Unexplained cash deposits: absence of primary evidence defeated the peak credit plea and sustained the addition.

Unexplained cash deposits in a bank account were upheld as taxable because the assessee failed to prove the source of the cash or establish rotation of the same funds. Mere production of cash book and bank book, without primary supporting evidence such as bills or vouchers, was held insufficient to discharge the initial onus. The Tribunal applied the preponderance of probability and human probabilities tests, and found no reliable records to support a peak credit computation. The plea to restrict the addition to peak credit was therefore rejected, and the addition for unexplained deposits sustained.

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Issues: Whether the addition sustained in respect of unexplained cash deposits in the bank account, including the plea for restriction of addition to peak credit, was justified.

Analysis: The assessee did not produce credible material to explain the source of the cash deposits or to establish a rotation of the same funds so as to justify application of the peak credit theory. Mere production of cash book and bank book, without supporting primary evidence such as bills or vouchers, was held insufficient to discharge the burden of proof. The reasoning applied the principle that the initial onus lies on the assessee in respect of unexplained deposits, and that income-tax proceedings are governed by preponderance of probability and the test of human probabilities. In the absence of reliable records enabling a peak credit computation, the plea for limiting the addition to peak credit was rejected.

Conclusion: The addition for unexplained cash deposits was upheld and the assessee's contention regarding peak credit was rejected.

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