Section 69 and unregistered sale agreements cannot explain unexplained cash deposits; one profit-addition issue was remanded.

Section 69 can be invoked for unexplained investments even where the assessee has not maintained books of account, because the provision is read as covering amounts not recorded in any books maintained. The assessee's objection on that basis therefore failed and the addition was upheld. Refusal to admit additional evidence was also sustained, as adequate opportunity had already been given and the source of cash deposits remained unexplained. An unregistered agreement to sell could not, on the facts discussed, by itself support the explanation that the deposits represented sale proceeds. The separate ground on 5% net profit from cash deposits was remanded for fresh adjudication on merits.

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Issues: (i) whether section 69 of the Income-tax Act, 1961 applied to unexplained cash deposits even where no books of account were maintained; (ii) whether the appellate authority was justified in refusing additional evidence and in treating the unregistered agreement to sell as incapable of supporting the assessee's explanation for the deposits; and (iii) whether the addition of net profit at 5% on the cash deposits required interference or fresh adjudication.

Issue (i): whether section 69 of the Income-tax Act, 1961 applied to unexplained cash deposits even where no books of account were maintained.

Analysis: The statutory language of section 69 was read as covering investments not recorded in books of account, if any, maintained by the assessee. On that construction, maintenance of books was not treated as a mandatory precondition for invoking the provision. The explanation that section 69 could not apply merely because books were not maintained was rejected.

Conclusion: The challenge to the applicability of section 69 failed and the addition on that ground was upheld.

Issue (ii): whether the appellate authority was justified in refusing additional evidence and in treating the unregistered agreement to sell as incapable of supporting the assessee's explanation for the deposits.

Analysis: The refusal to admit additional evidence was sustained because the assessee had been given adequate opportunity in assessment and had failed to explain the source of cash deposits. The explanation based on sale proceeds of immovable property through an unregistered agreement to sell was also rejected, since an unregistered instrument could not, in the circumstances discussed, confer an enforceable transfer-based claim for the assessee's explanation of the deposits.

Conclusion: The rejection of additional evidence and the reliance on the unregistered agreement were upheld against the assessee.

Issue (iii): whether the addition of net profit at 5% on the cash deposits required interference or fresh adjudication.

Analysis: The record showed that this specific ground had not been independently adjudicated by the appellate authority. Since the issue required factual examination and a reasoned finding, it was considered appropriate to restore it for decision on merits after granting proper opportunity of hearing.

Conclusion: The issue was remanded to the appellate authority for fresh adjudication on merits.

Final Conclusion: The assessee succeeded only on the remanded issue, while the challenge to the additions on the main legal and factual grounds was rejected.

Ratio Decidendi: Section 69 can be applied to unexplained investments even if no books of account are maintained, and an unregistered agreement to sell cannot, by itself, provide a legally effective basis to explain unexplained bank deposits.

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