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2014 (4) TMI 1018 - AT - Income TaxAddition of peak credit amount Unexplained credits Addition u/s 68 and 69 of the Act - Held that - The assessee rightly contended that when there is a small deposit during the whole year in the bank account of the assessee, then total amount of deposits during the financial year cannot be treated as income in the hands of assessee - there was a deposit of Rs.23,12,875/- during the Financial Year to the bank account of the assessee which was deposited in salary amounts of thousands on various dates, then it cannot be justified if entire amount of deposits during the year is considered as income in the hands of assessee Following Commissioner of Income-Tax Versus Kulwant Rai 2007 (2) TMI 185 - DELHI High Court - only the peak credit can be taken as income out of the deposits made during the year to the bank account of the assessee the AO is directed that only peak credit is to be taken as income of the assessee out of the deposits Decided in favour of Assessee.
Issues:
1. Treatment of credits in the PNB bank account as belonging to the assessee and addition under sections 68 and 69 of the Income Tax Act. 2. Calculation of profit on credits related to retail trade of HUF under section 44AF. 3. Treatment of credits as retail turnover of the assessee and calculation of profit. 4. Limitation on addition for unexplained credits. 5. Levying of interest under section 234B. Analysis: Issue 1: Treatment of credits in the PNB bank account The appellant challenged the lower authorities' decision to treat credits in the PNB bank account as belonging to the assessee instead of the claimed HUF. The Assessing Officer added the amount to the assessee's income under sections 68 and 69 of the Income Tax Act. The Tribunal held that only the peak credit should be considered as the income of the assessee out of the total deposits made during the financial year. This decision was based on various legal precedents, including the Jurisdictional High Court's ruling in Commissioner of Income Tax vs Kulwant Rai. Issue 2: Calculation of profit on retail trade credits The appellant argued that the profit on credits related to retail trade of HUF should be calculated under section 44AF. The Tribunal considered this argument but dismissed it as not pressed since the appellant's fourth alternative contention regarding book credit was accepted. Issue 3: Treatment of credits as retail turnover The appellant contended that the credits should be treated as retail turnover of the assessee, and the profit should be calculated accordingly. However, this argument was not pursued further by the appellant during the proceedings. Issue 4: Limitation on addition for unexplained credits The Tribunal directed the Assessing Officer to consider only the peak credit as the income of the assessee out of the total deposits made during the year, limiting the addition for unexplained credits. This decision was made after considering legal precedents and ensuring due opportunity for the assessee to be heard. Issue 5: Levying of interest under section 234B The Tribunal restored the issue of interest under section 234B to the Assessing Officer for a decision based on the determination of income following the direction to consider only the peak credit as the income of the assessee. In conclusion, the appeal of the assessee was disposed of with various grounds being allowed or dismissed based on the arguments presented and legal considerations. The Tribunal's decision was based on a thorough analysis of the facts and legal precedents, ensuring a fair outcome for the appellant.
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