DCIT Vs Sant Eknath Trading Company (ITAT Pune)
ITAT Remands ₹2.53 Crore Addition Because Source of Cash Payments Was Not Verified; ITAT Sets Aside Deletion Because Ownership of Transactions Does Not Explain Cash Source; ₹2.53 Crore Section 69 Addition Remanded Because CIT(A) Did Not Verify Peak Credit Claim; Cash Payments in Seized Diaries Need Verification Because Profit Disclosure Alone Is Not Enough.
The Income Tax Appellate Tribunal (ITAT), Pune, allowed the Revenue’s appeal for statistical purposes and remanded the matter to the Commissioner of Income Tax (Appeals) [CIT(A)] for fresh adjudication regarding the deletion of an addition of ₹2,53,36,402 made under Section 69 read with Section 115BBE of the Income-tax Act, 1961. The addition arose from handwritten pocket diaries seized during a search conducted in the Disha Group, which allegedly contained date-wise cash transactions involving the assessee and Devanand Narayan Kotgire (DNK). The Assessing Officer (AO) treated the cumulative net cash payments reflected in the seized diaries as unexplained cash payments and made the addition based on the peak theory.
The assessee had succeeded before the CIT(A), who held that DNK had accepted ownership of the transactions recorded in the diaries and had offered income based on the peak credit theory and net profit at 8% on business transactions. On that basis, the CIT(A) concluded that taxing the same transactions again in the assessee’s hands would amount to double taxation and deleted the addition.
