Unexplained cash deposits during demonetisation were accepted as agricultural land sale proceeds, deleting the section 69A addition.

Cash deposits made during the demonetisation period were treated as unexplained money under section 69A only where the assessee failed to substantiate the source; here, the assessee supported the explanation with a sale agreement-cum-GPA for agricultural land and stated that the sale proceeds were kept in a locker before bank deposit. As the Revenue did not dispute the land sale and the assessee had no other declared source of income for the year, the explanation was found bona fide and supported by the record, rather than resting on suspicion or human probability. The addition under section 69A was deleted.

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Issues: Whether cash deposits made during the demonetisation period were liable to be treated as unexplained money under section 69A of the Income-tax Act, 1961, or whether the assessee's explanation that the deposits represented sale proceeds of agricultural land was acceptable.

Analysis: The assessee produced the sale agreement-cum-GPA for the agricultural land and explained that the cash received from the sale was kept in a locker and later deposited in the bank account during demonetisation. The assessee had no other declared source of income for the year, and the Revenue did not dispute the fact of sale of agricultural land. On these facts, the explanation regarding the source of cash deposits was found to be bona fide and supported by the record, and the addition had been made only on suspicion and human probability.

Conclusion: The addition under section 69A was deleted and the assessee succeeded on this issue.

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