Section 68 cash deposit dispute turned on credible business explanation and contemporaneous records, defeating the addition.

Cash deposits reflected in audited books were not treated as unexplained cash credits under section 68 where the assessee supported them with audited accounts, bank statements, cash flow records and a consistent business explanation. The deposits were said to arise from receipts collected through a PAN-India transport network, and the record showed no cogent material rebutting that explanation. On those facts, the addition was held unjustified and the appellate deletion of the cash-credit addition was upheld, leaving the Revenue's challenge unsuccessful.

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Issues: Whether the addition under section 68 of the Income-tax Act, 1961, on account of cash deposited during the demonetization period was sustainable.

Analysis: The cash deposits were examined in the light of the assessee's business model, audited books, bank statements, cash flow, and balance sheet. The explanation that the deposits represented business receipts collected through a PAN-India transport network was accepted as satisfactory. The deposits during the demonetization period were found to be comparable with earlier periods, and the record did not show any cogent material rebutting the assessee's explanation. The principle that the assessee must explain the nature and source of a cash credit was applied, but on the facts the explanation was held to be credible and supported by contemporaneous records. The addition was therefore held to be unjustified.

Conclusion: The addition under section 68 was rightly deleted and the Revenue's challenge failed.

Final Conclusion: The appellate order deleting the cash-credit addition was upheld and the Revenue's appeal was dismissed.

Ratio Decidendi: A cash deposit recorded in audited books and supported by a credible business explanation cannot be assessed as unexplained cash credit under section 68 when the Revenue fails to dislodge that explanation with cogent material.

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