Additions ignoring peak credit amounts to double taxation if there is no material to show cash withdrawals could not have been re-deposited-ITAT

Additions ignoring peak credit amounts to double taxation if there is no material to show cash withdrawals could not have been re-deposited-ITAT 

ABCAUS Case Law Citation:
ABCAUS 1082 (2016) (12) ITAT

Brief Facts of the Case:
The Assessing Officer (AO) found that the assessee had not disclosed one bank account in her return of income. From the bank statement, the AO found  that the assessee had deposited cash on various dates amounting to Rs.32,36,112/-. The AO further observed that the assessee had deposited Rs. 20,000/- cash in another bank account. The assessee failed to explain the source of the cash deposits in the bank accounts and hence, the AO made addition of Rs.32,56,112/- to the income of the assessee as unexplained investment.

CIT(A) also confirmed the action of the AO and hence the assessee was in appeal before the Tribunal.

Contentions of the Assessee:
It was submitted that the addition of only peak credit of the Bank account should have been made by the AO. He submitted that immediate withdrawal of cash before the deposit of cash in the bank account should have been allowed as a set off.

Observations made by the Tribunal:
The Tribunal observed that there was also cash withdrawals from the said bank account before making of subsequent cash deposit in the very same bank account. The Revenue could not brought any material to show that the cash withdrawals from the Bank account could not have been utilized by the assessee for making subsequent cash deposit in the said bank account.

The ITAT opined that in the given circumstances, addition of aggregate of cash deposits ignoring the earlier cash withdrawals will lead to double taxation of very same amount.

Held:
The matter was remitted back to the file of the Assessing Officer for making addition of only peak credit amount of cash deposit made in the bank during the year following peak credit theory.