Unexplained cash deposits sustain section 68 additions when source, identity, creditworthiness and genuineness remain unproved.

Unexplained cash deposits justified additions under section 68 where the assessees failed to prove the source of the deposits or establish the identity, creditworthiness and genuineness of the alleged creditors. The court rejected the argument that the additions were invalid because the assessment order referred to an incorrect provision, holding that the source of power could still be traced from the record. It also found, on the facts, that the challenge based on bank passbooks was untenable and that remand would serve no purpose in the absence of proof of source. The additions were therefore sustained and the Revenue's position prevailed.

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Issues: Whether additions sustained under section 68 of the Income-tax Act, 1961 were justified where the assessees failed to explain cash deposits and also contended that bank passbooks could not be treated as books of account.

Analysis: The assessees had produced balance-sheets, profit and loss accounts, bank accounts and other financial statements, and the Tribunal found that books of account were maintained in the ordinary course. The Court held that, on the facts, the claim that the additions were based only on bank passbooks was not acceptable. It further held that the assessees had not proved the source of the deposits or the identity, creditworthiness and genuineness of the alleged creditors. The Court also held that mere mention of a wrong provision in the assessment order did not invalidate the addition where the source of power could otherwise be traced, and that remand would be futile in the absence of proof of source.

Conclusion: The additions were upheld and the challenge to the application of section 68 failed; the decision was against the assessees and in favour of the Revenue.

Ratio Decidendi: Where cash deposits remain unexplained and the assessee fails to establish identity, creditworthiness and genuineness, the addition cannot be set aside merely because the assessment order refers to an incorrect provision or because the assessee contends that the bank passbook is not a book of account.

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