Explained cash deposits in demonetisation period cannot be taxed under section 69A when linked to supported business receipts.

Cash deposits in the assessee's bank account during the demonetisation period were treated as explained because they were linked to authorised money transfer business activity carried on as a regulated business correspondence agent. The assessee supported the receipts with the agency agreement with Vodafone M-Pesa, Form No. 26AS, bank statements and customer-wise details, and the commission income from the same transactions was reflected in Form No. 26AS and accepted by the department. On these facts, the deposits were not unexplained cash credits merely because complete supporting particulars were available only for part of the receipts, so addition under section 69A and the consequential application of section 115BBE were deleted.

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Issues: Whether cash deposited in the assessee's bank account during the demonetisation period was unexplained so as to warrant addition under section 69A of the Income-tax Act, 1961 and consequential taxation under section 115BBE of the Income-tax Act, 1961.

Analysis: The assessee produced the agency agreement with Vodafone M-Pesa, Form No. 26AS, bank statements, and customer-wise details to show that he acted as a regulated business correspondence agent and received cash from customers in the ordinary course of money transfer activity. The commission income arising from the same transactions was reflected in Form No. 26AS and accepted by the department. The deposits were thus linked to the assessee's authorised business operations and were supported by contemporaneous records. On these facts, the deposits could not be treated as unexplained cash credits merely because full supporting particulars were available only for part of the receipts.

Conclusion: The addition made under section 69A, along with the consequential application of section 115BBE, was not sustainable and was deleted. The appeal succeeded.

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