Unexplained cash deposit addition deleted where presumptive taxation and disclosed cash-in-hand outweighed unsupported presumption-based findings.

The sustained addition for unexplained cash deposit under section 69A was deleted because it rested only on presumption and preponderance of probability, without supporting material or credible evidence. The assessee had disclosed cash-in-hand in the preceding year and sales in the relevant year, and the residual ad hoc amount had no evidentiary basis. The fact that the assessee filed returns under the presumptive taxation scheme under section 44AD also made insistence on books of account for source verification unreasonable on these facts. The issue was decided in favour of the assessee.

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Issues: Whether the sustained addition of Rs. 10,00,000 under section 69A was justified on the facts and evidence on record.

Analysis: The addition sustained by the first appellate authority was itself described as being based on presumption and preponderance of probability, while the assessee had disclosed cash-in-hand in the preceding year and sales in the relevant year. The assessment proceeded on unexplained cash deposit, but the sustaining of a residual ad hoc amount of Rs. 10,00,000 was found to have no supporting material or credible evidence. The fact that the assessee had been filing returns under the presumptive taxation scheme under section 44AD was also taken into account, making insistence on books of account for source verification unreasonable in the circumstances.

Conclusion: The addition of Rs. 10,00,000 was deleted and the issue was decided in favour of the assessee.

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