Unexplained cash credits can be assessed as undisclosed income when the assessee fails to prove a credible source.

Unexplained cash credits may be treated as income from undisclosed sources when the assessee fails to prove a credible independent source and surrounding circumstances cast doubt on the explanation. The assessee bears the primary burden of producing material evidence to establish genuineness, and the tax authority is not required to pursue every suggested inquiry where that burden is not discharged. An earlier rejection of a similar explanation in the assessee's own case may be treated as a relevant supporting circumstance for drawing that inference.

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Issues: Whether the cash credits in the assessee's books were rightly treated as income from undisclosed sources and whether the assessee had discharged the burden of proving their genuineness.

Analysis: The assessee's explanation that the credits represented the sale proceeds of family ornaments was not accepted, the surrounding circumstances casting doubt on the alleged source of the money. The assessee remained under the primary burden to produce material evidence in support of the credits, and the Income-tax Officer was not bound to pursue every suggested line of inquiry when the assessee had not established a reliable source. Where the source and nature of cash receipts are not proved, the authorities may draw a reasonable inference that the amounts are revenue receipts from undisclosed sources. The earlier rejection of a similar explanation in the assessee's own case was also treated as a relevant circumstance supporting that inference.

Conclusion: The credits were rightly treated as income from undisclosed sources, and the assessee's application failed.

Final Conclusion: The decision affirms that unexplained cash credits may be assessed as revenue income when the assessee fails to prove a credible independent source and the surrounding circumstances justify such an inference.

Ratio Decidendi: When an assessee fails to prove the genuine source of cash credits, the tax authorities may reasonably infer that the receipts are income from undisclosed sources, without being required to adduce positive evidence disproving the assessee's explanation.

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