Unexplained bank deposits and unverified contract receipts can be taxed when the assessee fails to prove their source or genuineness.

Unsubstantiated bank deposits and opening capital balance may be treated as unexplained where the assessee cannot prove the source with reliable evidence; here, the opening capital was accepted as relating to earlier years, but the balance of the deposits remained unsupported and the appellate sustenance of that addition was justified. Claimed contract receipts also failed verification because the assessee could not establish identity, confirmation, or documentary proof for the alleged petty contract work; on that basis, the appellate authority was entitled to treat the unverified receipts as income and enhance the assessment. The appeal failed in full.

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Issues: (i) Whether the addition sustained by treating part of the bank deposits and opening capital balance as unexplained cash credit/investment was justified. (ii) Whether the enhancement made on account of unproved contract receipts was justified.

Issue (i): Whether the addition sustained by treating part of the bank deposits and opening capital balance as unexplained cash credit/investment was justified.

Analysis: The opening capital balance was found to represent investments made in earlier years and not income of the year under consideration. As regards the bank deposits, the assessee's explanation linked the deposits to earlier withdrawals and to contract receipts already offered under presumptive taxation, but the appellate record showed that only a part of the claimed receipts was supported by confirmation. The remaining amount lacked supporting evidence or satisfactory verification.

Conclusion: The addition could not be fully deleted and the part sustained by the appellate authority was justified, therefore this issue is against the assessee.

Issue (ii): Whether the enhancement made on account of unproved contract receipts was justified.

Analysis: The assessee claimed that the disputed receipts formed part of contract turnover disclosed under section 44AD, but the alleged receipts from petty contract work were not substantiated by identity, confirmation, or documentary proof. In the absence of material evidence, the appellate authority was entitled to treat the unverified receipts as income and enhance the assessment.

Conclusion: The enhancement was upheld and this issue is against the assessee.

Final Conclusion: The appellate order sustaining the balance addition and the enhancement was affirmed, and the assessee's appeal failed in entirety.

Ratio Decidendi: Where an assessee fails to substantiate claimed contract receipts or the source of credited amounts with reliable evidence, the unexplained portion can be brought to tax and the assessment can be enhanced accordingly.

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