2011 (12) TMI 740 - AT - Income Tax

Tribunal limits addition to peak credit amount for unexplained deposits, remands for verification.

The Tribunal allowed the assessee's appeal for statistical purposes, restricting the addition to the peak credit amount of Rs. 16,15,261 for unexplained ... - Issues involved: Assessment of unexplained cash deposits in bank account u/s 69A of the Income Tax Act for the assessment year 2006-07.Summary:The appeal was filed by the assessee against the order of the Commissioner of Income-Tax (Appeals)-XXX, Kolkata for the assessment year 2006-07. The Assessing Officer noted that the assessee had deposited cash of Rs. 15,98,356 into a bank account with Standard Chartered Bank during the period 01.04.2005 to 31.03.2006. The assessee explained that the bank account was controlled by a third party as the assessee was a broker agent of a firm and only received commission. However, the Assessing Officer raised queries regarding the business activity and made an addition of Rs. 15,98,356 due to lack of verifiable details.The CIT(A) confirmed the Assessing Officer's action, stating that the assessee failed to provide evidence of business activity to substantiate the deposits in the bank account. The assessee then presented a bank account statement showing regular cash deposits and withdrawals for business purposes. Citing previous tribunal decisions, the assessee argued that only the peak credit should be added, not the entire deposits.The Tribunal considered the submissions and held that if there are regular deposits and withdrawals from an undisclosed bank account, only the peak credit can be added if both transactions are from the same source. Referring to previous cases, the Tribunal restricted the addition to the peak credit amount of Rs. 16,15,261, emphasizing the need for verification of peak credit statement by the Assessing Officer. As no other unexplained investments were found, the withdrawals were presumed to be utilized for payments, and deposits were likely from sale proceeds. The matter was remanded to the Assessing Officer for examination of the peak credit statement.In conclusion, the appeal filed by the assessee was allowed for statistical purposes, and the order was pronounced on 30/12/2011.