Unexplained bank deposits in search proceedings can be assessed as income where the assessee fails to prove the source.

Bank deposits detected during search that were not satisfactorily explained were treated as unexplained income under section 69. The Court held that, where the assessee failed to produce supporting final accounts or other primary evidence to substantiate the claimed cash source, the unproved explanation could not override the search material. It further held that the Assessing Officer was not required to make further independent enquiry in the face of the assessee's failure to discharge the burden of proof, and an adverse inference was justified for withholding the best evidence under section 114(g) of the Evidence Act.

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Issues: Whether deposits in a bank account detected during search and not satisfactorily explained by the assessee could be assessed as income from undisclosed sources under section 69, and whether the Assessing Officer was bound to undertake further independent enquiry despite the assessee's failure to produce supporting accounts.

Analysis: The bank account and the deposits were discovered in the course of search, and the assessee did not dispute the fact of deposit. The explanation that the amounts came from available cash balance was not substantiated either before the Tribunal or before the Court by production of the relevant final accounts. In these circumstances, the Court held that the assessee's unproved explanation could not displace the finding based on the search material. The Court further held that the reliance placed on the need for independent enquiry was misplaced, as the assessee bore the burden of producing the best evidence in support of its explanation, and withholding such evidence justified an adverse inference under section 114(g) of the Evidence Act.

Conclusion: The addition under section 69 was justified, and the appeal was liable to be dismissed.

Final Conclusion: The disputed bank deposits were treated as unexplained income, and the assessee failed to establish any error in the order under challenge.

Ratio Decidendi: Where search material establishes an undisclosed deposit and the assessee fails to substantiate the source with available primary evidence, the amount may be assessed under section 69 and an adverse inference may be drawn for non-production of the best evidence.

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