2010 (7) TMI 1086 - AT - Income Tax

Summary

Issues involved: Assessment order validity, Addition of unexplained expenditure, Addition of unexplained deposit

Assessment Order Validity:
The AO completed the assessment on 31st December, 2008, and the assessee received the order on 20th January, 2009. The Tribunal rejected the contention that the order was backdated, as there was no evidence to support this claim. Therefore, the ground challenging the validity of the assessment order was rejected.

Addition of Unexplained Expenditure:
The AO observed discrepancies in the assessee's bank transactions, treating total withdrawals as unexplained expenditure under section 69C of the Income Tax Act. Despite inconsistencies in the assessment order figures, the Tribunal concluded that the total amount considered by the AO was Rs. 49,00,000. The assessee appealed this addition, arguing that withdrawals were redeposited and should not be assessed as unexplained expenditure. The Tribunal noted undisclosed bank accounts and unrecorded transactions, ultimately allowing the appeal in part and reducing the addition to Rs. 16,15,261 under section 69 of the Act.

Addition of Unexplained Deposit:
The Ld. CIT(A) directed an addition of Rs. 49,09,000 as unexplained deposit under section 69A, considering undisclosed bank account transactions. The assessee contended that this provision only applied to hard cash, not bank deposits. The Tribunal found that the peak balance in the bank account constituted unexplained investment, modifying the addition to Rs. 16,15,261 under section 69 of the Act. The appeal on this issue was allowed in part.

Conclusion:
The Tribunal partially allowed the assessee's appeal, reducing the total addition under different sections of the Income Tax Act. The decision was pronounced on 30th July, 2010.