2017 (10) TMI 1355 - AT - Income Tax

Tribunal Partially Allows Appeal, Directs AO on Bank Accounts, Upholds Purchase Difference

The Tribunal allowed the appeal in part. It directed the AO to restrict the addition to the combined peak credit balance of undisclosed bank accounts and ... Additions u/s 68 - peak credit balance in the SB accounts - additions against difference in the amount of purchases - Held that:- AO directed to restrict the addition on this issue to the extent of combined peak credit balance of all the 3 bank accounts in question. - The AO is directed to verify the working of peak credit and allow appropriate relief to the assessee on this issue. Additions towards difference in the amount of purchases - Held that:- the said information was confronted by the AO to the assessee pointing out the difference in the amount of purchases and an opportunity was also given to the assesses to explain/reconcile the same. The assessee however failed to explain/reconcile the said difference and this failure continued even during the course of appellate proceedings before the Ld. CIT (A) where the assessee got another opportunity to reconcile/explain the difference in the amount of purchases specifically pointed out by the AO. - Addition confirmed. The appeal of the assessee is partly allowed. Issues Involved:1. Condonation of delay in filing the appeal.2. Addition of peak credit balance in undisclosed bank accounts.3. Addition of agricultural income.4. Addition due to difference in purchases.5. Addition related to Fixed Deposits in the personal balance sheet.Detailed Analysis:Condonation of Delay:The Tribunal noted a delay of 26 days in filing the appeal by the assessee. The assessee filed an application seeking condonation of the delay, citing sufficient cause. The Tribunal, satisfied with the reasons provided and noting no objections from the Revenue, condoned the delay and proceeded to dispose of the appeal on its merits.Addition of Peak Credit Balance:The primary issue in this appeal was the addition of peak credit balances in three undisclosed bank accounts held by the assessee's family members. The assessee argued that these accounts were used for business purposes and only the profit element should be added to the total income. The Tribunal rejected this argument due to a lack of evidence. However, the Tribunal accepted the alternative argument that only the combined peak credit balance should be considered. Citing the decision in ITO vs Uday Shankar Mahawar, the Tribunal directed the AO to restrict the addition to the combined peak credit balance of Rs. 5,44,775, subject to verification.Addition of Agricultural Income:The assessee did not press ground no. 2 regarding the addition of Rs. 1,66,287 as agricultural income. Consequently, this ground was dismissed as not pressed.Addition Due to Difference in Purchases:The AO found a discrepancy of Rs. 78,594 in the purchases made from M/s. Venkatrama Poultries Ltd. The assessee failed to reconcile this difference despite being given opportunities during the assessment and appellate proceedings. The Tribunal found no merit in the assessee's argument that they were not given a chance to cross-examine the supplier, as sufficient opportunities were already provided. Thus, the addition of Rs. 78,594 was upheld.Addition Related to Fixed Deposits:The assessee did not press ground no. 4 regarding the addition of Rs. 1,02,620 related to Fixed Deposits in the personal balance sheet. This ground was also dismissed as not pressed.Conclusion:The appeal was partly allowed. The Tribunal directed the AO to restrict the addition to the combined peak credit balance of the undisclosed bank accounts, subject to verification, and upheld the addition due to the difference in purchases. Other grounds raised by the assessee were dismissed as not pressed. The order was pronounced in the open court on 13th October 2017.