Explained cash deposits, earlier disclosed bond investment, and unsupported cost estimates cannot sustain additions in income assessment.

Cash deposits explained as sale proceeds of declared stock could not be taxed again as unexplained cash credits under section 68, because the source was already recorded and taxing them again would create double addition. Maturity proceeds of RBI relief bonds were also not taxable in the year of redemption where the investment had been made and disclosed in an earlier year; any doubt about the original source had to be examined in the year of investment. A long-term capital gain addition based on estimated backward indexation of jointly held property costs was unsustainable because the declared cost figures had no demonstrated defect and the estimate rested only on presumption.

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Issues: (i) whether cash deposits in the bank account could be added as unexplained cash credits under section 68 when the assessee explained them as sale proceeds of declared stock and the same amount was already brought to tax; (ii) whether the maturity proceeds of RBI relief bonds could be assessed in the year of maturity when the investment had been made and disclosed in an earlier year; and (iii) whether the long-term capital gain addition arising from reworking the cost of construction and acquisition of jointly held property on an estimated backward-indexation basis was sustainable.

Issue (i): whether cash deposits in the bank account could be added as unexplained cash credits under section 68 when the assessee explained them as sale proceeds of declared stock and the same amount was already brought to tax.

Analysis: The cash deposits were linked to sale proceeds of stock declared in the survey-related proceedings and were reflected in the profit and loss account as sales without corresponding purchase or opening stock deduction. The source of the deposits was thus explained by the sale proceeds, and taxing the cash deposits again would amount to double addition of the same income.

Conclusion: The addition under section 68 was not sustainable and was rightly deleted, in favour of the assessee.

Issue (ii): whether the maturity proceeds of RBI relief bonds could be assessed in the year of maturity when the investment had been made and disclosed in an earlier year.

Analysis: The investment in the bonds had been made in an earlier year and shown in the balance sheet in preceding years. Even if the source of the original investment was in doubt, the proper course was to examine the year of investment rather than tax the maturity amount in the year of redemption. No addition was justified in the year under appeal.

Conclusion: The addition of the maturity proceeds was not sustainable and was rightly deleted, in favour of the assessee.

Issue (iii): whether the long-term capital gain addition arising from reworking the cost of construction and acquisition of jointly held property on an estimated backward-indexation basis was sustainable.

Analysis: The cost of construction and acquisition had been disclosed in earlier years, and no defect was shown in those disclosures. The estimate adopted by the Assessing Officer was based on presumptions and backward indexation without an evidentiary foundation. The higher sale consideration and the absence of any demonstrated defect in the declared cost made the addition unsustainable.

Conclusion: The long-term capital gain addition was not sustainable and was rightly deleted, in favour of the assessee.

Final Conclusion: All the additions challenged by the Revenue were upheld as deleted, and the Revenue's appeals failed in entirety.

Ratio Decidendi: An addition cannot be sustained when the source of a cash deposit is explained by already offered sale proceeds, an amount relating to an earlier year cannot ordinarily be taxed in a later year merely because its original source is questioned, and a cost of acquisition cannot be re-estimated on mere presumption without a defect in the declared figures.

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