2022 (8) TMI 428 - AT - Income Tax

Addition on account of peak credit, being undisclosed capital in the bank accounts of the assessee - CIT(A) allowed part claim as genuine capital arises from past accumulated savings of assessee and remaining addition confirmed as undisclosed capital of the assessee - HELD THAT - No reasons to disagree with the ld. CIT(A) s findings where the CIT(A) regarding addition made by AO on account of peak credit being undisclosed capital in bank a/c s of the assessee where the ld. CIT(A) viewed that sum of Rs. 4,00,000/- as genuine capital i.e. out of accumulated past savings and remaining amount of Rs. 4,01,210/- was confirmed as undisclosed capital i.e. total addition of Rs. 8,01,210/- - Rs. 4,00,000/- Rs. 4,01,210/- as undisclosed capital and it was a reasonable order passed under the provisions of law and accordingly we sustained the order passed by the CIT(A). - Decided against assessee.

Issues:
1. Appeal against order of ld. CIT(A) under Income Tax Act
2. Addition of undisclosed capital in bank accounts
3. Assessment based on cash deposits in bank accounts
4. Failure to file return of income in response to notice u/s 148

Issue 1: Appeal against order of ld. CIT(A) under Income Tax Act:
The appeal was filed by the assessee against the order of the ld. CIT(A) passed under section 250 of the Income Tax Act. The grounds of appeal raised by the assessee included challenges to the legality and factual correctness of the impugned order. The main grievance of the assessee was the confirmation of the addition of undisclosed capital in the bank accounts. The ld. CIT(A) partly allowed the appeal, leading to the assessee being aggrieved and appealing further.

Issue 2: Addition of undisclosed capital in bank accounts:
The case involved the assessment of the assessee who had made substantial cash deposits in the bank account, disproportionate to the income declared in the return. The Assessing Officer (AO) treated the deposits as sales turnover, estimating income at 8% under section 44AD of the Income-tax Act. The ld. CIT(A) considered the nature of transactions and found that the deposits were not business-related, leading to the deletion of the addition on this ground. However, an amount was confirmed as undisclosed circulating capital based on past savings, resulting in a partial allowance of the appeal.

Issue 3: Assessment based on cash deposits in bank accounts:
The assessment was initiated after the assessee failed to file a return of income in response to a notice under section 148. The AO made an ex-parte assessment, determining the total income based on the cash deposits in the bank account. The ld. CIT(A) provided relief to the assessee by considering the nature of transactions and past savings, resulting in adjustments to the additions made by the AO.

Issue 4: Failure to file return of income in response to notice u/s 148:
Despite notices issued to the assessee, there was a lack of compliance and participation in the proceedings. The absence of the assessee during the hearing led to the decision being made with the assistance of the ld. DR. The conduct of the assessee indicated a lack of interest in pursuing the appeal, ultimately resulting in the dismissal of the appeal by the Tribunal.

In conclusion, the Tribunal dismissed the appeal of the assessee after considering the findings of the ld. CIT(A) and upholding the order regarding the addition of undisclosed capital in the bank accounts. The decision was based on the assessment of the nature of transactions, past savings, and the provisions of the law. The appeal was deemed unsustainable, and the order was sustained by the Tribunal.

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