Agricultural land resale profit requires proof of trading intention at purchase; unexplained bank deposits remained taxable.

An isolated purchase and resale of agricultural land was not treated as an adventure in the nature of trade because the department failed to prove an intention to trade at the time of acquisition; mere low yield, potential value, prior speculation in other assets, and later resale at a profit were insufficient. By contrast, unexplained bank deposits were sustained as income from undisclosed sources where the assessee's explanation based on accumulated agricultural income was not credible and the evidence did not support the claimed level of disclosed income. The assessment was therefore only partly disturbed, with the land-sale profit excluded from business taxation but the cash deposit addition maintained.

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Issues: (i) Whether the profit of Rs. 66,000 from the purchase and sale of agricultural land was assessable as income from an adventure in the nature of trade. (ii) Whether the sum of Rs. 30,000 could be sustained as income from undisclosed sources.

Issue (i): Whether the profit of Rs. 66,000 from the purchase and sale of agricultural land was assessable as income from an adventure in the nature of trade.

Analysis: The land purchased was agricultural land, which is ordinarily a recognised form of investment. The circumstances relied upon by the department, namely the low yield, the alleged potential value of the property, the assessee's prior speculation in gold and silver, and the later resale at a higher price, were held to be insufficient to establish that the assessee had the intention to trade at the inception of purchase. For an isolated transaction to be treated as an adventure in the nature of trade, the intention to trade must exist at the time of acquisition, and the burden of proving that fact rests on the department.

Conclusion: The profit was correctly computed, but it was not assessable to tax as business income. This issue was decided in favour of the assessee.

Issue (ii): Whether the sum of Rs. 30,000 could be sustained as income from undisclosed sources.

Analysis: The bank deposits were not satisfactorily explained by the assessee. His explanation based on accumulated garden income and alleged unspent funds was found unconvincing, while the evidence showed that the agricultural income could not reasonably have been as high as claimed. On the materials available, the Tribunal was justified in inferring that part of the deposits represented income from sources other than the disclosed agricultural income.

Conclusion: The addition of Rs. 30,000 as income from undisclosed sources was upheld. This issue was decided against the assessee.

Final Conclusion: The assessee succeeded on the taxability of the land-sale profit, but failed on the unexplained bank deposits, leaving the assessment only partly disturbed.

Ratio Decidendi: An isolated purchase and resale of agricultural land is not an adventure in the nature of trade unless the department proves an intention to trade at the time of acquisition; mere subsequent resale at a profit or other equivocal circumstances is insufficient.

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