Recorded cash sales and bank withdrawals can rebut section 68 treatment of demonetisation cash deposits.

Cash deposits during the demonetisation period were not to be taxed as unexplained cash credits under section 68 where the assessee supported the deposits with cash book entries, stock details, purchase and sales records, and evidence of bank withdrawals. The lower authorities did not dispute turnover, trading results, or stock position, and no specific defect in the books or adverse material was brought on record. On those facts, applying section 68 and consequential section 115BBE would amount to taxing the same receipts twice, which was impermissible. The addition was deleted in favour of the assessee.

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Issues: Whether cash deposits made during the demonetisation period could be assessed as unexplained cash credits under section 68 and subjected to section 115BBE when the assessee claimed the deposits were out of recorded cash sales and bank withdrawals.

Analysis: The assessee produced cash book, stock details, purchase and sales records, and other supporting material showing that the cash deposits were made from recorded business receipts and available cash balance. The turnover, trading results, and stock position were not doubted by the lower authorities, and no adverse material or specific defect in the books of account was brought on record. On these facts, the addition would amount to taxing the same receipts twice, once as sales income and again as the bank deposit, which is impermissible. In the absence of rebuttal of the documentary evidence, invocation of section 68 and consequential section 115BBE was not justified.

Conclusion: The addition on account of cash deposits was deleted and the issue was decided in favour of the assessee.

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