Unexplained cash credit cannot stand where credible documentary evidence and third party confirmations support agricultural receipts.

Addition of agricultural receipts as unexplained cash credit was deleted where the assessee produced credible documentary evidence and third party confirmations of purchases and land ownership; the tribunal found the assessing officer relied on presumption about a year on year increase and unchanged infrastructure rather than any defect in documents or quantities sold, and held that an addition under the unexplained cash credit doctrine cannot be sustained solely on assumption, allowing the appeal in favour of the assessee.

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Issues: Whether the addition of agricultural income of Rs. 2,90,830 as unexplained cash credit under Section 68 of the Income-tax Act, 1961 was justified.

Analysis: The tribunal examined the evidence submitted to support the agricultural receipts, including third party confirmation of purchases and ownership records of agricultural land. The assessment relied on a 27% increase in declared agricultural income over the previous year and onferences about unchanged infrastructure to treat the excess as cash credit. The enquiry under Section 133(6) of the Income-tax Act, 1961 produced confirmation from the purchaser. No defect was pointed out in the documentary evidence or in the quantities sold. The addition rested on assumption and presumption rather than identification of any flaw in the evidence submitted by the assessee.

Conclusion: The addition of Rs. 2,90,830 as unexplained cash credit under Section 68 is deleted and the appeal on this issue is allowed in favour of the assessee.

Ratio Decidendi: Where the assessee produces credible documentary evidence and third party confirmation for receipts, an addition as unexplained cash credit based solely on presumption of unexplained increase is not sustainable.

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