Unexplained cash addition under section 69A fails where deceased minor's source was not within legal heir's knowledge.

Cash found in the possession of a deceased person may not be added as unexplained money under section 69A merely on the basis of possession. The provision is discretionary and must be applied on the surrounding circumstances, including whether the source of funds was within the deceased's exclusive knowledge and whether the facts support an inference of ownership. Where the deceased was a minor, had recently stopped schooling, and there was no material showing capacity to earn the amount, the presumption of ownership was rejected. On those facts, the addition under section 69A was held unsustainable and deleted.

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Issues: Whether the cash of Rs. 1,18,500 found in the possession of a deceased minor could be assessed as unexplained money under section 69A of the Income-tax Act, 1961 in the hands of his legal heir.

Analysis: The money was found from the possession of the deceased before assessment proceedings were initiated and the explanation regarding its source was within his exclusive knowledge. After his death, the legal heir could not be required to discharge a burden based on facts personally known only to the deceased. Though possession may raise a presumption of ownership and section 69A permits an addition in appropriate cases, the provision is discretionary and must be applied judiciously on the facts. The surrounding circumstances, including the deceased's minority, recent cessation of schooling, and absence of material showing capacity to earn such amount within a short period, negatived the inference that the cash belonged to him.

Conclusion: The addition under section 69A was not sustainable and was deleted.

Ratio Decidendi: Where cash is found in the possession of a deceased person and the surrounding circumstances show that the source was not within the legal heir's knowledge and the deceased could not reasonably be treated as the owner, no addition can be made under section 69A merely on a presumption of possession.

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