Cash deposits as business receipts require reliable proof; estimated profit alone cannot justify deletion of the addition.

Cash deposits in a business bank account cannot be deleted from addition merely by treating them as turnover and applying an estimated profit rate unless reliable evidence shows they were actual business receipts. Where the books, receipts-and-payments account, and audit compliance are deficient, and the record does not establish that the deposits were sourced from travel agency receipts or passed on to principals in the ordinary course of business, the factual basis for deletion is unsustainable. The matter was therefore remitted for fresh adjudication, with the assessee to substantiate the source of the cash deposits and, if proved as business receipts, the addition to be confined to the income element only.

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Issues: Whether the addition made on account of cash deposits in the assessee's bank account could be deleted by treating the deposits as business receipts and estimating income at 8% of the disclosed turnover, and whether the matter required reconsideration by the Assessing Officer.

Analysis: The assessee had made substantial cash deposits in the bank account, but no material was produced to establish that the deposits were sourced from travel agency receipts. The first appellate authority itself found deficiencies in the books and receipts-and-payments account, including the absence of proper audit and statutory compliance, yet proceeded to infer that the deposits formed part of business turnover and that the income element was already covered by estimating profit at 8%. The absence of reliable evidence linking the deposits to business receipts made the deletion of the addition unsustainable. The record also did not show whether the deposits were passed on to principals or travel operators in the normal course of business, which was a material factual enquiry.

Conclusion: The deletion of the addition was set aside and the matter was remitted to the Assessing Officer for fresh adjudication. If the assessee establishes that the cash deposits formed part of business receipts, the addition is to be confined only to the income element of those receipts.

Final Conclusion: The Revenue succeeded to the extent that the appellate deletion was vacated and the issue was restored for fresh decision, with the assessee given an opportunity to substantiate the source of the cash deposits.

Ratio Decidendi: Cash deposits cannot be treated as business turnover and the corresponding addition cannot be deleted on a mere estimated-profit basis unless the assessee produces reliable evidence establishing that the deposits are in fact business receipts.

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