Unified peak credit applies to seized cash-book records; gross on-money additions and fragmented entries were unsustainable.

Reassessment challenges based on alleged lack of administrative approval, defective reopening satisfaction, and extended limitation were rejected because the approval process and statutory preconditions under sections 149 and 151 were found satisfied. The seized handwritten cash books and digital data, including material linked from third-party premises, were treated as usable against the assessee group in light of statements, admissions, and corroborative records, and objections based on retraction and ownership of premises were not accepted as grounds for total exclusion. For tax computation, the entries were held to represent a single rotating cash pool, so gross additions on on-money receipts and separate additions for V A/c entries were unsustainable. The correct method was a unified peak credit computation with carry-forward of the earlier peak.

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Issues: (i) whether the reassessment and notice process was vitiated for want of valid administrative approval and non-compliance with the reassessment procedure; (ii) whether the approval for reopening and the extended limitation under section 149(1)(b) were invalid for want of proper satisfaction; (iii) whether the seized handwritten cash books and digital data, including materials found from third-party premises, could be used against the assessee; and (iv) whether the on-money receipts and V A/c entries were liable to be taxed on a gross basis or had to be recomputed on a unified peak credit basis.

Issue (i): whether the reassessment and notice process was vitiated for want of valid administrative approval and non-compliance with the reassessment procedure.

Analysis: The notice under section 143(2) was held to have been issued after the requisite administrative approval had been received. The contention that the assessment was void ab initio for lack of prior approval was not accepted. The challenge based on the faceless mechanism and related procedural objections was also not accepted for want of merit.

Conclusion: Decided against the assessee.

Issue (ii): whether the approval for reopening and the extended limitation under section 149(1)(b) were invalid for want of proper satisfaction.

Analysis: The material in possession of the Assessing Officer was held to fall within section 149(1)(b) as books, documents or evidence revealing escaped income represented in the form of entries in books of account. The approval under section 151 was also upheld, there being no proof of non-application of mind. The objection that the statutory preconditions for reopening beyond three years were not satisfied was rejected.

Conclusion: Decided against the assessee.

Issue (iii): whether the seized handwritten cash books and digital data, including materials found from third-party premises, could be used against the assessee.

Analysis: The seized material was found to be connected to the assessee group through contemporaneous statements, admissions, and corroborative features in the regular records. The fact that certain premises were not owned by the assessee did not negate possession and control for search purposes, and the seized materials were treated as belonging to the assessee group. The objections based on retraction, third-party denials, and lack of independent corroboration were not accepted to the extent they sought complete exclusion of the seized material.

Conclusion: Decided against the assessee.

Issue (iv): whether the on-money receipts and V A/c entries were liable to be taxed on a gross basis or had to be recomputed on a unified peak credit basis.

Analysis: The seized digital cash book was treated by the Assessing Officer himself as a common pool of cash movements. Once the Department had relied on the same record to treat the entries as circulating funds and had also proceeded on the basis that the assessee was the owner of those funds, the entries could not be artificially split into separate silos for gross taxation. The Court held that the correct method was to integrate all entries in a single chronological ledger and compute only the unified peak, with the opening peak of the earlier year to be carried forward and only the incremental peak of the year taxed. Separate gross additions on on-money receipts and separate additions under section 69A for V A/c entries were therefore unsustainable.

Conclusion: Decided in favour of the assessee on the method of computation and against the Revenue on the gross additions.

Final Conclusion: The jurisdictional and reopening challenges failed, but the substantive additions were not sustained on a gross or fragmented basis. The income was directed to be recomputed by adopting a single unified peak credit approach across the seized cash-book records, and the Revenue's appeals were rejected.

Ratio Decidendi: Where seized material shows a single rotating cash pool and the Revenue itself relies on that common pool for jurisdiction and addition, the same material must be assessed as one integrated ledger and only the unified peak credit, not fragmented gross receipts or isolated entries, can be brought to tax.

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