Tribunal partially allows appeal, remits cash deposit issue, upholds plot purchase addition, emphasizes peak credit treatment.

The appeal was partly allowed with the Tribunal setting aside the order on the first issue related to cash deposits in the bank account and remitting it to the Assessing Officer for determining the peak credit. The Tribunal upheld the addition towards the purchase of the plot, emphasizing the treatment of peak credit and investments separately.

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Issues: Confirmation of addition of cash deposits in bank account under section 69 and confirmation of addition towards purchase of plot.

Analysis:

Issue 1: Addition of Cash Deposits in Bank Account
The appeal pertains to the confirmation of an addition of Rs.7,79,175 made by the Assessing Officer under section 69 towards cash deposits in the bank account. The Tribunal noted that during a survey under section 133A, documents related to properties/investments were found, leading to the issuance of a notice under section 148. The assessment finalized the total income at Rs.10,33,990, later rectified to Rs.10,63,990. The Tribunal previously directed the AO to provide Xerox copies of impounded documents and evidence before making the assessment. The AO, upon reviewing the bank account, observed cash deposits totaling Rs.7,79,175. The assessee claimed the deposits were from business activities, but the AO was not convinced, leading to the addition. The Tribunal held that only the peak credit should be charged to tax, not all deposit entries, and remitted the matter to the AO to determine the peak credit and make additions accordingly.

Issue 2: Addition towards Purchase of Plot
The second issue involved the confirmation of an addition of Rs.31,990 towards the purchase of a plot. The assessee bought a plot and spent Rs.31,990 without providing a source of investment, leading to the addition by the AO, which was upheld in the first appeal. The Tribunal considered the contention that the plot purchase should be sourced from bank withdrawals, but as only the peak credit was to be included in total income, the claim was not accepted. The Tribunal held that once the peak credit is considered, all withdrawn amounts were presumed to be re-deposited, and any claim of utilization elsewhere would adjust the peak balance accordingly. Consequently, the addition of Rs.31,990 was upheld.

In conclusion, the appeal was partly allowed, with the Tribunal setting aside the order on the first issue and remitting it to the AO for determining the peak credit and making additions accordingly. The addition towards the purchase of the plot was upheld, emphasizing the treatment of peak credit and investments separately.

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