2018 (11) TMI 1177 - HC - Income Tax

Peak credit addition - Held that - The assessee-appellant was unable to satisfactorily explain the source of ₹ 14,73,000/-, which was added on account of peak addition, no error could be pointed out in the impugned orders which may warrant interference by this Court. Thus, question No.1 does not arise. Addition on account of net profit @ 5% of the total amount of cash deposits to the CIT(A) - Held that - Tribunal had recorded that from the order passed by the CIT(A), it appeared that the said issue was taken by the assessee in the grounds of appeal before the CIT(A), however, neither specific agitation was made by the assessee nor adjudicated by the CIT(A). The Tribunal had remitted the matter to the CIT (A) to decide the issue regarding the addition of ₹ 57,700/- made by the assessing Officer on account of net profit @ 5% on the total amount of cash deposits in the saving bank account of the assessee afresh on merits after affording proper opportunity of hearing to the assessee. Thus findings recorded by the Tribunal warrant no interference by this Court. - decided against assessee.

Summary

Issues:
1. Whether the addition of ?14,73,000/- was justified?
2. Whether the Tribunal was correct in remanding the issue of addition of ?57,000/- on account of net profit @ 5% of the total cash deposits to the CIT(A)?

Issue 1: Addition of ?14,73,000/-:
The Assessing Officer added ?14,73,000/- to the income of the assessee as unexplained income under Section 69 of the Income Tax Act. The assessee claimed the cash deposits were from the sale of property, but the CIT(A) rejected this explanation due to lack of evidence and delayed deposits. The Tribunal upheld the addition, finding the assessee failed to explain the source of the cash deposits satisfactorily. The High Court concurred with the lower authorities, stating no error was found in the orders justifying interference.

Issue 2: Remand of ?57,000/- Addition:
Regarding the addition of ?57,700/- as net profit @ 5% on total cash deposits, the Tribunal remanded the issue back to the CIT(A) for proper adjudication. The Tribunal noted that the CIT(A) did not specifically address this issue despite being raised by the assessee. The Tribunal directed the CIT(A) to consider this issue separately and provide a fair hearing to the assessee. The High Court found no legal flaws in the Tribunal's decision, dismissing the appeal as no substantial question of law arose.

In summary, the High Court upheld the addition of ?14,73,000/- as unexplained income due to the assessee's failure to provide a satisfactory explanation. The Court also agreed with the Tribunal's decision to remand the issue of adding ?57,700/- back to the CIT(A) for proper consideration, finding no legal grounds to interfere with the lower authorities' decisions.