ITO, NEW DELHI vs. SH. MADHO PRASHAD GUPTA, NEW DELHI

impugned order dated 19.10.2015 of Ld. CIT(A)-14, New Delhi pertaining to assessment year 2011-12. The grounds raised in the revenue’s appeal reads as under:-

On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in -

addition of Rs. 41,12,860/- made by the AO on account of unexplained cash credits u/s. 68 of the I.T. Act 1961, ignoring that when the name and address of sellers and purchasers were made available then their genuineness and creditworthiness should have been verified by himself or through AO. By verifying these, the clear picture would have emerged and peak credit theory would not have been required.

2. The appellant craves the right to add, alter or amend any ground of appeal.

Accordingly, as per note sheet entry dated 6.12.2013, 17.12.2013 and 20.12.2013 assessee was asked filed the details and source of cash deposits alongwith documentary evidence to prove the genuineness of transactions. As per AO no details / documentary evidence filed by the assessee in support his claim, therefore, AO made the addition of Rs. 41,12,860/- u/s. 68 by observing that in the absence of any explanation with regard to cash deposit in his bank account amounting to Rs. 41,12,860/- was held to be income of the assessee u/s. 68 of the Income Tax Act as unexplained cash credit and accordingly, completed the assessment at Rs.42,97,160/- by passing an assessment order dated 21.3.2014 u/s. 147/143(3) of the I.T. Act, 1961.

6. On the other hand, Ld. Counsel of the Assessee has relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part, hence, the same may be upheld and accordingly, the appeal of the Revenue may be dismissed.

In support of his contention, he stated that the similar issue has been dealt by the Hon’ble Supreme Court of India in the case of Baladin Ram vs. CIT (1969) 71 ITR 427 (SC) and the ITAT, Lucknow ‘B’ Bench in the case of ITO, Barabanki vs. Kamal Kumar Mishra reported in (2013) 33 taxmann.com 610 (Lucknow – Trib.) and decided the same in favour of the assessee. In this regard, he filed the copies of the aforesaid decisions of the Hon’ble Supreme Court and ITAT, Lucknow Bench and requested to follow the aforesaid decisions and Appeal of the Revenue may be dismissed accordingly.

“I have considered the submission of the Ld. AR and finding of the Ld. AO on perusal of the details filed by the Ld. AR I incline to agree with the contention of the appellant that once it is a case of the Ld. AO that the deposits belong to the assessee, then the benefit of peak credit needs to be allowed. Peak credit principle is applicable in a case where there is several credit and entries are found in one account. The funds operated from such account should be taken to be one and hence, to avoid multiple counting of the same sums, only highest or peak of the amounts in that account should be taken as unexplained investment. In the interest of natural justice I considered it reasonable and justified to take the peak credit which as per the details filed by the Ld. AR for the appellant works out to Rs. 2,00,000/- be treated as income from undisclosed sources. So I order accordingly and the addition of Rs. 2,00,000/-- is confirmed & balance of Rs. 39,12,860/- is deleted.” 7.1 After going through the findings of the Ld.CIT(A), as aforesaid, I find that Ld. CIT(A) was of the view that once it is a case of the AO that the deposits belong to the assessee, then the benefit of peak credit needs to be allowed. In my opinion also Peak credit principle is applicable in a case where there is several credit and entries are found in one account.

The funds operated from such account should be taken to be one and hence, to avoid multiple counting of the same sums, only highest or peak of the amounts in that account should be taken as unexplained investment. Therefore, in my considered opinion, Ld. CIT(A) in the interest of natural justice taken the peak credit which as per the details filed by the Ld. AR for the assessee which works out to Rs. 2,00,000/- and rightly treated as income from undisclosed sources. Accordingly, Ld. CIT(A) has rightly confirmed the addition of Rs. 2,00,000/- and the balance addition of Rs. 39,12,860/- was deleted, which does not need any interference on my part, hence, I uphold the order of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the Revenue.