2011 (6) TMI 905 - AT - Income Tax

Tribunal affirms CIT(A)'s decision on unexplained cash credits under I.T. Act

The Tribunal upheld the CIT(A)'s decision to partially delete the addition of unexplained cash credits under section 68 of the I.T. Act for the assessment ... - Issues involved: Determination of unexplained cash credits u/s 68 of the I.T. Act, application of peak credit method, consideration of additional evidence by CIT(A) u/s Rule 46A.Summary:1. The Department's appeal for the assessment year 2007-08 challenged the CIT(A)'s decision on unexplained cash credits. The AO added the entire cash deposits in the bank account as income u/s 68 of the I.T. Act based on AIR information. The CIT(A) partially deleted the addition, confirming only a portion of it. 2. The CIT(A) restricted the addition to a certain amount, citing the peak credit method for unexplained cash credits. The Department contested this decision, arguing that the peak credit method was not applicable based on bank account transactions. The assessee's counsel supported the CIT(A)'s decision.3. The assessee, engaged in manufacturing, deposited cash in a bank account, explaining it as business-related transactions. The AO considered the deposits as income from undisclosed sources. The CIT(A) relied on the peak credit method and Tribunal decisions to make a partial deletion of the addition.4. Various legal precedents were cited by both parties, including cases like 'Jhamatmal Takhatmal Kirana Merchants v. CIT' and 'Bhaiyalal Shyam Behari v. CIT'. The Tribunal upheld the CIT(A)'s decision, emphasizing the application of the peak credit method in this case.5. The Tribunal found the CIT(A)'s order justified, as the bank transactions indicated the need for applying the peak credit method. The decision confirmed the partial deletion of the addition, dismissing the Department's appeal.Separate Judgement: None.