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2017 (8) TMI 715 - ITAT MUMBAIAddition u/s 68 - unexplained ‘Cash deposits’ and ‘Cash withdrawals’ - peak credit theory - Held that:- We find force in the contention of the ld. A.R that even if the explanation as regards the source of cash deposits does not merit acceptance, still the addition in the hands of the assessee was liable to be restricted by telescoping the cash deposits made in the bank accounts as against the respective cash withdrawals made from the same on the respective dates during the year under consideration. The Ld. A.R had drawn our attention to a chart reflecting the respective ‘Cash deposits’ and ‘Cash withdrawals’ made by the assessee during the year under consideration, as per which the peak credit addition in the hands of the assessee would stand restricted to ₹ 3,52,110/-. We are of the considered view that though the ‘Peak credit’ theory is not a proposition of law, however the fact as regards availability of funds out of the cash withdrawals made by the assessee from his bank account, which might have been utilised for redepositing on a subsequent date, cannot be ruled out in the absence of any evidence proving to the contrary that the said funds had been utilised/exhausted by the assessee by way of an investment or expenditure. We find that the Ld. A.R in order to drive home his aforesaid contention had relied on a host of judicial pronouncements and orders of coordinate benches of the Tribunal. We have deliberated on the facts of the present case and finding substantial force in the contentions raised by the ld. A.R before us, therefore in all fairness and in the interest of justice set aside the matter to the file of the A.O, who is directed to work out the peak credit in terms of our aforesaid observations and restrict the addition to the amount of such peak credit. That for the removal of doubts, it may be clarified that the A.O while working out the peak credit shall allow credit only as regards the availability of such respective cash withdrawals made by the assessee during the year under consideration, which can safely be held to be available with the latter for redepositing on a subsequent date. Appeal of the assessee allowed for statistical purposes.
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