Unexplained cash credit under section 68 fails where balance sheet cash and accumulated funds support capital introduction.

An addition for unexplained cash credit under section 68 could not be sustained where the assessee's balance sheet showed available cash, the returned income was substantial, and the long-standing earning history supported the existence of accumulated funds for capital introduction. On the overall financial record, the explanation for the cash introduced into the capital account was accepted, and the addition was directed to be deleted.

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Issues: Whether the addition made under section 68 of the Income-tax Act, 1961 in respect of cash introduced into the capital account was sustainable.

Analysis: The assessee's balance sheet showed availability of cash, and the returned income was substantial. The fact that the assessee had been earning income for many years also supported the inference that sufficient accumulated cash was available for capital introduction. On the overall facts, the explanation for the cash introduction was found acceptable.

Conclusion: The addition under section 68 was held to be unsustainable and was directed to be deleted.

Ratio Decidendi: Where the record shows availability of cash and the surrounding financial profile supports the existence of accumulated funds, an addition for cash introduced into capital account cannot be sustained as unexplained cash credit.

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