2014 (12) TMI 1361 - AT - Income Tax

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

Shri Vishal R. Chugh Versus ITO, ward-3 (1), Surat.

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 ... Unaccounted income deposited in undisclosed bank account - Whether only peak amount worked out, in accordance with accepted principles of accountancy, should have been added as income in the hands of the assessee - HELD THAT:- We are unable to accept the stand of the Revenue that the assessee should be put to prove that the there was a direct nexus between the debit and credit entries in the bank account of the assessee with ICICI Bank. Assessee claimed that the peak amount in this case, with regard to ICICI Bank comes to ₹ 2,97,297/-. In these facts of the case, we restore the issue in the grounds of the appeal of the assessee to the file of the AO with direction to make the addition of only the peak amount in the bank account of the assessee with ICICI Bank. The claim of the assessee that the peak amount comes to ₹ 2,97,297/- should be verified by the AO and the after verification, the correct figure of peak amount may be added as income in the hands of the assessee. We direct accordingly, and the ground of the appeal of the assessee is partly allowed. Issues:Addition of undisclosed income in bank accountAnalysis: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.