Unexplained cash deposits under income tax provisions were treated as income and addition upheld due to inadequate proof.

Impugned cash deposits made during the demonetisation period could not be satisfactorily shown to belong to any third party, and the assessee failed to rebut statutory presumptions; therefore the tax authority applied the tests for unexplained cash under Sections 69 and 69A and the special tax treatment under Section 115BBE, concluding that the deposits constituted unexplained income. The documentary record, cash books and investigative material did not establish ownership by a consultant or third party, so the addition of the deposited amount as unexplained income was sustained.

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Issues: Whether the impugned cash deposits of Rs. 1,44,50,000 made during the demonetization period could be held as unexplained money and added to the assessee's income under Section 69/Section 69A read with Section 115BBE of the Income-tax Act, 1961, notwithstanding the assessee's contention that the deposits were part of fraud committed by his consultant and did not belong to him.

Analysis: The assessment and appellate records show that the assessee failed to satisfactorily explain the source and ownership of the cash deposited in bank accounts during the relevant period. The authorities relied on the assessee's cash books, registers and deposited amounts which reflected an abnormal increase in receipts and did not support the claimed opening cash or third party creditors sufficient to account for the bank deposits. The assessee produced documents and criminal complaints alleging misuse of his identity and accounts by a consultant and reliance was placed on investigative material from GST authorities. However, the material on record did not demonstrably establish that the impugned deposits belonged to a third party rather than to the assessee. In these circumstances the statutory tests for invoking Sections 69/69A read with Section 115BBE were applied: absent a satisfactory explanation and documentary proof that the cash deposits were not the assessee's, the additions were held to be justified.

Conclusion: The addition of Rs. 1,44,50,000 as unexplained cash under Section 69/Section 69A read with Section 115BBE of the Income-tax Act, 1961 is confirmed; decision adverse to the assessee.

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