Reassessment validity and unexplained cash deposits upheld where recorded reasons, material, and lack of source proof supported the additions.

Reassessment was sustained because the assessing authority had relevant AIR material and the recorded reasons showed a prima facie belief that income had escaped assessment; in the absence of a change of opinion, the reopening was within jurisdiction. The addition for unexplained bank deposits was also upheld because the assessee failed to produce confirmations or other corroborative evidence for the stated source of cash. The peak credit method, with telescoping of withdrawals, was treated as a reasonable basis for estimating the unexplained amount, and the addition was maintained.

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Issues: (i) whether the notice issued for reassessment under section 148 was valid; (ii) whether the addition of peak cash deposits of Rs. 5,55,000 in the bank account was justified.

Issue (i): whether the notice issued for reassessment under section 148 was valid.

Analysis: The reassessment was based on AIR information showing substantial cash deposits and on the assessee's non-compliance with verification queries. The recorded reasons were found to show a prima facie belief that income had escaped assessment. Since the assessing authority had relevant material and there was no change of opinion, the reopening was held to be within jurisdiction.

Conclusion: The reassessment notice under section 148 was held to be valid, against the assessee.

Issue (ii): whether the addition of peak cash deposits of Rs. 5,55,000 in the bank account was justified.

Analysis: The assessee claimed that the cash deposits were collected from relatives for her son's marriage, but no confirmations or corroborative evidence were produced. In the absence of proof of source, the burden remained on the assessee to explain the deposits. The peak credit approach with telescoping of withdrawals was treated as a reasonable method of estimating the unexplained amount.

Conclusion: The addition of Rs. 5,55,000 was upheld, against the assessee.

Final Conclusion: The reassessment and the addition based on unexplained peak cash deposits were sustained, and the appeal failed in full.

Ratio Decidendi: Where the assessing authority has relevant material giving rise to a reason to believe that income has escaped assessment, reassessment is valid; unexplained cash deposits in a bank account remain taxable when the assessee fails to prove their source, and a peak credit method may be applied to determine the addition.

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