Recorded business cash deposits during demonetisation cannot be treated as unexplained money without disproving books and supporting records.

Cash deposits in specified bank notes during demonetisation, where explained as recorded business receipts, cannot be treated as unexplained money merely because of a higher cash balance. The notes state that audited books, day-wise cash records, sales and purchase registers, stock records, quantitative details and VAT returns supported the deposits; the recorded sales and stock movement were undisputed, and the books were not rejected. As no material established undisclosed sources or rebutted the documentary evidence, sections 68 and 69A did not apply. The addition for unexplained money was deleted.

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Issues: Whether cash deposited in specified bank notes during demonetisation, stated to arise from recorded business receipts, could be assessed as unexplained money where the books, sales, stock records and VAT returns were not discredited.

Analysis: The assessee maintained audited books, day-wise cash book, sales and purchase registers, stock records, quantitative details and VAT returns. The recorded sales and corresponding stock movement were not disputed, no defect was identified in the underlying records, and the books were not rejected. The cash deposits during the relevant demonetisation period were lower than those in the corresponding preceding period. A higher cash balance alone, without material establishing undisclosed sources or rebutting the documentary evidence, could not displace the explanation that the deposits represented pre-demonetisation business receipts already recorded in the books.

Conclusion: The cash deposits could not be treated as unexplained money under sections 68 or 69A; deletion of the addition was directed in favour of the assessee.

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