TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Assessee wins appeal on income addition; deduction allowed for new unit; creditor addition upheld.</h1> <h3>Shri Abbas Nabi Shaikh Versus Assistant Commissioner of Income Tax, Vapi Circle, Vapi</h3> Shri Abbas Nabi Shaikh Versus Assistant Commissioner of Income Tax, Vapi Circle, Vapi - TMI Issues Involved:1. Addition of Rs. 1,26,55,804/- during survey proceedings under Section 133A.2. Deduction under Section 80IB for a new unit.3. Addition of Rs. 2,56,808/- on account of treating creditors from unexplained sources.Issue-wise Detailed Analysis:1. Addition of Rs. 1,26,55,804/- during survey proceedings under Section 133A:The assessee admitted additional income of Rs. 1,51,55,804/- during a survey on 22-7-2004 but did not offer this in the return of income. Instead, the assessee declared Rs. 1,06,00,000/- under different heads and paid taxes. The A.O. rejected the retraction made after 2.5 years, considering it an afterthought, and added Rs. 1,26,55,804/- to the total income after granting relief of Rs. 25,00,000/-.The CIT (A) upheld the addition, noting no independent evidence was presented to justify the discrepancies found during the survey. However, the assessee argued that statements made during a survey under Section 133A have no evidentiary value and relied on the decision of CIT vs. Khader Khan (214 CTR 589), which states that such statements cannot be the sole basis for addition.The Tribunal held that no addition can be made solely based on statements recorded during a survey without corroborative evidence. Consequently, the addition of Rs. 1,26,55,804/- was directed to be deleted.2. Deduction under Section 80IB for a new unit:The assessee claimed deduction under Section 80IB for a new unit started at Amli Industrial Estate after closing the old unit at Balaji Industrial Estate. The A.O. disallowed the deduction, viewing the new unit as a reconstruction of the existing business to continue enjoying tax benefits.CIT (A) upheld the A.O.'s decision, stating that the new unit was not a newly established industrial undertaking but a reconstruction of the old business. However, the Tribunal referred to its earlier decision in the assessee's own case for A.Y. 2003-04 and 2004-05, where it was held that setting up a new unit with new plant and machinery at a new location constitutes a new industrial undertaking.Following this precedent, the Tribunal allowed the deduction under Section 80IB for the new unit, reversing the CIT (A)'s decision.3. Addition of Rs. 2,56,808/- on account of treating creditors from unexplained sources:The A.O. found discrepancies between the assessee's ledger account and the supplier's ledger account, leading to an addition of Rs. 2,56,808/- (including a protective addition of Rs. 1,50,347/- for opening balance of creditors). The CIT (A) upheld the addition due to the lack of evidence from the assessee to rebut the A.O.'s presumption.The Tribunal, noting the absence of documentary evidence from the assessee to counter the A.O.'s findings, upheld the CIT (A)'s decision and dismissed this ground of the appeal.Conclusion:The appeal was partly allowed. The addition of Rs. 1,26,55,804/- based on the survey statement was deleted, the deduction under Section 80IB was allowed for the new unit, and the addition of Rs. 2,56,808/- for unexplained creditors was upheld.
TaxTMI 
TaxTMI 
