Unexplained cash deposit addition fails when agricultural sale proceeds are plausibly explained and no contrary inquiry is made.

An addition under Section 69A for unexplained cash deposits cannot be sustained where the assessee offers a plausible explanation that the deposits came from sale of agricultural produce and the Revenue produces no evidence of any alternate undisclosed source. The Tribunal found that mere absence of a formal agricultural income certificate was insufficient, especially when no independent inquiry was made to verify the assessee's explanation. The addition was therefore deleted and the assessee's appeal allowed.

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Issues: Whether the addition of Rs.16,90,000 made under Section 69A of the Income-tax Act, 1961 as unexplained cash deposits is sustainable where the assessee claims the deposits are proceeds from sale of agricultural produce and the Revenue has not produced evidence of any other undisclosed source nor conducted independent inquiry.

Analysis: The assessee asserted that the bank deposits originated from sale of agricultural produce. The assessing officer made an addition under Section 69A on the ground that the assessee failed to prove the source. On appeal the Revenue relied on absence of an "agricultural income certificate" from a concerned authority but did not produce evidence of any alternate undisclosed source of income nor conduct independent verification. The Tribunal examined whether the Revenue met its evidentiary burden to establish that the deposits were unexplained income and whether non-production of a formal certificate, in the circumstances, was a valid basis to sustain the addition.

Conclusion: The addition of Rs.16,90,000 under Section 69A of the Income-tax Act, 1961 is deleted and the appeal is allowed in favour of the assessee.

Ratio Decidendi: Where an assessee offers a plausible explanation that deposits arise from agricultural income and the Revenue fails to produce evidence of an undisclosed source or to carry out independent inquiry, an addition under Section 69A of the Income-tax Act, 1961 cannot be sustained.

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