Business turnover treatment of bank deposits prevents full taxation as unexplained investment under section 69.

Bank deposits that are supported by disclosed gross receipts and treated as business turnover cannot be assessed in full as unexplained investment under section 69. Where the Assessing Officer has already estimated business receipts and applied a reasonable profit rate, the deposits should be viewed in the context of turnover, with taxation limited to the profit element rather than the entire cash credits. On these facts, the addition under section 69 was not justified and the deletion of the bulk addition was upheld, so the Revenue's challenge failed.

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Issues: Whether the amount deposited in the bank account was liable to be treated as unexplained investment under section 69 or, instead, as part of the assessee's turnover to be assessed by applying a reasonable profit rate, and whether the Revenue's appeal against deletion of the addition was sustainable.

Analysis: The assessee had disclosed gross receipts exceeding the bank deposits, and the Assessing Officer himself had estimated the business receipts and applied a profit rate in the assessment order after declining the applicability of section 44AD. On these facts, the deposits could not be viewed in isolation as unexplained money when they formed part of the business turnover. The reasoning was in line with the view that where cash deposits represent business receipts, the proper course is to assess only the profit element rather than bring the entire deposits to tax as unexplained investment.

Conclusion: The addition under section 69 was not justified, and the deletion of the bulk addition was upheld. The Revenue's appeal failed.

Ratio Decidendi: Where bank deposits are found to represent business turnover and the profit element has already been estimated, the entire deposits cannot be assessed as unexplained investment under section 69 of the Income-tax Act, 1961.

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