Balan Logeswaran Vs ITO (ITAT Chennai)
The assessee appealed against the order dated 14.07.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2017-18.
The assessee, an individual engaged in the business of plywood trading under the name Shri Deepam Traders, filed the return of income on 03.11.2017 declaring total income of ₹4,39,610. During scrutiny assessment, the Assessing Officer noticed that the assessee maintained two undisclosed bank accounts with Axis Bank Ltd. and Karur Vysya Bank Ltd.. Examination of the bank statements showed cash deposits during the demonetisation period in specified bank notes. The Assessing Officer rejected the assessee’s explanation that the deposits were sourced from the cash balance available as on 08.11.2016 and treated the entire credits in both bank accounts amounting to ₹60,04,999 as unexplained.
In appeal, the CIT(A) granted partial relief by deleting an addition of ₹31,02,000 but sustained the balance addition of ₹29,02,999 under Section 69A, rejecting the assessee’s plea that only the peak credit should be taxed. The CIT(A) observed that the two personal bank accounts had not been disclosed in the return of income or the audited books of account, that the assessee had not explained the identity of depositors, the nature and source of the deposits, or established any linkage between the transactions and the declared business. The CIT(A) further held that the claim for application of the peak credit theory was raised for the first time during appellate proceedings and was unsupported by evidence demonstrating rotation of funds. Accordingly, the CIT(A) upheld the addition of ₹29,02,999 under Section 69A.
