Appeal partially allowed, limits set on addition, excess amount deleted.

The Tribunal partially allowed the appeal, directing the Assessing Officer to limit the addition to Rs. 3,99,814, comprising the combined peak credit and the Gross Profit rate applied to the total deposits. The remaining addition of Rs. 17,92,286 was deleted.

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Issues Involved:
1. Addition of Rs. 21,92,100 under Section 68 of the Income-tax Act, 1961 as unexplained cash credit.

Detailed Analysis:

Issue 1: Addition of Rs. 21,92,100 under Section 68 of the Income-tax Act, 1961 as unexplained cash credit

Facts of the Case:
The assessee filed a return declaring a total income of Rs. 5,79,480. During scrutiny, it was found that the assessee had not disclosed two bank accounts in Allahabad Bank and Axis Bank, where deposits totaling Rs. 21,92,100 were made. Despite several opportunities, the assessee failed to explain these cash transactions, leading the AO to add Rs. 21,92,100 as unexplained cash credit under Section 68 of the Income-tax Act, 1961. This addition was upheld by the Ld. CIT(A).

Arguments by the Assessee:
The assessee contended that the deposits in the undisclosed bank accounts were part of her grocery business transactions. It was argued that only the Gross Profit (GP) or Net Profit (NP) or peak credit from these accounts should be taxed, not the entire deposits. The assessee relied on previous Tribunal decisions, including Ashok Kr. Paul Vs. ITO and Ghanshyam Agarwal Vs. ITO, where only a percentage of undisclosed receipts was added as income.

Tribunal's Findings:
The Tribunal examined the facts and previous case laws. It was noted that the assessee had two undisclosed bank accounts with regular deposits and withdrawals. The peak credits in these accounts were Rs. 1,76,281 (Allahabad Bank) and Rs. 2,06,690 (Axis Bank). The Tribunal accepted the assessee's argument that the cash flow indicated cross-deposits and withdrawals between the accounts.

Conclusion:
The Tribunal concluded that the combined peak credit of Rs. 2,06,690 should be considered as the undisclosed investment. Additionally, since the assessee was engaged in the grocery business, the GP rate of 8.81% on the total deposits of Rs. 21,92,100 should be applied, amounting to Rs. 1,93,124. Thus, the total addition sustained was Rs. 3,99,814 (Rs. 2,06,690 + Rs. 1,93,124), and the balance addition of Rs. 17,92,286 was directed to be deleted.

Final Judgment:
The appeal was partly allowed. The AO was directed to restrict the addition to Rs. 3,99,814, consisting of the combined peak credit and the GP rate applied to the total deposits. The balance addition of Rs. 17,92,286 was deleted.

Pronouncement:
The order was pronounced in the open court on 08 July, 2020.

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