Preponderance of probabilities accepted sale proceeds explanation for cash deposits; addition as unexplained investment was deleted.

Cash deposits in the assessee's bank account were examined under section 69 of the Income-tax Act, 1961, with the core question being whether they were unexplained investment or sale proceeds from agricultural land. The explanation was supported by matching deposit dates, a registered sale deed describing the property as agricultural land, its location within municipal limits, and surrounding circumstances pointing to the same transaction. Applying preponderance of probabilities and circumstantial evidence, the explanation was accepted; the purchaser's denial of higher payment and the registered value alone were insufficient to reject it. The addition under section 69 was deleted.

---

---

Issues: Whether the cash deposits in the assessee's bank account were unexplained investment under section 69 of the Income-tax Act, 1961, or stood explained as sale proceeds of agricultural land.

Analysis: The assessee explained that the deposits represented consideration received in two instalments from the sale of land and that the dates of deposit matched the sale transaction. The registered document described the land as agricultural land, the property was situated within municipal limits, and the surrounding circumstances supported the assessee's version. The rejection by the lower authorities rested mainly on the purchaser's statement and the absence of further documentary support, but the surrounding facts, human conduct and circumstantial evidence were relevant in evaluating the explanation. Applying the principle of preponderance of probabilities, the explanation could not be rejected merely on the basis of the registered value or the purchaser's denial of a higher payment.

Conclusion: The cash deposits were held to be explained sale proceeds, and the addition under section 69 of the Income-tax Act, 1961 was deleted in favour of the assessee.

---