Unexplained Cash Credits u/s 68: ITAT upholds Reduction Based on Peak Credit and Denies Telescoping of Income

The ITAT upheld a reduction of unexplained cash credits under Section 68, denying the telescoping of income. The case involved an individual taxpayer who had unexplained deposits in their account, which the tax authorities treated as income. The tribunal ruled that the taxpayer’s peak credit method was correct, which reduced the taxable income. The decision reinforces the principle of using the peak credit method to determine the extent of taxable income from unexplained cash credits. It also emphasizes that taxpayers should provide evidence to support the source of their deposits to avoid tax liabilities.