Benami bank accounts and peak credit computation turn on search record support and no double addition of disclosed income

Post-search investigative material alone cannot sustain a benami finding for bank accounts unless it is supported by the search record; the note states that accounts in the names of Sangam Traders and Pramod Traders were not treated as proved benami on that basis. It also explains that peak credit must be computed from the accounts actually operated during the relevant period, and a voluntary disclosure already accounted for cannot be added again. The result noted is partial relief for the Revenue through adoption of the higher peak credit, while the separate proposed addition for the disclosed amount was rejected as duplicative.

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Issues: (i) Whether the accounts in the names of Sangam Traders and Pramod Traders could be treated as benami accounts of the assessee on the basis of the material relied upon. (ii) Whether the peak credit and the additional disclosure of Rs. 2 lakhs were to be added in computing the undisclosed income.

Issue (i): Whether the accounts in the names of Sangam Traders and Pramod Traders could be treated as benami accounts of the assessee on the basis of the material relied upon.

Analysis: The finding treating those two accounts as benami could not be sustained because the material relied upon was not material found during the search. It was material collected during post-search investigation, and the conclusion that the accounts belonged to the assessee was therefore not supported by the search record.

Conclusion: The conclusion that the Sangam Traders and Pramod Traders accounts were benami accounts of the assessee was upheld against the Revenue.

Issue (ii): Whether the peak credit and the additional disclosure of Rs. 2 lakhs were to be added in computing the undisclosed income.

Analysis: The peak credit for the relevant period had to be worked out on the basis of the accounts actually operated during that period. The material on record justified adoption of the larger peak credit figure, and the voluntary disclosure of Rs. 2 lakhs could not again be added because it had already been accounted for in the computation process.

Conclusion: The Revenue succeeded on the peak credit issue, but failed on the addition of Rs. 2 lakhs.

Final Conclusion: The appeal succeeded only to the extent of restoration of the higher peak credit figure and failed on the proposed addition of Rs. 2 lakhs, leaving the Revenue with only partial relief.

Ratio Decidendi: Post-search investigative material, by itself, cannot sustain a finding that search-discovered bank accounts are benami, and peak credit must be computed on the basis of the period and accounts actually established on record without duplicating an amount already disclosed and accounted for.

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