Explained bank deposits accepted where HUF cash flow and remand findings supported the source of funds, barring unexplained addition.

Bank deposits were treated as explained where the assessee supported the source with a HUF cash flow statement showing funds from property sale proceeds and related income. The remand report accepted that capital gains on the HUF property had been offered to tax, interest income was reflected in the HUF return, and the relevant records were available in the HUF assessment file. The commentary also notes that ignoring the remand report and not confronting further doubts to the assessee offends natural justice. On that basis, the addition for unexplained deposits was deleted.

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Issues: Whether the addition made on account of deposits in the assessee's bank account as unexplained was sustainable, where the assessee claimed that the deposits were sourced from funds of the Hindu undivided family and supported the claim by a cash flow statement and remand proceedings.

Analysis: The assessee produced the HUF cash flow statement to show availability of funds from sale proceeds of property and related income. The Assessing Officer's remand report noted that the capital gain from the sale of the HUF property had been offered to tax, that interest income on fixed deposit was reflected in the HUF return, and that the relevant particulars were available in the HUF assessment record. The Tribunal also noted that the CIT(A) did not advert to the remand report before sustaining the addition, and that the doubts raised about book debts and pawn-broking advances were not confronted to the assessee after the remand report, which offended natural justice.

Conclusion: The source of the bank deposits stood explained from HUF funds, and the addition for unexplained deposit was not sustainable. The deletion of the addition was upheld in favour of the assessee.

Final Conclusion: The assessee succeeded and the addition made by the Assessing Officer was deleted.

Ratio Decidendi: Where the assessee substantiates a bank deposit with a supported cash flow statement and the remand report confirms availability of explained family funds, an addition for unexplained deposit cannot be sustained without contrary material and fair consideration of the remand findings.

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