Peak cash deposits treated as business turnover; only the profit element was taxable, not the full bank balance.

Peak cash deposits in a bank account from a small cash-based dairy business were treated as business turnover rather than unexplained investment, because the account showed regular cash deposits and withdrawals and identical deposits had been accepted as turnover in the preceding year. Although the assessee's documentary support for the stated remittance explanation was incomplete, the principle of consistency and the business pattern justified taxing only the profit element, not the entire peak balance. The addition made on account of unexplained peak cash deposits was therefore deleted.

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Issues: Whether the addition made by treating the peak cash deposits in the assessee's bank account as unexplained investment was sustainable, or whether the deposits had to be treated as business turnover assessable only to the extent of profit element.

Analysis: The assessee's explanation that the cash deposits represented receipts from business activity was not fully supported by documentary proof as regards alleged remittance to the society. However, the record showed regular cash deposits and withdrawals in the bank account, the assessee carried on a small cash-based dairy business, and in the preceding assessment year identical bank deposits had been accepted as business turnover. In these circumstances, the principle of consistency supported treating the deposits as turnover of the business rather than as unexplained peak investment. Following the cited tribunal view, only the profit element could be assessed, not the entire peak balance.

Conclusion: The addition of the peak cash deposit as unexplained investment was deleted and the assessee succeeded on this issue.

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