement, bank statements and cash book - consistently explains closing cash and the books of account are not rejected, an addition as unexplained cash income cannot be sustained on mere presumption; accordingly the contested addition of the unexplained cash figure was deleted and the taxpayer's appeal allowed. The note emphasises that corroborative account records that trace withdrawals, redeposits and closing balance displace a conclusion of unexplained income absent positive rejection of books or contradictory evidence.

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Issues: Whether the addition of Rs. 31,15,814/- as unexplained cash income for A.Y. 2016-17 is justified.

Analysis: The Tribunal examined the cash flow statement, bank statements and cash book reproduced in the record which together show total withdrawals, redeposits and the closing cash balance for F.Y. 2015-16. The books of account were not rejected and the deposits and cash expenses were reflected in the accounts. The Assessing Officer and the Commissioner (Appeals) had confirmed the addition based on a presumption that cash withdrawals were utilized for business purposes despite the documentary explanation. The Tribunal held that where the documentary evidence (cash flow statement, bank statements and cash book) consistently explains the cash position and the books are not rejected, no addition can be sustained merely on conjecture.

Conclusion: The addition of Rs. 31,15,814/- as unexplained income is deleted and the appeal is allowed in favour of the assessee.

Ratio Decidendi: Where books of account, bank statements and a cash flow statement consistently explain the closing cash and are not rejected, an addition as unexplained cash income cannot be sustained on mere presumption.

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