Unexplained Bank Credits: Tribunal attributes a reasonable commission of deposits as taxable income instead of treating entire deposits.

Whether entire bank credits in an account maintained with a cooperative society constitute the assessee's unexplained income or only a reasonable commission was the core issue. The Tribunal, prioritising statutory and factual findings from the Investigation Wing about accommodation/angadia-style operation and absence of attributable assets or lavish expenditure, applied precedents that attribute only a small commission where real beneficiaries are unidentified. Exercising discretion on the facts, the Tribunal directed computation of taxable income by adopting a fixed reasonable rate of commission on deposits rather than treating full deposits as the assessee's income.

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Issues: Whether the addition of entire cash/credits in the bank account maintained with Renuka Mata Multi State Urban Co-operative Credit Society Ltd. can be treated as the assessee's unexplained income or a reasonable proportion (commission) of deposits should be adopted as taxable income.

Analysis: The Assessing Officer reopened assessment under Section 147 of the Income-tax Act, 1961 and treated bank credits as unexplained income. The CIT(A) upheld the addition for failure to provide documentary evidence. The Tribunal examined investigation reports regarding modus operandi of the Society (operation on an angadia/accommodation entries model) and relied on appellate precedents where only a small percentage of deposits was treated as commission income of the account-holder. Considering (i) absence of assets or lavish expenditure attributable to the alleged income, (ii) the Investigation Wing's findings that many account-holders were mere name-lenders and accounts were operated by real beneficiaries, and (iii) relevant judicial decisions that adopted low commission rates where beneficiaries could not be identified, the Tribunal concluded that taxing the entire deposits as the assessee's income would be unjust. Applying the Tribunal's discretion in the facts of this case, and following comparable precedents, the Tribunal fixed a reasonable rate of income to be attributed to the assessee.

Conclusion: The appeals are partly allowed. The Assessing Officer is directed to compute the assessee's income by adopting 2% of the deposits/credits in the bank account maintained with Renuka Mata Multi State Urban Co-operative Credit Society Ltd. instead of treating the entire deposits as the assessee's income.

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