Agricultural cash deposits cannot be added as unexplained income when the taxpayer's explanation remains unrefuted.

Cash deposits could not be added as unexplained income where the assessee's explanation that they arose from agricultural floriculture operations was not disproved. The verification report accepted that agricultural activity was carried on, and no contrary evidence showed any other source of income or established an undisclosed source for the deposits. An addition based only on doubt and suspicion was therefore not sustainable, and the addition was deleted.

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Issues: Whether the addition made on account of cash deposits by disbelieving the assessee's claim of agricultural income from floriculture operations was sustainable.

Analysis: The assessee's explanation for the cash deposits was contained in the reply to the show-cause notice and was not disproved. The verification report accepted that agricultural activities were being carried on, and no contrary evidence was brought to show any other source of income or to establish that the deposits were from an undisclosed source. The disallowance was founded only on doubt and suspicion, which was insufficient to sustain the addition.

Conclusion: The addition was deleted and the assessee succeeded on the issue.

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