2017 (6) TMI 330 - AT - Income Tax

Disallowance on account of peak credit - addition confirmed by the ld. CIT-A after rejecting the plea of the assessee i.e. the cash deposit entries in IDBI bank also belongs to the father of the assessee - Held that - Though the assessee in support of his claim has demonstrated the business payments made by the father of the assessee from the IDBI bank account for which the affidavit was filed by the assessee. Therefore we find that there is force in the argument of the ld. AR which has not been adjudicated without adducing any reason thereon. It is also not disputed that the father of the assessee was joint holder in IDBI bank account and from this account the business payments were made by the father of the assessee. Therefore in the interest of justice & fair play we are of the opinion that the instant issue needs to be reconsidered in the light of the affidavit submitted by the father of the assessee. In our considered view the affidavit given by the father of the assessee cannot just be brushed aside. Therefore, we are inclined to restore the issue to the file of the AO for fresh adjudication in accordance with the law de-novo. - Decided in favour of assessee for statistical purpose

Summary

Issues involved:
1. Disallowance of peak credit amount of ?12,51,660.

Detailed Analysis:
1. The appellant contested the disallowance of ?12,51,660 on account of peak credit. The appellant argued that the cash deposits in the bank accounts were from business transactions. The appellant submitted supporting documents, including a certificate from the Gram Panchayat and a list of business transactions. However, the Assessing Officer (AO) disregarded the appellant's plea and made additions based on the peak credit theory and cash deposits in the bank accounts.
2. The appellant appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], presenting various submissions, such as the opening balance, intra-transfers between accounts, and business expenses paid from one of the accounts. The CIT(A) partially granted relief to the appellant but confirmed the AO's order regarding the peak credit amount. The CIT(A) rejected the appellant's claim that cash deposits in the IDBI bank belonged to the appellant's father, citing patterns of cash deposits and business transactions observed in the bank statements.
3. The appellant further appealed, raising multiple grounds challenging the assessment order. The appellant argued against the unexplained deposits and investments, emphasizing the joint ownership of accounts with the father. The appellant also disputed the peak credit calculation and interest income treatment.
4. Upon hearing both parties, the Appellate Tribunal found merit in the appellant's argument regarding the cash deposits belonging to the father. The Tribunal noted that the father had made business payments from the IDBI account, supported by an affidavit. Considering the evidence, the Tribunal decided to restore the issue to the AO for fresh adjudication, emphasizing the importance of the father's affidavit in determining the nature of the transactions.
5. Ultimately, the Tribunal allowed the appellant's appeal for statistical purposes, directing a reevaluation of the peak credit issue in light of the father's business transactions. The Tribunal's decision aimed to ensure fairness and justice in reconsidering the matter based on the evidence provided.

This comprehensive analysis highlights the legal proceedings, arguments presented, and the Tribunal's decision to address the disallowance of the peak credit amount in the case.