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2016 (12) TMI 608 - AT - Income TaxAddition on account of Undisclosed debtors - application of prime credit theory - Held that:- From perusal of the various entries found recorded in the seized documents and the cash flow statements prepared by the assessee, it is observed that in terms of amount advanced to various debtors, repayment thereof to the assessee, amount received from the creditors and its repayment by the assessee, the assessee has tried to establish the necessary linkage in terms of outflow and inflow of funds. It is also not the case of the Revenue that inflow of funds through various credit entries was applied elsewhere by the assessee other than his money lending business. Also, where necessary linkage in terms of inflow and outflow of funds are established, it is immaterial whether these transactions are happening in physical form or routed through the banking channel. Accordingly, we do not see any infirmity in applying the peak credit theory in the facts of the present case. Thus we set aside the matter to the file of the AO to apply the peak credit theory after taking into consideration both the debtors and creditors entries found recorded in the seized documents. - Decided in favour of assessee for statistical purposes. Addition on account of undisclosed/unexplained house hold expenses - assessee has contended that the household expenditure has been incurred out of his salary withdrawals - Held that:- As except for AY 2009-10 in respect of which documents were found during the course of search, no documents are found in respect of any of the other years and the AO has only made an estimation without any underlying documents. The basis of estimation which ranges from ₹ 50,000 to ₹ 2,50,000 is also not clear from the records. Though both AO and ld CIT(A) has taken cognizance of the said contentions of the assessee, however no credit/setoff has been given. As against the total addition of ₹ 8,00,000 made by the AO towards undisclosed household expenditure, the assessee has reported in his return of income, an amount of ₹ 8,92,000 as salary income for all the respective years taken together, besides income from other sources. We therefore find force in the said contention of the ld AR and are of the view that necessary credit should be available in respect of salary income already offered to tax and no addition is thus called for in respect of undisclosed household expenditure. The entire addition in the hands of the assessee on account of undisclosed household expenditure for AY 2005-06 and all subsequent years under appeal are hereby deleted.- Decided in favour of assessee
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