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2018 (6) TMI 957 - AT - Income TaxReopening of assessment u/s 147 - notice u/s 148 - additions made for unexplained credit - Held that - The peak credit statement is prepared by the assessee on the basis of the entries found in the pen drive and accepted by the Tribunal in earlier years 2013 (7) TMI 30 - ITAT DELHI therefore same method shall have to be followed in assessment year under appeal - Tribunal has given benefit of opening balance of the earlier years and that assessee had paid tax on the peak credit for AY 2003-04 - therefore such amount shall have to be reduced from the peak calculated by the assessee and benefit of the same shall have to be granted to the assessee - issue of the peak is therefore fully covered by the earlier years orders of the Tribunal - in earlier years also Tribunal has dismissed the ground of appeal of the assessee as regards reopening of the assessment u/s 148 of the Act. Therefore these grounds of appeal of the assessee are dismissed - hence we direct the AO to make an addition of 1, 36, 42, 861/- on account of peak credit
Issues Involved:
1. Reopening of assessment under Section 148 of the Income Tax Act, 1961. 2. Addition of unexplained credit entries found in a pen drive. 3. Methodology for calculating peak credit. 4. Set-off of opening balances and telescoping of peak credits from previous years. Detailed Analysis: 1. Reopening of Assessment under Section 148: The assessee challenged the reopening of the assessment under Section 148 of the Income Tax Act, 1961. The Tribunal upheld the reopening, referencing earlier decisions where similar circumstances were considered valid for reopening. The Tribunal noted that the AO had reason to believe that income chargeable to tax had escaped assessment based on the evidence recovered during the search operation by the Punjab State Vigilance Bureau. The Tribunal dismissed the ground of appeal regarding the reopening of the assessment, consistent with its decisions in previous years. 2. Addition of Unexplained Credit Entries: The AO made an addition of ?43,67,62,555/- based on credit entries found in a pen drive recovered from the assessee, treating them as unexplained credits under Section 68 of the Act. The assessee contended that the pen drive did not belong to him and that the peak balance should be calculated at ?1,82,59,248/-. The Tribunal found that the entries in the pen drive were admissible evidence against the assessee and upheld the addition of unexplained credits, but directed the AO to follow the methodology of calculating peak credit as established in earlier years. 3. Methodology for Calculating Peak Credit: The Tribunal emphasized the need to follow the methodology for calculating peak credit as established in previous years. The AO's method of excluding debit entries on account of expenses was rejected. The Tribunal reiterated that all entries in the pen drive should be considered, and the process and methodology adopted in earlier years should be followed. The Tribunal noted that the peak credit had been consistently calculated and accepted in earlier years, and there was no justification for the AO to rework the peak credit differently. 4. Set-off of Opening Balances and Telescoping of Peak Credits: The Tribunal discussed the concept of telescoping and set-off of opening balances, which had been accepted in earlier years. The Tribunal directed that the peak credit for the current year should be adjusted by the opening balance from the previous year, where the assessee had already paid taxes on the peak credit. The Tribunal concluded that the net addition should be ?1,36,42,861/- after considering the set-off of the opening balance of ?46,16,387/- from the peak credit calculated by the assessee. Conclusion: The Tribunal partly allowed the appeal of the assessee, directing the AO to make an addition of ?1,36,42,861/- on account of peak credit, following the established methodology and set-off principles. The Departmental appeal was dismissed. The Tribunal's decision was consistent with its earlier rulings on similar issues, ensuring a fair and reasonable assessment based on the evidence and established legal principles.
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