Unexplained bank deposits and estimated income additions deleted where receipts matched business activity and no reasonable basis existed.

Cash deposits in the assessee's bank accounts were held to be linked to regular cold storage business receipts and withdrawals for operating expenses, so the premise of unexplained money under section 69 failed and the addition was deleted. An income estimate at 8% on other bank deposits was also rejected because the audited accounts and surrounding record did not provide a reasonable basis for such estimation, so that addition was deleted as well. The impugned additions were set aside in full.

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Issues: (i) Whether the addition made under section 69 on account of cash deposits in the bank accounts as unexplained money was sustainable. (ii) Whether the addition made by estimating income at 8% on other bank deposits was sustainable.

Issue (i): Whether the addition made under section 69 on account of cash deposits in the bank accounts as unexplained money was sustainable.

Analysis: The assessee carried on cold storage business and the bank statements showed that receipts were followed by withdrawals for operating expenses, with no substantial accumulation in the accounts. On the facts, the deposits were found to be linked to business activity and the premise of unexplained investment was not supported.

Conclusion: The addition under section 69 was deleted.

Issue (ii): Whether the addition made by estimating income at 8% on other bank deposits was sustainable.

Analysis: The assessee's audited accounts reflected very small net profit in relation to large operating receipts and expenses, and the estimate at 8% was found to have no reasonable basis on the record.

Conclusion: The estimated addition was deleted.

Final Conclusion: The impugned additions were set aside and the assessee's appeal succeeded in full.

Ratio Decidendi: Where bank deposits are shown to arise from regular business receipts and withdrawals, and an income estimate lacks a reasonable basis on the record, additions as unexplained income cannot be sustained.

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