2015 (5) TMI 1077 - AT - Income Tax

Unexplained cash credit - peak credit addition - Held that - The assessee issued cheques in favour of one Shri Esakki Muthu and Shri Chermakani, both are employees of M/s. Jenson Enterprises P. Ltd. The reason for issuing cheques was not known. The fact remains that monies from the assessee s savings bank account with Axis Bank were withdrawn by these two employees on the basis of the cheques issued by the assessee. The assessee claims that he was withdrawing the money from Chennai and redepositing at Tuticorin. When the assessee could withdraw at Tuticorin itself from the very same savings bank account, it is not known why this amount was withdrawn from Chennai and taken to Tuticorin for redeposit. Similarly, the money from the very same savings bank account was withdrawn from Tuticorin and was used to deposit in Chennai. Though this kind of statement is unbelievable, the Commissioner of Income-tax (Appeals) found that the money withdrawn would be available for the subsequent deposit, therefore, directed the Assessing Officer to take only peak credit. Therefore, the assessee cannot have any grievance on the direction given by the Commissioner of Income-tax (Appeals) to take peak credit. - Decided against assessee

Summary

Issues:
Appeal against addition of unexplained cash credit of Rs. 20,27,531.

Analysis:
The appeal pertains to the assessment year 2010-11 and involves the addition of Rs. 20,27,531 as unexplained cash credit. The assessee, a director in a company, deposited a total of Rs. 32,39,731 in his savings bank account with Axis Bank. The Assessing Officer disallowed this amount as unexplained cash credit, but on appeal, the Commissioner of Income-tax (Appeals) directed the Assessing Officer to consider only the peak credit of Rs. 20,27,531. The assessee claimed that the withdrawn amount was redeposited at different locations, but the Departmental representative argued that there was no evidence to support this claim. The Tribunal noted that the money withdrawn by employees of the company from the assessee's account was considered the source for subsequent deposits. The Tribunal upheld the Commissioner's decision to take only the peak credit amount, dismissing the appeal.

The key contention was whether the assessee's explanation regarding the withdrawal and redeposit of funds from different locations was credible. The Tribunal observed that the assessee's claim of withdrawing money from Chennai and redepositing it in Tuticorin, and vice versa, lacked credibility. Despite the lack of evidence supporting the redeposit claim, the Commissioner concluded that the money withdrawn was available for subsequent deposits. The Tribunal agreed with the Commissioner's decision to consider only the peak credit amount of Rs. 20,27,531, as directed.

The Tribunal analyzed the facts, noting that the assessee issued cheques to employees who withdrew money from his account, but the purpose of these transactions was unclear. The Tribunal questioned the rationale behind withdrawing funds from one location to redeposit them in another, finding the explanation implausible. Ultimately, the Tribunal upheld the Commissioner's order, confirming the direction to take only the peak credit amount as unexplained cash credit. The appeal was dismissed, and the Commissioner's decision was upheld.

In conclusion, the Tribunal found no reason to interfere with the Commissioner's order regarding the addition of unexplained cash credit. The Tribunal confirmed the decision to consider only the peak credit amount of Rs. 20,27,531, as directed by the Commissioner. The appeal was dismissed, and the order was pronounced on 15th May 2015 in Chennai.