2012 (6) TMI 884 - AT - Income Tax

Summary

Issues Involved:

1. Legitimacy of the peak credit theory applied by CIT(A).
2. Justification of the addition of Rs. 14,57,000/- as peak cash deposit.
3. Examination of material evidence not presented at the assessment stage.

Summary:

Issue 1: Legitimacy of the peak credit theory applied by CIT(A)

The CIT(A) accepted the peak credit theory, which resulted in a relief of Rs. 27,39,953/- for the assessee. The Revenue contested this, arguing that the rotation of funds was not established, and there was no direct nexus between the conclusion of fact and the primary fact upon which the conclusion was based.

Issue 2: Justification of the addition of Rs. 14,57,000/- as peak cash deposit

The CIT(A) restricted the addition to Rs. 43,44,270/-, reasoning that the peak cash deposit of Rs. 14,57,000/- was justified as it was the highest cash balance on 23.05.2006. The CIT(A) also considered 1% of the total cash credited as deemed income earned by the appellant, amounting to Rs. 1,37,270/-. The assessee's appeal against this addition was dismissed, as the Tribunal found no legally sustainable merits to interfere with the CIT(A)'s conclusion.

Issue 3: Examination of material evidence not presented at the assessment stage

The Revenue's appeal highlighted that the material evidence for the peak credit of cheques was not furnished at the assessment stage. The Tribunal deemed it appropriate to remit the matter to the Assessing Officer for fresh examination of the material produced before the CIT(A). The assessee was also allowed to provide additional material and explanations. Consequently, the Revenue's appeal was allowed for statistical purposes, limited to this issue.

Conclusion

The appeal of the assessee was dismissed, and the appeal of the Revenue was allowed for statistical purposes for the limited purpose of re-examining the material evidence.

Order pronounced in the Open Court on the day of hearing itself i.e. 25.06.2013.