*Demonetization Cash Deposits – Source cannot be considered as unexplained u/s 69 even when deposit is in Violation of RBI guidelines [Sec 69 of ITA’61 – Sec 103 of ITA’25]

Summary: Cash deposits of demonetized notes are not unexplained investment merely because they were accepted or deposited in violation of RBI guidelines. For invoking section 69, the authority must show both an investment and failure to explain its source. Genuine business cash receipts, payment of indirect tax, identifiable customers, consistent cash sales patterns, and practical difficulty in accepting notes after demonetization are relevant factors. Additions based only on cash sales-to-deposit ratio during the demonetization period are improper where the source is otherwise explained.