Inter-Bank Transfers Cannot Inflate Consolidated Peak Credit: ITAT Jaipur

Surendra Pal Singh Sahni Vs ACIT (ITAT Jaipur)

Money Changes Pockets, Not Income: ITAT Corrects Inflated Peak Credit

Inter-bank Transfers Cannot Artificially Inflate Peak Credit

The Jaipur Bench of the Income Tax Appellate Tribunal, following a Third Member decision, reduced a disputed peak-credit addition from ₹29,18,784 to ₹11,97,484. The central issue concerned transfers between the assessee’s own undisclosed bank accounts and their treatment while preparing a consolidated peak-credit calculation.

The majority accepted that the relevant transfers were contra entries representing movement of the same money between accounts. They could not inflate the consolidated peak merely because one side of the transfer was considered without properly accounting for the corresponding entry. The Tribunal also deleted a separate rental-income addition of ₹50,400, since that issue had already attained finality in the earlier round.

Four Undisclosed Accounts and a Second Round of Litigation

The assessee had maintained four undisclosed bank accounts, which were disclosed during the earlier proceedings. In the first round of litigation, the Tribunal directed the Assessing Officer to calculate the peak by merging all four accounts, rather than proceeding on the basis of their closing balances.

The purpose of that exercise was to determine the maximum amount represented by the transactions after considering the movement of funds. The earlier order also required the assessee to cooperate and furnish the relevant evidence.