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Issues involved: Appeal against deletion of addition of unexplained cash credit in bank account u/s 68 of the Income Tax Act, 1961.
The Appellate Tribunal ITAT Ahmedabad heard the appeal against the order of Ld. CIT(A) I, Surat for the assessment year 2008-09. The revenue contended that the Ld. CIT(A) erred in deleting the addition of Rs. 32,68,699/- as unexplained cash credit in the bank account. The case was selected for scrutiny based on cash transactions in Kotak Mahindra Bank. The A.O. noted cash deposits and discrepancies in account details. The assessee claimed the cash deposit was made by another party for share business. The A.O. made additions for cash and cheque deposits, which the Ld. CIT(A) partially deleted based on peak credit theory. The revenue appealed this decision. The Ld. D.R. argued against the relief granted, stating the A.O. had already allowed relief for certain cheque deposits. He contested the application of peak theory for cash deposits. The Ld. A.R. defended the peak theory application, citing acceptance in a subsequent assessment year. He supported the relief for cheque deposits based on bank statements. In response, the Ld. D.R. emphasized the lack of evidence for cash rotation in the present year. After reviewing submissions and evidence, the Tribunal found no issue with the deletion of cheque deposits, as they were traced to legitimate sources. Regarding cash deposits, the Tribunal disagreed with the A.O.'s rejection of peak theory, noting the explanation provided by the assessee. The Tribunal observed the business transactions involving M/s. Beena Enterprises and upheld the addition based on peak credit of Rs. 2.50 lacs. Considering the overall facts, the Tribunal upheld the Ld. CIT(A)'s decision and dismissed the revenue's appeal. In conclusion, the Tribunal dismissed the revenue's appeal, confirming the Ld. CIT(A)'s order.
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