Cash deposit additions during demonetization cannot rest on suspicion alone when books and cash availability are unrebuked.

Demonetization-period cash deposit additions cannot be sustained on mere suspicion where the books show no specific defect in sales, purchases, stock, or cash balance, and the cash sales are supported by the record and VAT returns. On these facts, rejection of books under section 145(3) and the consequential addition as unexplained cash credit under section 68, together with taxability under section 115BBE, were held unsustainable. The tribunal found no direct or substantial evidence to rebut the assessee's explanation that the cash was actually available, so the ad hoc estimation was deleted and relief was allowed.

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Issues: Whether the addition made on account of cash deposits during the demonetization period, based on rejection of books under section 145(3) and treatment of part of the deposits as unexplained cash credit under section 68, with taxability under section 115BBE, was sustainable.

Analysis: The books and trading results were not shown to suffer from any specific defect in the quantitative details of sales, purchases, stock, or cash balance. The assessee's cash sales and cash availability were supported by the record and corroborated by the VAT returns, while the addition was sustained only on suspicion drawn from the timing of sales and deposits. The absence of direct or substantial evidence to show that the cash was not actually available made the ad hoc estimation and rejection of explanation unsustainable. In these circumstances, the rejection of books and the consequential addition under section 68, together with application of section 115BBE, could not be upheld.

Conclusion: The addition was not sustainable and the relief sought by the assessee was allowed.

Final Conclusion: The assessment-based addition relating to demonetization-period cash deposits stood deleted, and the appeal succeeded in full.

Ratio Decidendi: An ad hoc addition based only on suspicion about the timing of cash sales and deposits cannot be sustained where the books, stock position, and cash availability are not specifically rebutted by direct or substantial evidence.

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