The correct answer is option 'B' - Deducted.

When reconciling the Cash Book with the Pass Book, it is important to identify any discrepancies and make the necessary adjustments in order to bring the balances into agreement. One common discrepancy that may occur is the undercasting of the receipt side of the Cash Book. Undercasting refers to the situation where the total amount of receipts recorded in the Cash Book is lower than the actual amount received.

To rectify this error, the undercast amount needs to be added to the balance as per the Cash Book. However, when preparing the reconciliation statement and adjusting the Pass Book balance, the treatment of undercasting is the opposite.

Here is the detailed explanation of why undercasting on the receipt side of the Cash Book is deducted:

1. Starting point is the Pass Book balance:
- The Pass Book balance is considered as the starting point for the reconciliation process. It represents the balance as per the bank's records.

2. Purpose of reconciliation:
- The purpose of reconciliation is to identify and rectify any differences between the Cash Book balance and the Pass Book balance.

3. Identifying undercasting:
- During the reconciliation process, if it is discovered that there is an undercast on the receipt side of the Cash Book, it means that the actual amount of receipts is higher than what is recorded in the Cash Book.

4. Adjusting the Cash Book balance:
- In order to bring the Cash Book balance in line with the actual receipts, the undercast amount needs to be added to the Cash Book balance.

5. Adjusting the Pass Book balance:
- However, when preparing the reconciliation statement and adjusting the Pass Book balance, the treatment of undercasting is the opposite.
- Since the undercast amount represents a discrepancy between the Cash Book balance and the Pass Book balance, it needs to be deducted from the Pass Book balance.

Therefore, the treatment of undercasting of the receipt side of the Cash Book when reconciling with the Pass Book is to deduct the undercast amount from the Pass Book balance. This adjustment ensures that the balances of both books are brought into agreement.