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The Income- Tax Act, 1995
Commissioner Of Income Tax vs Shri Kulwant Rai on 13 February, 2007

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Income Tax Appellate Tribunal - Delhi
Dheeraj Ahuja, Sonepat vs Department Of Income Tax on 28 January, 2010
                DELHI BENCH: 'B' NEW DELHI


                       I.T.A .NO.- 1398/Del/2010
                    (ASSESSMENT YEAR- 2007-08)

ITO,                     vs           Dheeraj Ahuja,
Ward-4,                               15, Bank Colony,
Sonepat.                              Rohtak
(APPELLANT)                           (RESPONDENT)

            Appellant by: Sh. Aroop Kr. Sinha, Sr. DR
               Respondent by: Sh. Gautam Jain, CA

                      Appeal heard on-12.09.2012
                    Order pronounced on-14.09.2012


PER KULBHARAT, JM This appeal of the revenue is directed against the order of Ld. CIT(A), Rohtak dated 28.01.2010.

2. The revenue has raised solitary grounds which reads as under:-

"1). In the facts and under the circumstances of the case, the Ld. CIT(A) has erred in restricting the addition on account of unexplained cash deposits in the bank account to the peak amount of Rs. 2,57,853/- without any finding regarding rotation of funds by the assessee. Since there was no business in existence, the question of working out a peak amount of cash deposit does not arise as rotation of funds for any legitimate purpose has not been established."

3. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and a notice u/s 143(2) of the Income Tax Act, 1961 2 I.T.A .NO.- 1398/Del/2010 (herein after refer to as the Act) was issued and served upon the assessee and during the course of assessment proceedings, the assessee was called upon to explain the source of deposit of Rs. 23,56,300/- in AXIS Bank, Rohtak. The Assessing Officer observed that the assessee is engaged in wholesale trading of cloth business but the undisclosed as the assessee furnished return of income in Form No. ITR-2 (non-business), therefore, addition of Rs. 23,56,300/- was added back into the total income of the assessee. The assessee preferred an appeal before the Ld. CIT(A), against the assessment order and Ld. CIT(A), after considering the submissions of the assessee held that the ends of justice would be met if addition of peak credit amount in the bank account of the appellant during the previous year is treated as its undisclosed investment/income. Therefore, addition of Rs. 2,57,853/- peak credit as on 02.08.2006 was confirmed out of the total addition of Rs. 23,56,300/-.

4. The revenue is now in appeal before this Tribunal. Ld. Senior DR strongly supported the order of Assessing Officer and vehemently argued that Ld. CIT(A) ought not to have adopted the peak credit and the addition made by the Assessing Officer should have been confirmed. Since the assessee himself has disclosed in his return of income that he was deriving income from salary, house property and interest. He has not disclosed that he was carrying out any business activity. On the contrary, Ld. Counsel for 3 I.T.A .NO.- 1398/Del/2010 the assessee strongly supported the order of Ld. CIT(A) and submitted that the case is covered by the various decisions of the Hon'ble Income Tax Appellate Tribunal and he relied on the decision of the Hon'ble Co-ordinate Bench, Mumbai rendered in the case of Narayan G. Mandgiri in ITA No. 3653/Mum/2011, in support of contention that the assessee had withdrawn money from his account, therefore, peak credit has to be adopted. He further relied on the decision of Hon'ble ITAT, Chandigarh in the case of ITO, Ward-6(3) vs. Smt. Surjit Kaur in ITA No. 1184/Chd./2011, in support of the contention that the benefit of rotation of cash is to be given to the assessee since only peak balance could be assessed. He also relied on the judgement of the Hon'ble Delhi High Court rendered in the case of CIT vs Kulwant Rai (2007) 291 ITR 36 (Delhi).

5. We have heard the rival submissions perused material available on record. The only issue involved is taking peak credit amount in the bank of the assessee during the previous year for treating the same as his undisclosed investment/income. The Assessing Officer has made addition on the basis that during the assessment proceedings, the assessee contended that he is engaged in trading of cloth and the source of investment in the form of bank deposit has been made out of cloth business. He observed that although the assessee claimed that he is engaged in the whole-sale trading of cloth but 4 I.T.A .NO.- 1398/Del/2010 such business is undisclosed as the assessee furnished return of income in Form No ITR -2(non-business).

6. The undisputed fact is that the assessee had made cash withdrawals from the bank and no other material has been placed on record suggesting investment made in any other activity, therefore, we do not find any infirmity in the order of Ld. CIT(A) for adopting the peak credit for the purpose of treating the same as undisclosed investment/income. In this view of the matter, this ground of the revenue 's appeal is dismissed.

7. In the result, the appeal of the revenue is dismissed.

Order pronounced in the Open Court on14.09.2012.

       Sd/-                                                         Sd/-
(S.V.MEHROTRA)                                             (KULBHARAT)
ACCOUNTANT MEMBER                                      JUDICIAL MEMBER

Dated: 14/09/2012
*Amit Kumar*

Copy forwarded to:
1.   Appellant
2.   Respondent
3.   CIT
4.   CIT(Appeals)
5.   DR: ITAT

                                                   ASSISTANT REGISTRAR
                                                         ITAT, NEW DELHI
 5   I.T.A .NO.- 1398/Del/2010