JUDGMENT

PATHAK, J.:—This appeal, by special leave, is directed against a judgment of the Andhra Pradesh High Court, concerning the scope of Section 271 (1) (c) of the Income Tax Act, 1961.

2. The assessee is an Akbari contractor. It filed a return of its income for the assessment year 1959-60, disclosing a total turnover of Rs. 10,92,132 and an income of Rs. 7,704/-. The Income Tax Officer did not accept the correctness of the return. He found that on 12th December, 1957 and 16th January, 1958 the excess of expenditure over the disclosed available cash was Rs. 17,720/- and Rupees 65,066/- respectively. He also noticed several deposits, totalling Rupees 28,200/-, entered in the names of certain Sendhi shop-keepers. The assessees explanation that the excess expenditure was met from amounts deposited with him by some shop-keepers but not entered in his books was not accepted. The alternative explanation that expenditure incurred earlier had possibly been recorded later was also rejected. In regard to the cash deposits of Rs. 28,200/- the assessee explained that they represented amounts deposited with it as security. That explanation was rejected in so far as deposits totalling Rs. 21,