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2016 (10) TMI 844 - AT - Income TaxAddition u/s 68 - peak credit theory - Held that:- It is not in dispute that the assessee’s income either in the earlier year or in subsequent years has never crossed the threshold of ₹ 2 lakhs in which event the Assessing Officer could have kept the same in mind while making the addition. Even while computing the assessment to the best of his judgment, under section 144 of the Act, it is the duty of the Assessing Officer to make an addition on the basis of the available material and circumstances of each case. Judgement is a faculty to decide the matters with wisdom, truly and legally and it should not depend on the arbitrary caprice of an officer. In otherwords, though an element of guess work is involved in best judgement it should not be a wild one, as held by the Hon’ble Supreme Court in the case of State of Kerala vs. Velukutti [1965 (12) TMI 32 - SUPREME Court]. In the instant case, the Assessing Officer ought to have taken into consideration the normal turnover of the assessee, the expected profit in each year, based on the earlier year’s income declared and accepted in order to estimate the income of the current year; while holding that there was some undisclosed income assessable to tax under section 68 of the Act. The assessee having furnished the bank statement Assessing Officer could have verified and noticed that there were credits and corresponding debits which would give an indication that some amount has been recycled and it is a settled principle that in such cases ordinarily, peak credit is taken into consideration for the purpose of making an addition. On a conspectus of the matter, we are of the view that an addition of peak credit would meet the ends of justice. We, therefore, direct the Assessing Officer accordingly.
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