AO to redo the assessment in the light of the observations made by the ITAT inasmuch as any addition if to be made to the tax declared, it should not be more than the peak credit in the bank account of the petitioner.

KARNATAKA HIGH COURT

No.- WRIT PETITION No.4349/2018 (T– IT)

Dated.- July 25, 2019

LOKESH CHANDRAPPA S/O CHANDRAPPA VERSUS INCOME TAX OFFICER WARD-3 (2) (4) , BANGALORE

Power of AO to determine income in remand case – ITAT directed AO for granting one more opportunity to the assessee for explanation of the source of cash deposit and in any case the addition if any it should not be more than the peak credit in the bank account. – AO determine the tax and penalty amount sans computing peak credit in the bank account

 – HELD THAT:- It is trite law that the AO has a legal obligation to implement the order of the ITAT strictly and such failure would result in the failure of justice. A writ of mandamus would be issued in such circumstances to the respondent – AO to carry out the directions given to him by the ITAT. This view is fortified by the judgment of the Hon’ble Apex Court in the case of Bhopal Sugar Industries Ltd., vs. ITO [1960 (9) TMI 11 – SUPREME COURT] . It is ex-facie apparent that no peak credit of the bank account has been worked out by the AO to conclude the assessments on remand by the ITAT.

Hence, the order impugned being perverse and illegal stands quashed. The proceedings are restored to the file of the respondent – AO to redo the assessment in the light of the observations made by the ITAT inasmuch as any addition if to be made to the tax declared, it should not be more than the peak credit in the bank account of the petitioner.