I.T.O WD - 2(4),DURGAPUR., DURGAPUR vs. PRASANTA SINGH ROY., KOLKATA

Per Shri Mahavir Singh, JM:

According to AO, there are total deposit in the bank accounts at Rs.48,36,000/-. As the assessee could not explain the source of deposit, the AO added the entire amount of Rs.48.36 lakhs as unexplained deposits in the bank accounts u/s. 69A of the Act. Aggrieved, assessee preferred appeal before CIT(A), who directed the AO to compute the peak credit and assessed only peak credit by observing as under: “Though three grounds have been preferred the issue involved is same, namely addition of Rs.48,46,894/- made by the AO. The facts of the case are that the appellant's returned income has been rejected by the AO. who has taken the view that the appellant has not conducted any business. However, while discussing elaborately in his order as to why he feels that the appellant's income from business should be taken as 'nil' as against the income disclosed in the return, it is seen that while computing the income he has assessed the income disclosed under the head 'business'. That Prasanta Singha Roy AY 2009-10 apart the A.O. has added RS.48,46,894/- being deposits found in five bank accounts held either by the appellant or jointly with his wife. The appellant had sought to explain these deposits as cash sales of seasonal crops, an explanation which the A.O. rejected. Having done so, the AO proceeded to assess the entire deposits as unexplained. The appellant's submission is that he has been carrying on business of dealing in agricultural crops for the last few years and that fact has never been challenged in the past. However, at this stage, I do not find it necessary to go into this issue as that has little bearing on the addition made. I do not see the appellant coming forward with any coherent explanation regarding these cash deposits. Therefore, in my opinion, the view taken by the AO to assess these cash deposits as ‘Income from other Sources’ is substantially correct. However, if there is no explanation for these deposits, it will be proper to apply the judicially approved principle of peak credit here. While giving effect to this order, the AO will compute the peak credit across the five bank accounts and assess the income accordingly. These grounds of appeal are, therefore, partly allowed subject to the direction given above.”