2022 (8) TMI 448 - AT - Income Tax

Addition on account of peak credit - undisclosed capital in the bank accounts of the assessee - CIT(A) allowed Rs. 6,00,000/- as genuine capital arises from past accumulated savings of assessee and remaining Rs. 10,00,028/- confirmed as undisclosed capital of the assessee - HELD THAT - As we do not see any reasons to disagree with the ld. CIT(A) s findings where the ld. CIT(A) regarding addition made by AO of Rs. 16,00,028/- 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. 6,00,000/- as genuine capital i.e. out of accumulated past savings and remaining amount of Rs. 10,00,028/- was confirmed as undisclosed capital i.e. total addition of Rs. 16,00,028/- - Rs. 6,00,000/- Rs. 10,00,028/- 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). Appeal of the assessee is dismissed.

Summary

Issues involved:
Assessment of undisclosed income based on cash deposits in bank accounts, validity of estimating income at 8% of total deposits, treatment of peak credit as undisclosed capital, imposition of interest under sections 234A, 234B, and 234C.

Analysis:

1. Estimation of Income and Gross Turnover:
The appellant contested the estimation of income at 8% of total cash deposits in bank accounts as gross turnover. The CIT(A) found that the transactions were not typical business transactions, involving withdrawals and deposits without clear evidence of sale/purchase. Consequently, the addition based on treating total deposits as gross turnover was deemed unsustainable and deleted. The CIT(A) allowed this ground of appeal.

2. Treatment of Peak Credits:
The significant issue revolved around the addition of Rs. 16,00,028/- as peak credits, representing undisclosed capital in the bank accounts. The CIT(A) partially upheld this addition, considering Rs. 6,00,000/- as genuine capital from past savings and confirming the remaining Rs. 10,00,028/- as undisclosed capital. The appellant's contention regarding accumulated past savings was acknowledged, leading to a partial allowance of this ground of appeal.

3. Interest Imposition and Other Grounds:
The imposition of interest under sections 234A, 234B, and 234C was challenged by the appellant, along with other grounds not specifically discussed in the judgment. However, the CIT(A) did not delve into these aspects, deeming them infructuous or consequential. Consequently, these grounds were not adjudicated upon.

4. Judgment and Dismissal of Appeal:
Upon review, the ITAT concurred with the CIT(A)'s findings, upholding the decision to consider Rs. 6,00,000/- as genuine capital and confirming Rs. 10,00,028/- as undisclosed capital. The ITAT found the CIT(A)'s order reasonable and in accordance with the law, leading to the dismissal of the appellant's appeal. The ITAT sustained the CIT(A)'s decision regarding the addition of undisclosed capital based on peak credits.

This detailed analysis covers the key issues addressed in the legal judgment, highlighting the arguments presented, findings of the CIT(A), and the final decision rendered by the ITAT.