Unexplained bank deposits may be assessed on an estimated income basis where business receipts are plausible and books are absent.

Where bank deposits are explained as business receipts and ATM withdrawals but no books of account are maintained, the unexplained-money addition need not be sustained in full if the explanation is not specifically rebutted. On the available facts, the income element was estimated at 12% of the total bank deposits instead of treating the whole credit as unexplained. The addition was therefore restricted to estimated income of Rs. 5,35,215, and the balance was deleted, giving partial relief to the assessee.

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Issues: Whether the addition made towards bank credits under the unexplained money provision was sustainable in full, and whether the income from the assessee's trading activity could be reasonably estimated on the basis of the deposits.

Analysis: The assessee explained the cash deposits as arising from business receipts and ATM withdrawals, but no books of account were maintained. The Tribunal noted that the explanation regarding source of deposits had not been effectively rebutted with specific reasons, yet the entire credit could not be accepted as unexplained in the facts of the case. On the material available, the Tribunal adopted an estimation approach and determined that income should be computed at 12% of the total bank deposits.

Conclusion: The addition was sustained only to the extent of estimated income of Rs. 5,35,215/-, and the balance addition was deleted, resulting in partial relief to the assessee.

Final Conclusion: The assessment was modified by restricting the tax consequence to estimated income from the deposits, with the remaining addition set aside.

Ratio Decidendi: Where business deposits are found in bank accounts but books of account are absent, the unexplained component may be replaced by a reasonable estimation of income on the available facts rather than sustaining the entire credit as addition.

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