Cash deposit addition under section 69A fails when business-linked explanation remains plausible and unrebutted.

Section 69A could not be applied to demonetisation-era cash deposits where the assessee offered a plausible business-linked explanation and the Revenue produced no contrary material. A deposit of Rs. 46,000 was directly linked to a prior cash withdrawal and redeposit, making the explanation commercially credible. The remaining deposits of Rs. 2,08,000 were treated as business collections from a cash-based stamp vending activity, supported by accepted books, substantial turnover, and the small comparative quantum in dispute. The addition under section 69A was deleted in full.

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Issues: Whether the addition made under section 69A in respect of deposits of specified bank notes during the demonetisation period was sustainable.

Analysis: The assessee was engaged in stamp vending, a cash-based business. One deposit of Rs. 46,000 was found to have a direct nexus with a preceding cash withdrawal of Rs. 50,000 from the assessee's own bank account and its immediate redeposit into an overdraft account, which made the explanation commercially plausible and uncontroverted. For the remaining deposits of Rs. 2,08,000, the surrounding circumstances supported the explanation that they represented business collections received before demonetisation: the same books and records had been accepted for other periods, the overall turnover was substantial, the amount in dispute was comparatively small, and the Revenue brought no positive material to show any source other than business receipts. Section 69A can be applied only when the explanation is found unsatisfactory on the basis of material on record, which was not the position here.

Conclusion: The addition under section 69A was deleted in full and the assessee succeeded.

Ratio Decidendi: Section 69A cannot be invoked where the assessee offers a plausible, business-linked explanation for cash deposits and the Revenue fails to rebut it with contrary material.

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