2009 (8) TMI 1275 - AT - Income Tax

Summary

Issues involved: Reduction of addition of undisclosed income u/s 158BC read with section 158BD.

Summary:
The appeal was filed by the Revenue against the order of the CIT(A) reducing the addition of undisclosed income made by the AO. A search action revealed a bank statement in the name of a sales-tax practitioner, the assessee, with significant credits. The AO added the total credits as undisclosed income. The CIT(A) directed the AO to compute profit at 7% of the deposits, considering the nature of the transactions. The Revenue contended that the CIT(A) erred in law by directing the profit computation at 7%. The Tribunal held that the onus was on the assessee to prove the source of deposits, and only the peak credit in the bank account could be treated as income. The order of the CIT(A) was set aside, and the AO was directed to calculate the peak credit for the addition.

In conclusion, the appeal was partly allowed, and the order was pronounced in open court.