Cash deposits explained by books and business records cannot be treated as unexplained income when the department fails to rebut them.

Cash deposits in bank accounts could not be assessed as unexplained income where the assessee supported the explanation with books of account, audit report, cash book, bank book, cash flow statement, sales register, tractor registration details and supplier ledger. The records showed that the deposits arose from cash generated through tractor sales and were applied for business purchases. The remand report did not discredit the deposits or identify defects in the documentary evidence, and no effective bank inquiry or further verification was undertaken by the department. On that basis, the addition under section 69A was held unsustainable and the deletion was upheld.

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Issues: Whether the addition made on account of cash deposits in bank accounts as unexplained income under section 69A was sustainable when the assessee produced books of account and other supporting evidence and the remand report did not dislodge the explanation.

Analysis: The addition made by the Assessing Officer was found to be unsupported by any clear basis, as no effective inquiry from the bank was shown and the bank statement was not brought on record at the assessment stage. In appeal, the assessee produced audit report, cash book, bank book, cash flow statement, sales register, tractor registration details and purchase ledger of the supplier, showing that the deposits represented cash generated from tractor sales and were used for business purchases. The remand report did not deny the actual cash deposits and did not point out any defect in the documentary evidence. The Assessing Officer also did not undertake further verification despite the additional material.

Conclusion: The cash deposits were properly explained and could not be treated as unexplained income. The deletion of the addition under section 69A was upheld.

Final Conclusion: The Revenue failed to establish any error in the first appellate order, and the disallowance of the unexplained cash-deposit addition did not survive.

Ratio Decidendi: Where an assessee substantiates cash deposits with books and contemporaneous business records, and the department does not rebut the explanation through cogent inquiry or adverse material, the deposits cannot be treated as unexplained income.

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