Cash credits in a relative's name may be taxed as undisclosed family income when surrounding evidence shows name-lending and benami entries.

Cash credits standing in a family member's name in third-party books can be treated as the Hindu undivided family's undisclosed income where surrounding circumstances provide affirmative material linking the credits to the family. The Bombay HC noted that rejection of the assessee's explanation alone was insufficient, but the partition deed was unreliable, no satisfactory proof showed the lady owned the initial funds, intervening books were not produced, and the interest and withdrawal entries were inconsistent with the stated version. The son's role in deposits and withdrawals supported a finding that the lady was only a name-lender, and the credits were properly brought to tax as revenue receipts.

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Issues: Whether the cash credits standing in the name of a family member in third-party books could be treated as the income of the Hindu undivided family from an undisclosed source for the relevant assessment years.

Analysis: The rejection of the assessee's explanation by itself was not enough, but the surrounding circumstances furnished affirmative material: the partition deed was found unreliable, no satisfactory evidence established that the alleged initial funds belonged to the lady, the books for the intervening period were not produced, the interest entries and withdrawals in the third-party books were inconsistent with the statements of the mother and son, and the son's involvement in the deposit and withdrawal of the amounts showed that the lady was only a name-lender. On the totality of the evidence, the cash credits were traceable to the Hindu undivided family and were properly treated as revenue receipts for the years in which they appeared.

Conclusion: The questions were answered in the affirmative and against the assessee.

Ratio Decidendi: A finding that cash credits represent undisclosed income can rest on the cumulative effect of surrounding circumstances and documentary entries, and not merely on rejection of the assessee's explanation; where the evidence shows benami name-lending and the credits are referable to the assessee, the addition is sustainable.

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