Section 68 cash deposit addition fails where contemporaneous evidence and purchaser confirmation explain disclosed property sale proceeds.

Contemporaneous acknowledgements, purchaser confirmation and evidence of direct payment to the developer can satisfactorily explain bank cash deposits arising from a disclosed immovable property transaction. Where the assessee has disclosed the sale consideration in the return and the revenue does not independently verify or rebut the third-party confirmation, an addition as unexplained cash credit cannot be sustained merely because the agreement does not reflect a cash component. A section 68 addition also fails where there is no proper correlation between the alleged unexplained cash credit and the actual bank deposits.

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Issues: Whether the addition of cash deposits as unexplained cash credit under section 68 of the Income-tax Act, 1961 was sustainable where the assessee claimed that the deposits represented part sale consideration of disclosed immovable property and supported the claim with contemporaneous acknowledgements and purchaser confirmation.

Analysis: The assessee had disclosed the sale of immovable property and the full sale consideration in the return, along with a claim under section 54 of the Income-tax Act, 1961. The record contained written acknowledgements evidencing receipt of cash on specific dates and material showing that part payment was made directly to the developer on behalf of the assessee. The purchaser's reply to a notice under section 133(6) of the Income-tax Act, 1961 also confirmed the transaction and the cash payment. The lower authorities did not independently verify or rebut this confirmation, and the absence of a cash component in the agreement, by itself, was insufficient to discredit the explanation. The addition also lacked proper correlation with the actual cash deposits made in the bank account.

Conclusion: The source of the cash deposits stood satisfactorily explained, the addition under section 68 of the Income-tax Act, 1961 was unsustainable, and the assessee succeeded on the substantive ground.

Ratio Decidendi: Where an assessee furnishes contemporaneous evidence and uncontroverted third-party confirmation showing that bank deposits arose from a disclosed transaction, an addition under section 68 of the Income-tax Act, 1961 cannot be sustained merely on suspicion or on the basis of an unverified absence of reflection in the agreement.

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