Cash deposits linked to presumptive business turnover treated as business receipts, not unexplained income, at presumptive rate.

Cash deposits linked to an assessee's already accepted business turnover under section 44AD were treated as business receipts rather than unexplained credits or investments under sections 68 and 69. On that factual basis, the deposits were regarded as prima facie connected with the same business activity, so the presumptive rate was applied instead of adding them as unexplained income. The income from those deposits was therefore to be assessed at 8% as business receipts.

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Issues: Whether the assessee's cash deposits were to be assessed as unexplained credits/investments or as business receipts, and if so, at what rate of income.

Analysis: The assessee had already been assessed on a presumptive basis under section 44AD of the Income-tax Act, 1961 for business turnover. In that factual setting, the cash deposits were treated as prima facie connected with the same business activity rather than as unexplained receipts under sections 68 and 69. The proper course was therefore to apply the presumptive rate to those deposits as business receipts.

Conclusion: The cash deposits were directed to be assessed as business receipts at 8%, and not as unexplained income.

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