2010 (2) TMI 1280 - AT - Income Tax

Summary

Issues involved: Appeal against assessment order u/s.143(3) for Assessment Year 2001-02.

Assessment of Unexplained Credits:
The Assessing Officer found an aggregate sum of &8377; 24,29,115 payable by the assessee to five weavers, which were not confirmed by the creditors. The AO treated this amount as unexplained credits and added it to the assessee's income. Additionally, other disallowances were made under different sections. The Commissioner of Income-tax(A) confirmed the unexplained credits addition and enhanced another addition based on a remand report. However, disallowances related to certain expenses were deleted by the Commissioner.

Judgment:
The ITAT Bangalore heard arguments from both parties and reviewed the case details and evidence. The assessee failed to provide external evidence to prove the genuineness of the credit balances in the accounts of the suppliers. The ITAT upheld the Commissioner's decision on this issue, stating that the unproved credit balances remained unverified.

Enhancement of Addition:
Regarding the enhancement of the addition made by the Commissioner, the ITAT found that the assessee deserved leniency as the remand report came after the closure of the relevant year, and the assessing authority's conclusions were based on presumptions. The ITAT disagreed with the enhancement and deleted it, partially allowing the appeal filed by the assessee.

Conclusion:
The ITAT Bangalore partially allowed the appeal, confirming the addition of unexplained credits while deleting the enhancement made by the Commissioner. The judgment was pronounced on February 26, 2010, in Bangalore.