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2017 (8) TMI 608 - AT - Income TaxTrading addition - rejection of books of accounts - Held that - There is no dispute with regard to the gross profit. It is also not undisputed that the assessee is maintaining books of accounts. Moreover the Assessing Officer has not given any basis for making addition as to how this figure of 5 lacs as arrived at would be sufficient for estimating the profit. In the absence of such finding we do not see any reason to interfere into the finding of the Ld. CIT(A) same is hereby affirmed. Disallowance of deduction claimed u/s 80IA - Form 10CCB was not e-filed till the date of assessment proceedings although it was mandatory to file upto 31/10/2013 - reasons for delay - Held that - The reports in the form no. 10CCB have been filed manually within the due date before the Assessing Officer which could not be uploaded electronically. Further evidence has been filed in support of the fact that there was a technical issue in filing the report while the assessee had registered on the portal on 29.03.2013 itself as evidenced from the snap shot yet the same could not be uploaded. In view of the above there has been a reasonable cause for non e-filing of the reports and in view of the fact that the manual reports were filed in time in view thereof the deduction is allowable. - Decided in favour of assessee.
Issues Involved:
1. Restriction of trading addition by the CIT(A). 2. Allowance of deduction under section 80IA of the Income Tax Act. Issue-wise Detailed Analysis: 1. Restriction of Trading Addition by the CIT(A): The Revenue contested the CIT(A)'s decision to restrict the trading addition from ?5,00,000 to ?1,00,000. The Assessing Officer (AO) had initially made the addition due to the assessee not maintaining a stock register, which was deemed necessary to verify the consumption of raw materials and finished goods. The AO invoked section 145(3) of the Income Tax Act, 1961, to make a lump sum trading addition of ?5,00,000. The CIT(A), however, found that the gross profit of the assessee had increased and that the AO had not provided a concrete basis for the ?5,00,000 addition. The CIT(A) restricted the addition to ?1,00,000, considering the absence of a stock register insufficient to justify the higher amount. The Appellate Tribunal upheld the CIT(A)'s decision, noting that the AO failed to substantiate the basis for the ?5,00,000 addition and affirmed the CIT(A)'s findings. 2. Allowance of Deduction under Section 80IA: The Revenue also challenged the CIT(A)'s decision to allow the deduction under section 80IA amounting to ?1,62,25,183. The AO had disallowed this deduction on the grounds that the individual units had not earned profits since installation and that the audit report in Form 10CCB was not e-filed as required. The CIT(A) allowed the deduction, referencing section 80IA(5) which states that the income of the eligible business should be computed as if it were the only source of income from the initial assessment year onward. The CIT(A) noted that losses and depreciation from prior years, already absorbed, should not be considered for determining the eligible profit. This interpretation was supported by judicial precedents, including the Supreme Court's dismissal of the SLP in the case of Velayudhaswamy Spinning Mills (P) Ltd. vs. ACIT. Additionally, the CIT(A) addressed the issue of non-e-filing of the audit report, accepting the assessee's explanation of technical difficulties and noting that the audit report was filed manually within the due date. The CIT(A) concluded that the procedural requirement of e-filing should not override the substantive compliance of filing the audit report. The Appellate Tribunal affirmed the CIT(A)'s decision, agreeing that the CIT(A) had duly considered the AO's objections and followed binding precedents. The Tribunal found no reason to interfere with the CIT(A)'s findings and dismissed the Revenue's appeal on this ground. Conclusion: The Appellate Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decisions to restrict the trading addition to ?1,00,000 and to allow the deduction under section 80IA amounting to ?1,62,25,183. The Tribunal found the CIT(A)'s conclusions to be well-founded and supported by relevant judicial precedents.
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