Cash deposit additions limited to profit element where bank entries showed business-like circulation rather than unexplained lump-sum credits.

Cash deposits appearing in a bank account were not treated as fully taxable income where the transaction pattern showed numerous small credits with corresponding debits, indicating business receipts and related purchases rather than a single unexplained deposit. Although the assessee did not establish that the account belonged to someone else, the evidence did not justify taxing the entire deposits as income. The addition was therefore confined to 8% of the total deposits as the profit element.

---

---

Issues: Whether the entire cash deposits reflected in the assessee's bank account were liable to be assessed as income, or only the profit element embedded in those deposits could be brought to tax.

Analysis: The deposits consisted of numerous small credits on different dates, with corresponding debit entries also appearing in the account. Although the assessee failed to produce reliable evidence that the account belonged to any person other than himself, the pattern of transactions indicated business receipts and related purchases rather than a single unexplained lump-sum deposit. In these circumstances, taxing the whole of the deposits was not warranted.

Conclusion: The entire deposits were not treated as income. The taxable addition was restricted to 8% of the total deposits as the profit element, and the assessee's appeal was partly allowed.

---