2011 (8) TMI 1272 - HC - Income Tax

Summary

Issues Involved:
The issues involved in the judgment are the challenge to the order of the Income Tax Appellate Tribunal regarding the deletion of an addition made by the Assessing Officer on account of peak working for the assessment year 1995-96.

Summary:

Challenge to ITAT Order:
The Revenue challenged the ITAT order confirming the deletion of an addition made by the Assessing Officer on account of peak working. The assessee, engaged in commission business, also entered the business of shares and cheque discounting. The Assessing Officer calculated taxable income based on peak credit of 90 days. The CIT(A) set aside the assessment and directed the Assessing Officer to examine bank transactions. The Assessing Officer assessed income at a lower amount, which was further reduced by the CIT(A) based on peak credit computed by the assessee.

Working of Peak Credit:
The CIT(A) accepted the peak credit calculated by the assessee's power of attorney, noting the lack of proper records. The theory of peak credit is used when no other reasonable basis is found for computing income. The Tribunal concurred with the CIT(A), emphasizing the Assessing Officer's failure to provide comments on the peak credit calculation. Despite objections from the Revenue, the authorities upheld the peak credit calculation due to the absence of identified infirmities.

Court's Decision:
The Court acknowledged the Revenue's concerns regarding the acceptance of the assessee's version without Assessing Officer's input. However, the Court found no identified infirmities in the peak credit calculation to warrant interference. Due to the age of the matter and the lack of grounds for close scrutiny, the Court dismissed the appeal, upholding the tax assessment based on the peak credit calculation.

This summary provides a detailed overview of the judgment, highlighting the key issues and decisions made by the authorities and the Court.