Cash deposit addition restricted where prior returns and possible savings supported explanation, but full acceptance was not justified.

Cash deposits in the assessee's bank account were not fully unexplained where the returned income had been accepted and prior returns showed declared income over earlier years, making accumulated savings plausible. The time gap between withdrawals and redeposit of cash did not, by itself, establish a specific alternative use of the funds, so the explanation could not be rejected outright. At the same time, the material did not justify full acceptance of the claim. The addition was therefore restricted to Rs. 1 lakh, with balance relief granted to the assessee.

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Issues: Whether the addition made on account of cash deposit in the bank account was liable to be sustained in full or restricted to a lesser amount.

Analysis: The assessee's returned income had been accepted, and the record showed regular filing of returns with declared income over preceding years, making the possibility of accumulated past savings plausible. Although there was a time gap between withdrawals and redeposit of cash, the material on record did not establish any specific alternative use of the idle cash. In these circumstances, the entire explanation could not be rejected outright, but the claim also did not warrant full acceptance.

Conclusion: The addition was restricted to Rs. 1 lakh and the balance relief was granted in favour of the assessee.

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