Explained cash receipts during demonetisation cannot be taxed under section 68 when accounting evidence is unrebutted.

Cash receipts during the demonetisation period were held to be explained where the assessee produced books of account, cash book, bank statements, sales bills, debtor confirmations and reconciliation material showing accounted business transactions, and the revenue failed to rebut that evidence with concrete material. On that basis, the addition under section 68 for unexplained cash credit was deleted. A separate balance amount was treated as requiring factual verification with reference to bank records and the books, so that limited issue was remanded for examination.

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Issues: (i) whether the addition of Rs. 3,96,000 under section 68 could be sustained as unexplained cash credit in respect of cash received during the demonetisation period; (ii) whether the balance amount of Rs. 47,000 required verification and consequent remand.

Issue (i): Whether the addition of Rs. 3,96,000 under section 68 could be sustained as unexplained cash credit in respect of cash received during the demonetisation period.

Analysis: The assessee produced books of account, cash book, bank statements, sales bills, debtor confirmations, and reconciliation material to show that the cash receipts were part of accounted business transactions. The lower authorities had not expressly discarded these materials and there was no concrete rebuttal to show that the remaining amount represented unaccounted demonetised currency. The Tribunal held that the initial onus stood discharged by the assessee and that the department failed to dislodge the explanation. The addition was found to rest on assumptions and presumptions rather than proved unexplained credits.

Conclusion: The addition of Rs. 3,96,000 was deleted and the issue was decided in favour of the assessee.

Issue (ii): Whether the balance amount of Rs. 47,000 required verification and consequent remand.

Analysis: The sum of Rs. 47,000 related to deposits claimed to be in new notes and the Tribunal found that this aspect required factual verification with reference to the bank records and the books of account. The matter was therefore not finally concluded on merits and was sent back for limited verification.

Conclusion: The issue of Rs. 47,000 was remanded to the Assessing Officer for verification.

Final Conclusion: The assessee obtained substantial relief, as the major addition was deleted and only the limited verification issue survived before the Assessing Officer.

Ratio Decidendi: Where the assessee produces primary accounting evidence and the revenue fails to rebut it with concrete material, an addition under section 68 cannot be sustained merely on suspicion, and any remaining disputed component may be remanded only for limited verification.

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