Unexplained cash deposits and cash gifts need credible evidence; unsupported explanations may be accepted only to a limited extent.

A claim that cash deposited into fixed deposits came from sale of gold ornaments and silver must be supported by contemporaneous, credible evidence; absent documentary trail, buyer details, bank linkage, or reliable proof of acquisition and sale, the explanation remains only partly acceptable. Here, limited recognition was given only for 500 grams of gold on the basis of accepted household practice and CBDT guidance, while the balance was treated as unexplained. A separate claim of a cash gift from a close relative was rejected because the donor's identity, capacity, and transaction trail were not proved, and the explanation failed the test of human probability.

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Issues: (i) whether the cash deposits used to make fixed deposits were explained by the assessee as having arisen from sale of gold ornaments and silver, and to what extent such explanation could be accepted; (ii) whether the alleged cash gift of Rs. 3,00,000 received from a close relative was proved.

Issue (i): Whether the cash deposits used to make fixed deposits were explained by the assessee as having arisen from sale of gold ornaments and silver, and to what extent such explanation could be accepted.

Analysis: The assessee had not disclosed the fixed deposits or the related receipts in the return originally filed, and the explanation was produced only after the transactions were detected in reassessment proceedings. The claim of holding and selling gold ornaments and silver was examined against the surrounding circumstances, including the absence of contemporaneous documentary support, the lack of PAN or income-tax returns of the alleged buyers, the absence of item-wise purchase details, the lack of bank trail, and the absence of any reliable evidence of the alleged meher or acquisition of such sizeable jewellery holdings. The statements and affidavits filed were not found sufficient to establish the full genuineness of the transaction. At the same time, the accepted Indian household practice of holding some gold ornaments was taken into account, and limited relief was given by accepting ownership of 500 grams of gold on the basis of the CBDT instruction relating to search seizures.

Conclusion: The explanation was accepted only to the limited extent of 500 grams of gold, and the balance was held to remain unexplained and taxable; the assessee succeeded only partly on this issue.

Issue (ii): Whether the alleged cash gift of Rs. 3,00,000 received from a close relative was proved.

Analysis: The alleged donor had no PAN, no return history, no bank account trail, and no reliable material was produced to establish the gift deed, confirmation, or the donor's capacity to make the gift. In the absence of cogent evidence, the claim was not found credible on the test of human probability and surrounding circumstances.

Conclusion: The alleged gift was not proved and the addition on this count was sustained against the assessee.

Final Conclusion: The appeals were disposed of by granting limited relief only to the extent of accepted jewellery holding, while sustaining the additions for the remaining unexplained amounts and the alleged cash gift.

Ratio Decidendi: A claim of source for unexplained bank deposits or cash credits must be established by cogent, contemporaneous, and credible evidence, and self-serving explanations unsupported by a bank trail or reliable corroboration cannot displace the finding of unexplained investment, except to the extent independently supported by accepted probabilities or administrative guidance.

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