Tribunal limits undisclosed bank account income to verified peak amount, rejects Revenue's direct nexus requirement.

The Tribunal partially allowed the appeal against the order of the CIT(A) for the Assessment Year 2009-2010. It was determined that only the verified peak amount of Rs. 2,97,297 should be added as income in the undisclosed bank account, rather than the entire sum of Rs. 26,77,745. The Tribunal disagreed with the Revenue's requirement for a direct nexus between the bank account entries and instructed the AO to verify and add the correct peak amount as income, remanding the issue for further assessment.

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Issues:
Addition of undisclosed income in bank account

Analysis:
The appeal was filed against the order of the CIT(A) for the Assessment Year 2009-2010. The only ground of appeal was related to the addition of Rs. 26,77,745 as unaccounted income deposited in an undisclosed bank account. The assessee contended that only the peak amount should have been added as income, not the entire amount. The counsel argued that the peak amount in the bank account with ICICI Bank was only Rs. 2,97,297, contrary to the high addition made by the AO. The DR opposed this argument, stating that the assessee failed to explain the peak theory before the AO and establish a direct nexus between the credit and debit entries in the bank account.

Upon reviewing the submissions and evidence, the Tribunal found that only the peak amount, calculated in accordance with accounting principles, should be treated as income. The Tribunal disagreed with the Revenue's stance that the assessee must prove a direct nexus between the entries in the bank account. The counsel reiterated that the peak amount with ICICI Bank was Rs. 2,97,297. Consequently, the Tribunal decided to remand the issue back to the AO with directions to add only the verified peak amount as income. The AO was instructed to verify the claim of the assessee and add the correct peak amount as income, thereby partially allowing the ground of appeal.

In conclusion, the appeal was partly allowed, and the Tribunal directed the AO to add only the verified peak amount of Rs. 2,97,297 as income in the hands of the assessee.

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