KETUR M BHA vs. AR,MUMBAIVS.ITO WD 16(3)(3), MUMBAI

The ld. Commissioner of Income Tax(Appeals)-27 Mumbai [the CIT(A)] erred in confirming the addition U/s 68 of Income Tax Act, 1961 (the Act) at peak credit in the bank account of Appellant at Rs. 12,54,955/-.

Brief facts of the case are that assessee is Proprietor of M/s Nitika Gems dealing in precious, semi-precious and synthetic stones, filed his return of income for relevant AY on 27.10.2005 declaring total income at Rs.1,15,610/-. The assessment was completed 17/12/2007 under section 143(3) of the Act determining the total income of Rs. 41,21,290/-. The Assessing Officer (AO) while passing assessment order besides other addition and disallowance, made addition of Rs. 34,68,250/- under section 68 as unexplained cash credit in Bank Account. On appeal before the ld. CIT(A), the addition was restricted to Rs. 12,54,955/-. The ld. CIT(A) restricted the addition to Rs. 12,54,955/- on the basis of peak credit. Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us.

None appeared on behalf of assessee, despite service of notice of hearing through R.P. AD. This appeal is pending adjudication before the Tribunal since 2011. Therefore, we decided to hear the submission of ld. DR and to decide the appeal on the basis of material available on record. The ld. DR for the Revenue supported the order of ld. CIT(A), it was submitted that while filing return of income, the assessee did not disclose the cash deposit in his Bank Account No. 23510085371 in Standard Chartered Bank, S.G. Marg, Mumbai. The AO made the addition under section 68 for aggregate of the amount deposited in the said Account. The assessee was granted partial relief by the ld. CIT(A) while restricting the addition on the basis of peak credit. The assessee is not entitled for further relief.

We have considered the submission of the ld. DR and perused the record carefully. We have noted that during the course of assessment proceedings, the AO was having information about cash deposit of Rs. 34,68,250/- in Bank Account No. 23510085371 in Standard Chartered Bank, S.G. Marg, Mumbai. This account was not disclosed by assessee in his return of income. When this account was confronted with assessee, the assessee remained silent and not explained the deposits in the said Bank. The AO made addition under section 68 for entire cash deposit. During appeal before the ld. CIT(A), the assessee explained that his account was prepared by Free lancer part time Accountant, who did not mentioned the said account due to oversight. The assessee further explained that the said deposit and withdrawal in the said account are purchase and sale proceeds of his business. The ld. CIT(A) after verifying the said account observed that there is regular cash deposit and cash withdrawal almost on day to day basis. The ld. CIT(A) further observed that the assessee has not disclosed the complete income from business carried out by him and is liable to explain peak credit in the Bank Account. On the basis of his observation, ld. CIT(A) worked out peak credit to Rs. 12,54,955/- as on 10.03.2005, and accordingly sustained the addition to that extent. Before us, neither the assessee nor his representative explained the fact as to why the addition sustained on the basis of peak credit is liable to be deleted. The assessee has not filed any documentary evidence on record in support of his the grounds of appeal raised before us. Hence, we do not find any merit in the grounds of appeal raised by assessee, which in result dismissed.

In the result, appeal filed by assessee is dismissed. Order pronounced in the open court on this 13th day of February, 2018.