2013 (8) TMI 1162 - AT - Income Tax

Summary

Issues involved: Addition made on account of deposits in bank account with Centurion Bank of Punjab.

Summary:
The appeal was filed against the order of the Commissioner of Income-tax (Appeals) relating to assessment year 2008-09 under section 143(3) of the Income Tax Act, 1961. The issue raised was regarding the addition made on account of various deposits in the bank account with Centurian Bank of Punjab. The assessee, an insurance agent, had deposited Rs.29,56,000 in cash on different dates in her Saving Account with the bank. The Assessing Officer made an addition of Rs.29,56,000 as income from unexplained sources, which was upheld by the CIT(Appeals). The assessee contended that the deposits were rotated through her account on the advice of a bank consultant and that the peak balance was Rs.55,923. The case was heard, and it was found that the concept of peak theory needed to be applied to determine the quantum of addition. The issue was restored back to the Assessing Officer to verify the cash deposits and withdrawals, applying the peak theory to determine the addition in the hands of the assessee.

The Appellate Tribunal found merit in the plea raised by the assessee regarding the cash deposits and withdrawals. The Tribunal noted that while the assessee had made deposits in different denominations on different dates, the same amounts were withdrawn either on the same day or the next day. The Tribunal held that the concept of peak theory needed to be applied to ascertain the addition in the hands of the assessee. The case was sent back to the Assessing Officer to determine the initial cash deposit at the start of the year and to apply the peak theory to the various cash deposit and withdrawal entries during the year to calculate the addition in the hands of the assessee. The grounds of appeal raised by the assessee were allowed for statistical purposes, and the appeal was allowed accordingly.

In conclusion, the appeal was allowed for statistical purposes, and the case was remanded back to the Assessing Officer to apply the peak theory in determining the addition in the hands of the assessee based on the cash deposits and withdrawals in the bank account with Centurion Bank of Punjab.