Golam Mostafa v. ITO [ITA Nos. 382 & 405/Kol/2012, dt. 22-4-2016] : 2016 TaxPub(DT) 1998 (Kol-Trib)

Peak credits in multiple banks how recknoned.

Facts:

Assessee was found to be having cash entries in his bank disproportionate to his income. Thus the assessing officer added the same as unexplained credits in all the 6 bank accounts. This was reduced in the appeal citing that only peak credit should be taken in the addition. Further the assessee was found to have brought in addition capital of 8.2 lakhs. This was also not explained and thus added back. On appeal the Commissioner (Appeals) allowed for withdrawal of capital by way of drawings thus reduced the addition. Aggrieved assessee went in further appeal:

Held in favour of the assessee that the peak credit addition should be worked out basing all the bank accounts in toto and then peak credit be applied considering the withdrawals and contra entries.

Then the capital addition should be seen and double addition be avoided basing the original capital of INR 8.2 lakhs.