2024 (9) TMI 853 - AT - Income Tax

Undisclosed income of the assessee - Addition u/s 69A - Peak credit method application - HELD THAT - CIT(A) satisfied with the business activities of the assessee and collection of cash, deposit in the bank accounts - CIT(A) reproduced the details of peak credit wherein, he considered opening balance in bank account, opening cash balance, opening balance of advance as on 01.04.2010 and income from money lending business less drawings other than family members. CIT(A), the peak credit and net fund available for explaining the peak credit determined the balance unexplained amount - Further, we find in order to come to such conclusion, the ld. CIT(A) placed reliance in the case of S. Kulanthaian 2019 (3) TMI 2065 - ITAT CHENNAI who is relative of the assessee, wherein, the ITAT affirmed the order of the ld. CIT(A) in working the peak credit method. CIT(A) relied on the decision of the Hon ble Jurisdictional High Court in the case of PCIT v. S. Anbukannan 2019 (5) TMI 1129 - MADRAS HIGH COURT who is relative of the assessee, which held the method of peak credit was rightly adopted for addition of the alleged undisclosed income of the assessee and is a well settled common principle We find no infirmity in the order of the ld. CIT(A) in adopting peak credit method placing reliance of decision in the case of PCIT v. A. Anbukannan 2019 (5) TMI 1129 - MADRAS HIGH COURT and the case of assessee s relative in S. Kulanthaian 2019 (3) TMI 2065 - ITAT CHENNAI - Thus, the ground raised by the Revenue fails and the appeal is dismissed.

Summary

Issues:
- Justification of sustaining the addition of Rs. 16,08,071/- out of the total addition of Rs. 5,82,38,126/- by the ld. CIT(A) based on the peak credit method.

Analysis:
1. The Revenue filed an appeal against the order passed by the ld. Commissioner of Income Tax (Appeals) for the assessment year 2011-12. The assessee did not appear, and the appeal proceeded exparte. The main issue was whether the ld. CIT(A) was correct in upholding the addition of Rs. 16,08,071/- out of the total addition of Rs. 5,82,38,126/-.

2. The case involved scrutiny of cash deposits in the assessee's bank accounts. The Assessing Officer made an addition treating the cash deposits as unexplained money under section 69A of the Income Tax Act. The ld. CIT(A) restricted the addition to Rs. 16,08,071/- using the peak credit method. The Revenue challenged this decision, arguing that the ld. CIT(A) did not consider the case properly and the details provided were incomplete.

3. The ld. CIT(A) considered the nature of the business and the submissions made by the assessee. He relied on the peak credit method to determine the unexplained amount. The decision was supported by the case of S. Kulanthaian and the judgment of the Hon'ble Jurisdictional High Court in the case of PCIT v. S. Anbukannan. The ld. CIT(A) found the peak credit to be Rs. 44,00,557/- and the unexplained amount to be Rs. 16,08,071/-.

4. The ld. CIT(A) referred to the decision of the Hon'ble High Court and followed the same principles in this case. He concluded that the addition should be limited to Rs. 16,08,071/- as the unexplained money. The Tribunal upheld the ld. CIT(A)'s decision, stating that there was no error in adopting the peak credit method based on legal precedents.

5. In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the decision of the ld. CIT(A) to sustain the addition of Rs. 16,08,071/- using the peak credit method. The judgment was pronounced on 28th August, 2024 in Chennai.