Unexplained bank credits sustained where documentary evidence failed to prove source of funds and creditworthiness.

Credits in bank accounts were treated as unexplained where the assessee's confirmations, bank statements, returns and other documents did not satisfactorily establish the source of funds, the receipt and distribution of alleged advances or sale proceeds, or the creditworthiness of the parties. Although some entries were linked to mutual fund redemptions and loan repayments, the overall explanation remained unproved. The Tribunal found no basis to disturb the factual findings and accepted peak credit verification only as part of the appellate approach. The addition was sustained.

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Issues: Whether the addition made under section 69A of the Income-tax Act, 1961 on account of credits in the bank account and the direction to consider peak credit required interference.

Analysis: The assessee produced confirmations, bank statements, income-tax returns and other documentary material to explain the credits and the source of funds. The appellate authority nevertheless found that the source of funds and creditworthiness of the parties were not established to the required extent, particularly because the evidence did not satisfactorily prove the receipt and distribution of the alleged advances or sale proceeds. It also noticed that some credits reflected mutual fund redemption proceeds and loan repayments, but concluded that the overall explanation remained unproved. The Tribunal found no reason to disturb those findings and accepted the direction to verify peak credit only as part of the appellate conclusion.

Conclusion: The addition under section 69A was sustained and the assessee's challenge failed.

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