Unexplained cash credit treated as explained on facts; finding based on surrounding circumstances and broad probabilities was upheld.

An unexplained cash credit was treated as explained where the assessee's explanation that the amount formed part of an earlier fixed deposit was accepted on surrounding circumstances and broad probabilities. The court treated the question whether such a credit constitutes income as one of fact, dependent on the evidence and record, and declined to interfere because the finding was neither unsupported by evidence nor perverse. A passing reference to the conditions of the year 1956 did not shift the legal burden to the revenue. The credit was therefore not assessed as income from undisclosed sources on the facts found.

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Issues: Whether the Tribunal was in treating the sum of Rs. 2,00,000 credited on 29 March 1956 as forming part of the earlier deposit of Rs. 3,00,000 and, therefore, not income from undisclosed sources for the assessment year 1956-57.

Analysis: The Tribunal accepted the assessee's explanation that the credit of Rs. 2,00,000 represented part of the earlier fixed deposit, and that conclusion was reached on an appreciation of the surrounding circumstances and broad probabilities. The finding was not shown to be unsupported by evidence or inconsistent with the record. In the case of an unexplained credit, the question whether it represents the assessee's income is one of fact, depending on the evidence and circumstances. The observation regarding the conditions of the year 1956 was treated only as a passing circumstance and not as shifting the legal burden to the revenue.

Conclusion: The answer to the first question was given in the negative, in favour of the assessee, and the credit of Rs. 2,00,000 was not brought to tax as income from undisclosed sources on the facts found.

Ratio Decidendi: A finding that an unexplained cash credit is explained by the assessee on a consideration of the surrounding circumstances and broad probabilities is a finding of fact, and it will not be disturbed unless shown to be unsupported by evidence or perverse.

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