Cash credit additions require proper inquiry before rejection; unsupported business income estimate was sustained.

Cash credits in partners' accounts were deleted because the assessee gave plausible explanations, including withdrawals from the post office and accumulation of bank funds from past savings, and the revenue authorities failed to make proper further inquiry before sustaining the additions. The estimate of business income at Rs. 5,000 was upheld because no effective challenge or supporting material was produced to dislodge it. The commentary therefore reflects partial relief to the assessee, with deletion of the cash-credit additions but confirmation of the income estimate.

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Issues: (i) Whether the additions made on account of cash credits in the partners' accounts were sustainable. (ii) Whether the estimate of income of Rs. 5,000 was liable to be interfered with.

Issue (i): Whether the additions made on account of cash credits in the partners' accounts were sustainable.

Analysis: The explanations offered for the credits were that one sum came from post office withdrawals and the other from bank funds accumulated out of past savings. Once such explanations were furnished, the matter called for further verification if the Income-tax Officer remained unsatisfied. The appellate authority had merely endorsed the Income-tax Officer's view without independent examination of the explanation and supporting circumstances.

Conclusion: The additions on account of cash credits were not sustainable and were deleted, in favour of the assessee.

Issue (ii): Whether the estimate of income of Rs. 5,000 was liable to be interfered with.

Analysis: No effective argument was advanced against the estimate of business income, and no material was shown to dislodge the estimate as confirmed in appeal.

Conclusion: The estimate of income of Rs. 5,000 was upheld, against the assessee.

Final Conclusion: The additions for cash credits were deleted, but the estimate of business income was sustained, resulting in partial relief to the assessee.

Ratio Decidendi: Where an assessee furnishes a plausible source for cash credits, the revenue authorities must make proper further inquiry before sustaining the addition; a mere endorsement of the original finding is insufficient.

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