Right person, right hands principle bars section 68 addition where trust deposits were not the individual's unexplained income.

Cash deposits in a bank account standing in the name of a trust's unit were not assessable as unexplained income in the individual assessee's hands under section 68, because the account was held and operated for the trust, and the assessee showed he was only an authorised signatory. Affidavit evidence, the trust's statement of affairs, bank records, and the trust's assessment order supported the explanation that the funds belonged to the trust. As no material established that the deposits were the assessee's undisclosed income or that he had beneficial ownership, and the same deposits had already been taxed in the trust's hands, the addition was deleted on the principle of taxing the right person in the right hands.

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Issues: Whether the cash deposit of Rs. 4,94,69,000 in a bank account standing in the name of a trust/unit could be assessed as unexplained income in the individual assessee's hands under section 68 of the Income-tax Act, 1961.

Analysis: The bank account in question was held and operated in the name of M/s KCC Institute of Technology and Management, a unit of Deepak Gupta Education Trust. The assessee produced an affidavit, the trust's statement of affairs, bank records, and the assessment order of the trust to show that he was only an authorized signatory and that the deposits belonged to the trust. No material was brought by the Assessing Officer to establish that the cash deposits represented the assessee's undisclosed income or that he had beneficial ownership of the funds. The same deposits had also been brought to tax in the trust's assessment, and the principle of taxing the right person in the right hands applied.

Conclusion: The addition under section 68 in the assessee's hands was not sustainable, and the deletion of the addition was upheld.

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