Peak credit method applied to bank cash deposits, limiting undisclosed income addition on consistent facts.

Cash deposits in the assessee's bank accounts were treated as undisclosed income, but the addition was held to be restricted by applying the peak credit method. The assessment had been completed under section 144 read with section 147 because the assessee did not comply with the proceedings. As the facts were stated to be the same as in an earlier year, the principle of consistency was applied and the earlier appellate approach to estimate income on peak credit was followed. The Assessing Officer was directed to compute income on that basis, and the appeal was partly allowed in favour of the assessee.

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Issues: Whether the addition of the entire cash deposits as undisclosed income was liable to be restricted by applying the peak credit method.

Analysis: The assessee had made cash deposits in bank accounts and had not complied with the assessment proceedings, resulting in an assessment under section 144 read with section 147 of the Income-tax Act, 1961. In a similar earlier year, the appellate authority had considered it fair and reasonable to estimate income on the basis of peak credit appearing in the bank account and had restricted the addition. As the facts for the year under consideration were found to be the same, the principle of consistency was applied.

Conclusion: The Assessing Officer was directed to estimate the income on the basis of peak credit in the assessee's bank account, and the appeal was partly allowed in favour of the assessee.

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