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2012 (8) TMI 1041 - AT - Income TaxAdditions based on the statement recorded at the time of survey u/s. 133A - Held that - In the present case, the additions are based on the statement recorded at the time of survey u/s. 133A which have been later on retracted by the assessee. The A.O. has not brought any corroborative evidence and material on record to justify the addition. The A.O. has not brought any independent evidence or given any finding to substantiate the declaration made at the time of survey. In view of these facts we are of the view that no addition can be made only on the basis of admission during the course of survey. We thus direct the deletion of the addition made. Thus this ground of the assessee is allowed. Violation of conditions laid down under section 80IB (2)(ii) - Held that - Carrying on the same business in the new unit or stoppage of business in the old unit cannot be a criteria to hold that it is a case of reconstruction of a business already in existence Creditors from unexplained sources - Held that - A.O. made addition on the basis of the ledger account of the assessee as appearing in the books of the supplier. Before us the Ld. A.R. has urged that the addition has been made on the basis of assumption and presumption. However, no documentary evidence has been furnished before us in its support. Thus in the absence of any material to the contrary, we do not find any reason to interfere in the order of CIT (A). We thus uphold the order of CIT (A) and dismiss this ground of assessee.
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.
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