2010 (12) TMI 1316 - AT - Income Tax

Summary

Issues involved: Department's appeal against CIT(A)'s order for AY 2001-02. Grounds include deletion of addition u/s 68 of IT Act and unexplained expenditure.

Deletion of addition u/s 68 of IT Act:
- AO reopened assessment due to credit entries in assessee's books from certain parties.
- AO considered entries as escaped assessment, added Rs. 8,25,000 u/s 68.
- CIT(A) deleted the addition.
- Department appealed, arguing transactions were accommodation entries.
- Assessee argued amounts were refunds of advances for goods not supplied.
- ITAT found parties were not creditors of assessee, no loan taken.
- No evidence of undisclosed income, AO relied on unverified information.
- ITAT rejected department's arguments, upheld CIT(A)'s decision.
- Case laws cited by department deemed inapplicable.
- Ground no.2 of department's appeal rejected.

Unexplained expenditure addition:
- AO made addition of Rs. 16,500 for alleged unpaid commission.
- CIT(A) deleted this addition.
- Since addition of Rs. 8,25,000 was deleted, ground no.3 rejected.
- Appeal of the department dismissed.