2017 (8) TMI 1532 - AT - Income Tax

Tribunal allows appeal due to delay, questions peak credit basis computation, emphasizes HUF income additions assessment

Shri V. Srinivasan (HUF) Versus The Income Tax Officer, Ward 2, Villupuram.

Shri V. Srinivasan (HUF) Versus The Income Tax Officer, Ward 2, Villupuram. - TMI Issues: Delay in filing appeal, Addition on peak credit basis, Peak credit computation, HUF status and co-parceners.Delay in filing appeal:The appeal was filed by the assessee with a delay of 42 days. The assessee requested condonation of the delay, citing oversight as the reason for missing the due date. The Ld.AR argued for condonation, emphasizing the merits of the case. The Ld. DR objected to the delay. The tribunal, acknowledging the lethargic attitude of the assessee, decided to condone the delay in the interest of justice. The appeal was then heard on its merits.Addition on peak credit basis:The core issue revolved around the addition made by the Ld.AO and further enhanced by the Ld.CIT(A) on peak credit basis. The assessee, a HUF engaged in tanker lorry operations and trading, had undisclosed cash deposits in a bank account. The Ld.AO considered these deposits as unaccounted income, leading to an initial addition of &8377; 23,14,320. The Ld.CIT(A) increased this amount to &8377; 38,22,700. The assessee contended that the deposits were from jewel loans and cash withdrawals from a credit account, disputing the peak credit computation by the Ld.CIT(A).Peak credit computation:The tribunal found the Ld.CIT(A)'s computation of peak credit based on cumulative cash deposits to be inappropriate. In contrast, the Ld.AO's calculation, considering the peak credit at any given point in the bank account during the assessment year, was deemed more suitable. The tribunal noted the lack of evidence from the assessee to support the claim that the cash deposits were from jewel loans or cash withdrawals. Despite this, recognizing the HUF status and the financial positions of co-parceners, the tribunal remitted the matter back to the Ld.AO for fresh consideration.HUF status and co-parceners:Given the HUF status of the assessee and the presence of co-parceners, the tribunal highlighted the importance of considering the financial positions of all members while making additions to the HUF's income. This factor played a significant role in the decision to send the matter back to the Ld.AO for reevaluation.In conclusion, the tribunal allowed the appeal of the assessee for statistical purposes, remitting the issue of peak credit computation back to the Ld.AO for a fresh assessment. The judgment emphasized the need for proper consideration of peak credit and the financial dynamics within an HUF while determining additions to income.