Section 68 cash deposits partly explained, with unsupported income explanation rejected and addition sustained in part.

Cash deposits in a bank account were examined under section 68, with the assessee offering inconsistent explanations and failing to produce supporting evidence before the lower authorities. A later claim that the deposits represented labour charges from gold ornament work was not substantiated by credible material, so the explanation was not accepted in full. However, in light of the surrounding facts and the nature of the deposits, the Tribunal accepted that some cash could reasonably have been available on hand. The addition was therefore sustained only partly, with a portion of the deposits treated as explained and the balance maintained.

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Issues: Whether the addition made under section 68 for cash deposits in the bank account was fully sustainable, or whether part of the deposits stood explained so as to warrant partial deletion.

Analysis: The assessee initially offered inconsistent explanations for the source of the cash deposits and failed to produce supporting material before the lower authorities. Before the Tribunal, a fresh explanation was advanced that the cash represented labour charges from gold ornament work, but no credible evidence was produced to substantiate the generation of such income. At the same time, considering the surrounding facts and the nature of the deposits, the Tribunal accepted that the assessee could reasonably have had some cash on hand. On that basis, the addition was not deleted in full, but a part of the deposits was treated as explained on an basis.

Conclusion: The addition under section 68 was sustained in part and reduced by Rs. 2,00,000, with the balance addition of Rs. 2,60,000 maintained.

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