Unexplained cash deposit addition deleted where family gifts explained the deposits and no adverse evidence rebutted the claim.

An unexplained cash deposit addition was deleted where the assessee explained the deposits as arising from monetary gifts received from his father, made partly by cheque and partly in cash over time. The ITAT held that, in the absence of adverse evidence showing the gift arrangement to be false or improbable, the Revenue could not reject the explanation merely because the father did not make a lump-sum gift or because part of the gift was given in cash. A plausible explanation supported by surrounding circumstances could not be discarded on conjecture, and the impugned addition was quashed.

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Issues: Whether the addition made on account of unexplained cash deposit was sustainable when the assessee explained the deposits as arising from cash gifts received from his father.

Analysis: The explanation was that the father had made monetary gifts to the assessee, partly by cheque and partly in cash at different intervals, and that the cash deposits in the bank account were out of such receipts and cash in hand. In the absence of any negative evidence showing that the gift arrangement was improbable or false, the Revenue could not reject the explanation merely because the father did not make a lump sum gift or because part of the gift was made in cash.

Conclusion: The addition sustained by the appellate authority was not sustainable and was deleted.

Final Conclusion: The assessee's explanation for the cash deposits was accepted and the impugned addition was quashed, resulting in allowance of the appeal.

Ratio Decidendi: A plausible explanation for cash deposits, supported by surrounding circumstances and not rebutted by adverse evidence, cannot be rejected merely on conjecture as to how a family member ought to have made the gift.

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