Nursery receipts treated as agricultural income where seasonal sales and lack of contrary evidence defeated undisclosed income addition.

Nursery receipts were held to be exempt agricultural income where the cash memos showed no interpolation, the seasonal sales pattern matched rose plant , and the Revenue produced no reliable material to discredit the assessee's explanation. The partners' alleged withdrawals, by themselves, were insufficient to sustain an addition as undisclosed income. The disputed addition was therefore deleted and the receipts were treated as agricultural income exempt under section 10(1) of the Income-tax Act, 1961.

---

---

Issues: Whether Rs. 50,000 out of the nursery receipts could be treated as income from undisclosed sources instead of exempt agricultural income.

Analysis: The assessee's nursery was the only source of income of the partners. The cash memos did not disclose interpolations, and the seasonal sales pattern was consistent with the nature of rose plant business. No material was produced by the Revenue to discredit the explanation, and the higher net profit percentage also supported the assessee's explanation. The alleged withdrawals by partners were not a valid basis, by itself, to sustain the addition.

Conclusion: The addition of Rs. 50,000 as income from undisclosed sources was not justified and was deleted; the amount was held to be agricultural income exempt under section 10(1) of the Income-tax Act, 1961.

Final Conclusion: The assessee succeeded and the disputed addition was set aside, resulting in relief in full on the only substantive issue decided.

Ratio Decidendi: In the absence of reliable material to reject the assessee's explanation, seasonal sales and surrounding business circumstances may support classification of nursery receipts as exempt agricultural income rather than undisclosed income.

---