Best judgment assessment can stand on persistent non-compliance, while appellate evidence may defeat cash credit and support agricultural income treatment.

Persistent non-compliance with notices and an assessee's uncorroborated claim of a later reply supported continuation of a best judgment assessment under section 144. A creditor's confirmation produced in appellate proceedings, coupled with reconciliation explaining the balance difference as goods returned, justified deletion of the unexplained cash credit addition under section 68. Nursery and cultivation receipts were treated as agricultural income where records such as Khasra Girdawari, books, vouchers, and sale-purchase material showed cultivation on agricultural land, and prior-year acceptance supported consistency. The overall result was partial relief: the best judgment assessment stood, but the cash credit and agricultural income additions were deleted.

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Issues: (i) Whether the assessment made under section 144 of the Income-tax Act was valid for want of proper opportunity; (ii) Whether the addition made under section 68 on account of alleged unexplained cash credit was sustainable in the absence of admission of additional evidence; (iii) Whether the income from nursery and cultivation activities was assessable as agricultural income under section 2(1A) or as income from other sources.

Issue (i): Whether the assessment made under section 144 of the Income-tax Act was valid for want of proper opportunity.

Analysis: The return and notices were examined in the light of the assessment record and the assessee's claim that a reply was filed after verbal directions from the Assessing Officer. The record showed repeated non-compliance with earlier notices and also indicated that the reply filed on the relevant date was received after the assessment order had already been passed. The assessee's assertion was not supported by independent material, and the affidavit alone was found insufficient to displace the record.

Conclusion: The assessment under section 144 was upheld and the challenge to its validity failed.

Issue (ii): Whether the addition made under section 68 on account of alleged unexplained cash credit was sustainable in the absence of admission of additional evidence.

Analysis: The confirmation from the creditor was produced in appellate proceedings and was forwarded to the Assessing Officer, who did not controvert it with specific adverse comments. The appellate authority's refusal to admit the evidence was held to be unjustified. The discrepancy in the balance was also explained by the assessee through reconciliation details showing that the difference related to goods returned for which no credit had been given.

Conclusion: The addition under section 68 was deleted and the issue was decided in favour of the assessee.

Issue (iii): Whether the income from nursery and cultivation activities was assessable as agricultural income under section 2(1A) or as income from other sources.

Analysis: The material on record, including Khasra Girdawari, books of account, vouchers, sale and purchase records, and the earlier acceptance of similar income in the assessee's own case, established carrying on of cultivation and nursery operations on agricultural land. The statutory definition of agricultural income was applied to hold that income derived from land used for agricultural purposes remains agricultural income. The rule of consistency also supported the assessee, as there was no change in facts or law from earlier years.

Conclusion: The income was held to be agricultural income and the addition as income from other sources was deleted.

Final Conclusion: The appeal succeeded on the additions and the agricultural income claim, but failed on the challenge to the validity of the best judgment assessment; the overall result was a partial allowance of the assessee's appeal.

Ratio Decidendi: Where the record shows persistent non-compliance and the assessee cannot rebut the assessment record with reliable evidence, a best judgment assessment may stand; conversely, admissible appellate evidence and material showing actual cultivation on agricultural land justify deletion of cash-credit and conversion of the receipts into agricultural income.

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