DCIT,CENTRAL CIRCLE-2, TRICHY vs. SHRI.N.ANBALAGAN, PUDUKOTTAI

The ld. DR Shri V. Nandakumar, CIT relied on the order of the Assessing Officer and argued that the ld. CIT(A) without considering the facts and circumstances of the case in proper perspective adopted peak credit method. He drew out attention to page 3 of the impugned order and argued that there was no occasion to the Assessing Officer for examination of the said working of peak credit method and argued vehemently that the details as given in page 3 of the impugned order are incomplete and cannot be made basis for adopting peak credit method. The ld. DR prayed to restore the order of the Assessing Officer and set aside the order of the ld. CIT(A).

Having no representation before us, we deem it proper to refer to the statement of facts forming part of Form 35, wherein, we find the assessee offered explanation in respect of his books of account. The assessee is maintaining regular books of account on day-to-day basis and all the bank accounts are duly reflected in the said books of account. He submitted before the ld. CIT(A) that all the bank account including the cash deposit of ₹.5,82,38,126/- were duly reflected in the said books of account. Further, the assessee stated that he advanced money for a short period only for a period upto 7 to 10 days only and does not make a second advance to the same person when an earlier advance is pending. All the transactions are completed within a maximum period of 7 to 10 days. Further it was stated that the assessee does not permit any back log in connection of interest/balance outstanding and it is not necessary to maintain the individual balance of each and every person on any given date as the transaction are completed then and there.

We note that having considering the nature of business and submissions made before the ld. CIT(A), it establishes that the ld. CIT(A) satisfied with the business activities of the assessee and collection of cash, deposit in the bank accounts. Further, we note that the ld. CIT(A) reproduced the details of peak credit in page 3 of the impugned order, wherein, he considered opening balance in bank account, opening cash balance, opening balance of advance as on 01.04.2010 and income from money lending business less drawings other than family members. According to the ld. CIT(A), the peak credit is at ₹.44,00,557/- and net fund available for explaining the peak credit at ₹.27,92,482/-, determined the balance unexplained amount of ₹.16,08,071/-. Further, we find in order to come to such conclusion, the ld. CIT(A) placed reliance in the case of S. Kulanthaian, who is relative of the assessee, wherein, the ITAT affirmed the order of the ld. CIT(A) in working the peak credit method. Further, the ld. CIT(A) relied on the decision of the Hon’ble Jurisdictional High Court in the case of PCIT v. S. Anbukannan, who is relative of the assessee, in TCA No. 216 & 217 of 2019 dated 04.03.2019, which held the method of peak credit was rightly adopted for addition of the alleged undisclosed income of the assessee and is a well settled common principle. The relevant part at para 9 to 9.6 are reproduced herein below for ready reference: 9. I have pursued the assessment order, grounds of appeal and submissions made by the appellant during the course of appellate proceedings. 9.1 While going through the assessment order dated 26.03.2014, it can be seen that the Assessing Officer has made the addition amounting to Rs. 5.82,38,126/- which is being the cash deposit made by the appellant, as unexplained money as per the provisions of Sec. 69A of the Act. 9.2 While completing the assessment, the AO has not considered the withdrawals from the bunk accounts. The appellant has contended that the amount of Rs.5,82,38,126/- is the deposits held by the appellant in various accounts on various dates. The relevant bank accounts submitted by the appellant pursued. The best way to arrive the unexplained money is only by arriving a peak credit. As per the order passed by this office in the appellant's relative case upon the same issue and by the same Assessing Officer in the case of Shri S. Kulanthaian relevant AY 2013-14 in dated 31.01.2017, A.Y.2014-15 in dated 16.10.2017 and A.Y.2015-16 in ITA No.402/2017-18 dated 27.10.2020, it has been held that by working the peak credit method and the deficit amount can alone be added as unexplained money. In respect of the appeal filed by the Department against the above order relevant to the A.Y. 2014-15 the ITAT, vide its order in ITA No.35/Chny/2018 has dismissed the Revenue appeal. 9.3 In this background, considering the earlier decision taken by this office in the appellant's relative case upon the same issue and facts and as per the decision taken by the ITAT in the same case in a similar issue, I am of the opinion that in the interest of justice, the AO must have taken into

In the result, the appeal filed by the Revenue is dismissed. Order pronounced on 28th August, 2024 at Chennai.