Unexplained cash credit claims require verification of cash sales, withdrawals and re-deposits before section 68 addition is sustained.

Cash deposits treated as unexplained credit under section 68 were not sustained at this stage because the reconciliation of bank deposits with alleged cash sales, cash withdrawals and re-deposits had not been examined. The tribunal considered the factual verification incomplete and restored the matter to the Assessing Officer for fresh examination of the deposits against the sales and withdrawal details.

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Issues: Whether the addition made as unexplained cash credit under section 68 on account of cash deposits in bank accounts should be sustained, or the matter should be restored for verification of cash sales, cash withdrawals and re-deposits.

Analysis: The assessee claimed that the deposits represented cash sales under presumptive taxation and sought an opportunity to correlate the bank deposits with sales and withdrawals. The record showed that the lower authorities had not examined the reconciliation between cash withdrawals, re-deposits and the stated gross sales. In view of the need for factual verification, the matter was considered fit to be sent back to the Assessing Officer.

Conclusion: The issue was restored to the Assessing Officer for fresh examination and verification of the cash deposits with the sales and withdrawal details.

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