Tribunal affirms peak credit amount as unexplained cash credit despite explanations from assessee

The Tribunal upheld the Commissioner's decision to consider only the peak credit amount of Rs. 20,27,531 as unexplained cash credit in the appeal against the addition of funds in the savings bank account. Despite the assessee's explanation of withdrawing and redepositing money at different locations, the Tribunal found it lacking credibility and upheld the Commissioner's order. The appeal was dismissed, affirming the direction to take only the peak credit amount as unexplained cash credit.

---

---

Issues:
Appeal against addition of unexplained cash credit of Rs. 20,27,531.

Analysis:
The appeal pertains to the assessment year 2010-11 and involves the addition of Rs. 20,27,531 as unexplained cash credit. The assessee, a director in a company, deposited a total of Rs. 32,39,731 in his savings bank account with Axis Bank. The Assessing Officer disallowed this amount as unexplained cash credit, but on appeal, the Commissioner of Income-tax (Appeals) directed the Assessing Officer to consider only the peak credit of Rs. 20,27,531. The assessee claimed that the withdrawn amount was redeposited at different locations, but the Departmental representative argued that there was no evidence to support this claim. The Tribunal noted that the money withdrawn by employees of the company from the assessee's account was considered the source for subsequent deposits. The Tribunal upheld the Commissioner's decision to take only the peak credit amount, dismissing the appeal.

The key contention was whether the assessee's explanation regarding the withdrawal and redeposit of funds from different locations was credible. The Tribunal observed that the assessee's claim of withdrawing money from Chennai and redepositing it in Tuticorin, and vice versa, lacked credibility. Despite the lack of evidence supporting the redeposit claim, the Commissioner concluded that the money withdrawn was available for subsequent deposits. The Tribunal agreed with the Commissioner's decision to consider only the peak credit amount of Rs. 20,27,531, as directed.

The Tribunal analyzed the facts, noting that the assessee issued cheques to employees who withdrew money from his account, but the purpose of these transactions was unclear. The Tribunal questioned the rationale behind withdrawing funds from one location to redeposit them in another, finding the explanation implausible. Ultimately, the Tribunal upheld the Commissioner's order, confirming the direction to take only the peak credit amount as unexplained cash credit. The appeal was dismissed, and the Commissioner's decision was upheld.

In conclusion, the Tribunal found no reason to interfere with the Commissioner's order regarding the addition of unexplained cash credit. The Tribunal confirmed the decision to consider only the peak credit amount of Rs. 20,27,531, as directed by the Commissioner. The appeal was dismissed, and the order was pronounced on 15th May 2015 in Chennai.

---