Business turnover already taxed cannot be re-taxed as unexplained cash; partial demonetisation deposits sustained at normal rate.

Cash deposits made during demonetisation were partly held to be business turnover already returned under the presumptive scheme, so that component could not be taxed again as unexplained money under section 69A. The remaining cash, for which withdrawal-and-redeposit evidence was not fully satisfactory, was sustained only to that limited extent. The tribunal also held that the restricted addition did not warrant special rate taxation under section 115BBE because it was linked to business activity and not to unexplained income in full. The assessee therefore obtained partial relief, with the balance taxable at the normal rate.

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Issues: (i) Whether the cash deposit of Rs. 15,50,000 made during the demonetisation period could be treated as unexplained money under section 69A, where part of the amount was claimed to be business turnover already covered under the presumptive scheme under section 44AD. (ii) Whether the amount retained its character as business receipts and, if not fully explained, whether tax on the sustained addition was to be levied under section 115BBE or under the normal rate.

Issue (i): Whether the cash deposit of Rs. 15,50,000 made during the demonetisation period could be treated as unexplained money under section 69A, where part of the amount was claimed to be business turnover already covered under the presumptive scheme under section 44AD.

Analysis: The assessee was engaged in transportation business and had returned income under the presumptive scheme under section 44AD. The material on record showed that Rs. 6,00,000 out of the cash deposits was supported as part of business turnover and had already been subjected to presumptive taxation. That component could not be taxed again as unexplained money. For the remaining Rs. 9,50,000, the explanation of withdrawal and redeposit was not supported by sufficient evidence to fully accept the source as explained.

Conclusion: The addition under section 69A was not sustainable in full and was restricted to a limited portion of the cash deposits, with relief granted to the assessee for the amount already covered by business turnover.

Issue (ii): Whether the sustained addition was liable to be taxed under section 115BBE or at the normal rate of tax.

Analysis: The sustained amount was treated as arising from the assessee's business activity and not as an item warranting special rate taxation as unexplained income. The nature of the addition, as restricted, did not justify application of the special taxation regime under section 115BBE.

Conclusion: The sustained addition was directed to be taxed at the normal rate and not under section 115BBE.

Final Conclusion: The appeal succeeded only to the extent of reducing the addition and directing normal-rate taxation on the balance, leaving the assessee with partial relief.

Ratio Decidendi: Amounts forming part of business turnover already offered under presumptive taxation cannot be taxed again as unexplained money, and a partially unexplained redeposit may be brought to tax only to the extent not satisfactorily explained.

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