2012 (9) TMI 1183 - AT - Income Tax

Summary

Issues involved:
The issues involved in this case include the addition of unexplained cash credits u/s 68 of the Income Tax Act, 1961 due to failure to provide confirmation of creditors, the confirmation of addition by the ld. CIT(A), and the alternative submission of the assessee to adjust the closing stock in lieu of the disputed creditors.

Addition of unexplained cash credits u/s 68:
The Assessing Officer (AO) made an addition of &8377; 1,38,452/- as unexplained cash credits u/s 68 of the Income Tax Act, 1961, due to the assessee's failure to provide confirmation for certain creditors. The AO emphasized the triple onus under section 68 for providing identity, creditworthiness, and genuineness of transactions, which the assessee failed to prove, resulting in the addition.

Confirmation of addition by ld. CIT(A):
The ld. CIT(A) confirmed the findings of the AO regarding the unexplained cash credits. Despite the alternative submission of the assessee to adjust the purchases from the trading account, the ld. CIT(A) rejected this based on the decision of the Hon'ble Delhi High Court in CIT vs. La Medica, emphasizing the importance of proving the genuineness of transactions.

Alternative submission of the assessee:
The assessee's counsel argued that while the purchases were not disputed, the creditors were contested due to the inability to provide confirmations during the assessment proceedings. The counsel suggested adjusting the closing stock to account for the disputed creditors, but this contention was not accepted.

Decision and reasoning:
The Tribunal upheld the ld. CIT(A)'s decision, citing the precedent set by the Hon'ble Delhi High Court in CIT vs. La Medica. The Tribunal found that the assessee failed to prove the genuineness of the creditors, similar to the case precedent. Therefore, the appeal was dismissed, and the order of the ld. CIT(A) was confirmed.

Separate Judgement:
No separate judgment was delivered by the judges in this case.