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Issues: Whether the addition of Rs. 16,88,000 as unexplained cash deposits could be sustained when the assessee's regular books showed sufficient cash in hand to cover the deposits made during the demonetization period.
Analysis: The assessee's cash book and audited accounts showed an opening cash balance, continued withdrawals and receipts, and a cash-in-hand position on 08.11.2016 far exceeding the total deposits made thereafter. The Revenue did not dispute the availability of cash in hand, but proceeded mainly on the premise that the cash ought to have been deposited earlier in November 2016. That approach did not address the decisive question of availability of funds in the books. Once the assessee demonstrated sufficient cash balance and the earlier November deposits were also accepted, there was no basis to treat the later deposits as unexplained merely because of the timing of deposit.
Conclusion: The addition of Rs. 16,88,000 was deleted and the issue was decided in favour of the assessee.
Ratio Decidendi: Where regular books of account show sufficient cash in hand to explain cash deposits, an addition as unexplained cannot be sustained merely on suspicion about the timing of the deposit.
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