2012 (3) TMI 537 - AT - Income Tax

Unexplained credits of the bank account - peak credit addition - Held that - The money deposited in the bank account was withdrawn either on the same day or on subsequent dates. It is seen that the total addition of the aggregate deposits in the bank account after giving benefit of withdrawals is the peak amount and in that case peak amount is to be added. We find that the assessee has maintained a bank account which is admittedly not disclosed to the revenue and there is no doubt that the deposits in this bank account represents undisclosed income of the assessee to be assessed as undisclosed income but qua only the peak amount. The assessee has filed complete statement of peak deposit and withdrawals which is at 1, 87, 247/- and before CIT(A). We are of the view that the CIT(A) has rightly directed the AO to restrict the addition to the extent of peak amount and we confirm the same. This issue of revenue s appeal is dismissed.

Summary

Issues: Appeal against order of CIT(A) directing assessment of peak credit instead of unexplained credits in bank account.

Analysis:
1. The appeal by revenue was delayed by three days, and a condonation petition was filed. The delay was condoned based on the concession given by the Ld. Counsel for the assessee, and the appeal was admitted.

2. The main issue in this appeal was regarding the direction of CIT(A) to assess the peak credit instead of the addition made by the Assessing Officer on account of unexplained credits in the bank account. The Assessing Officer had added &8377; 17.69 lacs as unexplained deposits, consisting of cash and cheque deposits. The CIT(A) directed the AO to restrict the addition to the peak amount.

3. Upon hearing both parties and examining the facts, it was observed that the assessee had filed a statement of peak credit, showing deposits and withdrawals from the bank account. The peak credit as on a specific date was found to be &8377; 1,80,247/-. The deposits in the bank account were withdrawn either on the same day or subsequent dates. After considering the withdrawals, it was determined that the peak amount was &8377; 1,87,247/-. The undisclosed income represented by the deposits in the bank account was to be assessed as undisclosed income, limited to the peak amount.

4. The Tribunal confirmed the direction of CIT(A) to restrict the addition to the peak amount, as the assessee maintained a bank account not disclosed to the revenue. The complete statement of peak deposits and withdrawals supported the determination of the peak amount. Therefore, the appeal of the revenue was dismissed, upholding the decision to assess only the peak credit amount.

5. The order was pronounced in open court on 23.03.2012.