2011 (6) TMI 878 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of addition of Rs. 18,33,676 u/s 143(3) for assessment year 2003-04.

Addition of Rs. 18,33,676:
The Appellate Tribunal ITAT DELHI heard an appeal by the revenue against the deletion of an addition of Rs. 18,33,676 made by the Assessing Officer. The case involved unexplained credits in bank accounts. The Assessing Officer contended that the assessee failed to explain the deposits in the bank accounts, leading to the addition. However, the assessee argued that the deposits were from income earned by plying trucks on hire, covered u/s 44AE, and that she did not maintain daily account books. The assessee detailed deposits made in two bank accounts and explained withdrawals for business expenses. The CIT(Appeals) found that total withdrawals exceeded deposits, indicating a circulation of the same money in the banks. The CIT(Appeals) also applied the peak credits theory to show that the deposits were explained. The Tribunal upheld the CIT(Appeals)' decision, noting that the Assessing Officer did not properly verify the facts and that the total deposits did not match the amount in question. The Tribunal found no reason to interfere with the CIT(Appeals)' order and dismissed the revenue's appeal.

This judgment highlights the importance of thorough verification of facts by the Assessing Officer and the application of relevant legal provisions, such as the peak credits theory, in determining the legitimacy of additions in tax assessments.