Reassessment and estimated-profit addition upheld where undisclosed bank deposits and accepted turnover justified reopening and margin-based computation.

Reassessment under Sections 147 and 148 was treated as valid because the bank deposits were not disclosed in the original return, reasons were recorded before notice, and the required approval was obtained, so no legal infirmity was found in the reopening. On the addition for cash deposits, the assessee had accepted business turnover and a profit rate of 12.7% for the relevant accounts; the disputed deposits were accordingly treated as business turnover to that extent, and the balance was recomputed on the same margin. The first appellate authority's restriction of the addition to 12.7% was sustained, and no interference was called for.

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Issues: (i) Whether the reassessment initiated under Section 147 read with Section 148 of the Income-tax Act, 1961 was liable to be interfered with; (ii) Whether the addition made on account of cash deposits in bank accounts was required to be restricted on an estimated profit basis.

Issue (i): Whether the reassessment initiated under Section 147 read with Section 148 of the Income-tax Act, 1961 was liable to be interfered with.

Analysis: The assessee's bank deposits were not disclosed in the original return, and reasons were recorded before issuance of notice. The reassessment was based on information indicating escapement of income and was proceeded with after obtaining the requisite approval. No legal infirmity in the reopening was found.

Conclusion: The reassessment proceedings were upheld, and the challenge to reopening failed.

Issue (ii): Whether the addition made on account of cash deposits in bank accounts was required to be restricted on an estimated profit basis.

Analysis: The assessee itself had admitted business turnover and profit at 12.7% in respect of the relevant accounts. The disputed cash deposits were treated as part of business turnover to the extent accepted, and the balance was re-computed by applying the same profit rate. The restriction of the addition by the first appellate authority was found to be justified.

Conclusion: The restriction of the addition to 12.7% of the disputed amount was sustained.

Final Conclusion: No interference was called for with the first appellate order, and the assessee did not succeed on either the reopening or the quantum addition.

Ratio Decidendi: Where bank deposits are linked to undisclosed business transactions and the assessee has itself accepted a profit rate for part of the turnover, the addition may be sustained on an estimated profit basis and reassessment based on recorded reasons and approved notice remains valid.

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