Explained cash deposits during demonetisation accepted where books, sales records and supporting evidence showed genuine business receipts.

Cash deposits during the demonetisation period were accepted as explained where the assessee produced bank certification, cash book, sales and purchase ledgers, month-wise cash sales, closing cash-in-hand and supporting certificates from the marketing committee. The records showed a regulated consignment-sales business with substantial turnover, and the regular books were neither found defective nor rejected. A comparison with lower cash deposits in the preceding year was held insufficient, by itself, to disbelieve the source of deposits. The addition treated as business income was deleted.

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Issues: Whether the addition made on account of cash deposits during the demonetisation period as business income was justified.

Analysis: The assessee produced bank certification, cash book, sale and purchase ledgers, month-wise cash sales, closing cash-in-hand, and supporting certificates from the marketing committee. The material showed regulated consignment sales in a cash-driven business, substantial turnover during the relevant year, and no defect in the regular books of account, which were also not rejected. The mere comparison with lower cash deposits in the preceding year was held insufficient to doubt the explained source of the deposits.

Conclusion: The addition on account of cash deposits was deleted and the assessee succeeded on the substantive grounds.

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