2015 (1) TMI 1334

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....he assessee to a sum of Rs. 16,36,060 from the original sum of Rs. 6,30,89,413. Thus, the relief granted to the assessee was for a sum of Rs. 6,14,53,353. Aggrieved by the order of the Tribunal, the assessee has come up in appeal. 2. Mr. Poddar, learned senior advocate appearing on behalf of the assessee, submitted that the Tribunal erred in not applying the peak credit theory to the case of the assessee. He submitted that in this case the opening balance as per the bank statement was a sum of Rs. 12 lakhs. If the aforesaid sum of Rs. 12 lakhs is to be treated as an unexplained entry, then the sum of Rs. 12 lakhs may be taxed but that becomes the real income of the assessee on the basis whereof the further transactions can be explained and....

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.... addition is made to the book profits during an assessment proceedings, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee. That income, although commonly described as "intangible", is as much a part of his real income as that disclosed by his account books. It has the same concrete existence. It could be available to the assessee as the book profits could be. In Lagadapati Subba Ramaiah v. CIT [1956] 30 ITR 593 (AP), the Andhra Pradesh High Court adverted to this aspect of secret profits and their actual avail ability for application by the assessee. That view was affirmed by the Madras High Court in S. Kuppuswami Mudaliar v. CIT [1964] 51 ITR 757 (Mad). There can be no esca....

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....h deficit or cash credit cannot reasonably be related to the amount covered by the intangible addition but must be regarded as pointing to the receipt of undisclosed income earned during the assessment year under consideration. It is open to the Revenue to rely on all the circumstances pointing to that conclusion. What these several circumstances can be is difficult to enumerate and indeed, from the nature of the enquiry, it is almost impossible to do so. In the end, they must be such as can lead to the firm conclusion that the assessee has concealed the particulars of his income or has deliberately furnished inaccurate particulars. It is needless to reiterate that in a penalty proceeding the burden remains on the Revenue of proving the exi....

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....[2005] 276 ITR 38 (All), wherein the following views were expressed (page 40) : "For adjudicating upon the plea of peak credit the factual foundation has to be laid by the assessee. He has to own all cash credit entries in the books of account and only thereafter the question of peak credit can be raised." 7. Mr. Saraf, relied upon the judgment in the case of Kale Khan Mohammed Hanif v. CIT reported in [1963] 50 ITR 1 (SC), which was also taken into account by the learned Tribunal. 8. We have considered the rival submissions advanced by the learned advocates appearing before us. We are inclined to think that Mr. Saraf is correct in his submission that the factual foundation for applying the theory of peak credit was not laid by the asse....