Unexplained cash credit addition fails where bank deposits are traced to business receipts and the Form 26AS figure is incorrect.

Cash deposits cannot be treated as unexplained cash credit where the assessment rests on a or revised Form 26AS entry and the assessee's books, turnover details, and bank deposit particulars show that the deposits came from business receipts. The Tribunal found that the factual foundation for invoking section 68 was erroneous because the correct cash deposit figure was materially different from the figure originally relied on, and the audited accounts supported the explanation of cash sales of chicken. In these circumstances, the addition was not sustainable and was deleted.

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Issues: Whether the addition made on account of cash deposits in the bank account as unexplained cash credit could be sustained when the underlying Form 26AS entry was found to be and the deposits were explained as cash sales.

Analysis: The assessment was founded principally on Form 26AS, which initially reflected a higher cash deposit figure, but the material placed before the Tribunal showed that the entry had been revised and that the correct cash deposit figure was materially different. The assessee's audited accounts, turnover details, and month-wise bank deposit particulars indicated that the deposits were linked to business receipts from sale of chicken. On that basis, the foundation for treating the entire amount as unexplained cash credit was held to be erroneous, and the absence of effective compliance before the appellate authority did not justify sustaining an addition based on wrong facts.

Conclusion: The addition under section 68 was not sustainable and was directed to be deleted, in favour of the assessee.

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