Unexplained investments in the form of Specified Bank Notes ...

Cash deposits during demonetization period were business receipts, not unexplained income.

Case Laws     Income Tax

September 23, 2024

Unexplained investments in the form of Specified Bank Notes (SBNs) deposited during demonetization period were questioned. The assessee claimed the deposits were trade receipts from milk and milk product sales, offering to provide customer details. The CBDT circular mandates analyzing the assessee's business model, books, and sales. No significant change in cash deposits during demonetization indicates the explained source cannot be disregarded solely for accepting demonetized currency. The assessee maintained audited books proving the cash/SBNs were part of the taxed turnover. Making a separate addition would lead to double taxation. Hence, the decision favored the assessee, as the amount deposited was already offered for taxation as part of turnover.

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