Entire Deposits in Bank cannot be Taxed, Only Peak Credit can be Taxed: ITAT

Entire Deposits in Bank cannot be Taxed, Only Peak Credit can be Taxed: ITAT

The assessee is a small hawker dealing in the business of cloth who sold cloth in cash and deposited the amount in his bank account and from where the withdrawals were made to meet out the cost of purchases and bank statement of the assessee where such deposits and withdrawals were scrutinized. The tribunal found that the assessee had filed a copy of the bank account with Punjab National Bank, and the pattern of deposits and withdrawals reflects that the assessee had been withdrawing the money from the above deposits and the total withdrawals are more than the deposits in the account. Before ld. CIT(A), the assessee had submitted the entire deposits of Rs. 15,82,190 are on account of sale proceeds of cloth and therefore income should be computed as per the provisions of Section 44AF of the Act. The tribunal held that the entire deposits in the bank cannot be taxed and only peak credit can be taxed in the present case i.e.; Rs. 79,668 keeping in view the peculiar conditions of the assessee and in view of the facts and circumstances of the case and the fact that such submissions were made before ld. CIT(A), and finding the deposits and withdrawals in the bank account. The AO is directed to restrict the addition to Rs. 79,688 being the peak credit in his bank account. Therefore, an appeal filed by the assessee was allowed. To Read Judgment Download Given PDF Below.