Unexplained bank credits during demonetisation were deleted where sale receipts were accepted and no books defect was found.

Unexplained bank credits during the demonetisation period could not be added where the assessee explained the deposits as sale consideration from rice business receipts, the books of account were not found defective, and the book results were not rejected. A partial acceptance of the deposits by the assessment order, without any rational basis or supporting analysis for treating the balance as unexplained, was unsustainable in law and on facts. The addition was deleted in favour of the assessee.

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Issues: Whether the addition of Rs. 30 lakhs sustained as unexplained bank credits during the demonetization period was justified.

Analysis: The assessee's deposits were explained as sale consideration from its rice with a substantial turnover, while the assessment order accepted only a part of the deposits without any analysis. No defect in the books of account was pointed out and the book results were not rejected. In the absence of any rational basis for segregating the deposits into explained and unexplained portions, the addition lacked support in law and on facts.

Conclusion: The addition was deleted and the issue was decided in favour of the assessee.

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