AKR Poly Industries Vs ITO (Madras High Court)
The case concerns an appeal filed by the assessee challenging the order of the Income Tax Appellate Tribunal dated 29.01.2013. The assessee, a firm engaged in manufacturing disposable plastic cups and registered as a small-scale undertaking, filed its return declaring nil income and claimed deduction of ₹9,10,600 under Section 80-IA of the Income Tax Act.
During scrutiny, the Assessing Officer accepted that the assessee satisfied the conditions for claiming deduction under Section 80-IA(4). However, it was observed that the assessee had shown sundry creditors amounting to ₹30,17,891.78 in its balance sheet. The assessee failed to furnish complete details such as names, addresses, confirmations, and other supporting evidence for these creditors.
The Assessing Officer held that the assessee failed to discharge its burden of proving the identity, capacity, genuineness, and creditworthiness of the creditors. Consequently, an addition of ₹16,42,093 was made under Section 68 as unexplained credit and treated as “income from other sources.” The total income was determined accordingly.
On appeal, the Commissioner of Income Tax (Appeals) partly accepted the assessee’s explanation. Based on remand proceedings, ₹4,55,355 was found explained, and the remaining ₹11,86,758 was treated as business income. The CIT(A) also allowed deduction under Section 80-IB on such income.
