Unexplained money rules require cogent evidence; agricultural rental income cannot be rejected solely on presumptions about HUF records

Section 69A of the Income-tax Act, 1961, read with Section 115BBE, concerns unexplained money where ownership is established but the nature and source remain unsubstantiated. The notes explain that the assessee must provide an explanation, while the Revenue must first establish the statutory preconditions with cogent material. An HUF's ancestral agricultural land, identified cultivators and agricultural rental receipts may support the explanation for cash deposits, particularly where those facts were accepted in the assessment record. The absence of an earlier PAN or return declaration does not, by itself, prove that the HUF was newly created or that exempt agricultural receipts were unexplained. Additions cannot rest solely on presumptions or guesswork.

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Issues: Whether the addition under Section 69A read with Section 115BBE of the Income-tax Act, 1961, in respect of cash deposits attributed to agricultural rental income of the HUF was sustainable.

Analysis: The HUF's ancestral agricultural landholding, the cultivators' identities and the receipt of agricultural rental income were supported by the record and had been accepted by the Assessing Officer. The absence of an earlier PAN or return declaration did not establish that the HUF was newly created or that the exempt agricultural rental receipts were unexplained. Section 69A of the Income-tax Act, 1961, is a deeming provision involving a rebuttable presumption. Although the assessee bears the burden of explaining the nature and source of the money after ownership is established, the Revenue must first establish the statutory preconditions through cogent material. The addition could not be sustained on presumptions and guesswork where the explanation was supported by the HUF's background and agricultural income.

Conclusion: The addition under Section 69A read with Section 115BBE of the Income-tax Act, 1961, was unsustainable and was directed to be deleted.

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