Tribunal directs assessing 1/3 peak credit balance for 2008-09, disagrees with CIT(A) on withdrawals

The tribunal allowed the appeal of the assessee for statistical purposes, directing the AO to assess 1/3rd of the peak credit balance in the hands of the assessee for the assessment year 2008-09. The tribunal disagreed with the Ld CIT(A)'s reasoning on certain withdrawals, finding them relevant to the peak credit balance. The issue was restored to the AO for verification of peak credit workings, with the final decision pronounced on 27th November 2019.

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Issues:
- Challenge to order by Ld CIT(A) for assessment year 2008-09
- Validity of reopening of assessment
- Addition relating to cash deposits sustained by Ld CIT(A)

Analysis:
1. Challenge to Ld CIT(A) Order:
- The appellant challenged the order by Ld CIT(A) for the assessment year 2008-09.
- Grounds 1, 6, and 7 were discussed, with ground 6 concerning the levy of interest u/s 234B being deemed consequential.
- Grounds 2 & 3 regarding the validity of reopening of assessment were not pressed by the Ld A.R and were dismissed.
- Remaining grounds focused on the addition related to cash deposits sustained by Ld CIT(A).

2. Cash Deposit Addition:
- The assessee, along with two others, maintained a joint bank account where a sum of Rs. 20,39,000 was deposited during the year under consideration.
- The assessee failed to explain the sources of the deposits and claimed only 1/3rd of the deposit belonged to him.
- The AO made an addition of Rs. 20,39,000 despite the claim.
- An identical addition was made in a previous assessment year, and the ITAT restricted the addition to 1/3rd of the peak amount of deposits.
- The Ld CIT(A) followed the ITAT's order but reduced the undisclosed income to Rs. 18,39,000, directing the AO to assess 1/3rd of this amount in the hands of the assessee.

3. Appeal and Hearing:
- The appellant appealed the Ld CIT(A)'s decision.
- The Ld A.R argued against the observations made by Ld CIT(A) regarding the working of peak credit, presenting discrepancies in the calculations.
- The Ld D.R supported Ld CIT(A)'s order during the hearing.

4. Judgment and Decision:
- The tribunal examined the peak credit workings and discrepancies highlighted by the Ld A.R.
- Withdrawals not considered by Ld CIT(A) were found relevant and should have been included in the peak credit balance.
- The tribunal disagreed with Ld CIT(A)'s reasoning on certain withdrawals and directed the AO to assess 1/3rd of the peak credit balance in the hands of the assessee.
- The tribunal set aside Ld CIT(A)'s observations and restored the issue to the AO for verification of peak credit workings.

5. Final Decision:
- The tribunal allowed the appeal of the assessee for statistical purposes, pronouncing the order on 27th November 2019.

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