Unexplained cash deposits may be inferred as concealed income, but amounts already taxed cannot be added again.

Unexplained cash deposits may be treated as concealed income of the relevant previous year where the assessee's explanation is rejected and surrounding circumstances, including proved suppression of profits and unsatisfactory accounts, support that inference. However, amounts already brought to tax in the assessment cannot be taxed again as concealed income on the same deposits, as that would amount to double taxation. The deposits were therefore treated as concealed income, but the addition was confined to the balance not already assessed, and the assessment was reduced accordingly.

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Issues: (i) whether unexplained cash deposits, after rejection of the assessee's explanation, could be treated as concealed income of the previous year; (ii) whether amounts already brought to tax in the assessment could again be added as concealed income on the basis of the same deposits.

Issue (i): whether unexplained cash deposits, after rejection of the assessee's explanation, could be treated as concealed income of the previous year.

Analysis: The explanation offered by the assessee for the source of the deposits was a question of fact, and the Court proceeded on the basis that the Tribunal had rejected it. Rejection of the explanation by itself did not automatically establish taxable income, but the surrounding circumstances, including proved suppression of profits and unsatisfactory accounts, were material from which an inference could be drawn that the deposits represented income of the relevant year.

Conclusion: Yes. The sum of Rs. 68,958/- was liable to be treated as concealed income of the assessee of the previous year relevant to assessment year 1945-46.

Issue (ii): whether amounts already brought to tax in the assessment could again be added as concealed income on the basis of the same deposits.

Analysis: Where specific items forming part of the deposit figure had already been added back as suppressed profits or as wrongly claimed losses, taxing them again as concealed income would amount to double taxation. Only the balance of the deposit amount, not already brought to tax, could properly be added in computing the total income.

Conclusion: No. The already taxed amounts of Rs. 26,397/-, Rs. 403/- and Rs. 12,782/- could not be taxed again, and only the remaining Rs. 29,376/- was addable.

Final Conclusion: The deposits were rightly inferred to represent concealed income, but the assessment had to be restricted to the balance not already taxed, so the addition stood reduced accordingly.

Ratio Decidendi: Rejection of an assessee's explanation for cash deposits does not by itself establish taxable income, but concealed income may be inferred from the surrounding circumstances and proved suppression of profits, while amounts already taxed cannot be assessed again as the same income.

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