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Income Tax Appellate Tribunal, HYDERABAD BENCH “A”, HYDERABAD
This appeal is filed by the assessee against the order of the Ld. CIT(A)-4, Hyderabad in appeal No. 0205/15-16/ITO, W-16(1)/CIT(A)- 4/Hyd/2016-17, dated 27/02/2017 passed U/s. 144 r.w.s 250(6) of the Act for the A.Y. 2012-13.
The assessee has raised five grounds in its appeal and they are extracted herein below for reference:
“1. In law and in facts and circumstances of the appellant’s case, the Ld. CIT(A) has grossly erred in sustaining the part of adhock additions, enhancing the addition of Rs. 13,68,655/- “under the head business promotion” without following the mandatory provision of section 251(2), also without providing the full remand report with annexure even after prayed by the appellant.
2. The Ld. CIT(A) further erred in law confirming the addition of Rs. 33,47,325/- being the 50% of business promotion expenses of Rs. 66,94,649/- simply relied on the remand report of the A.O. without proper appreciation of material evidence with explanation and submissions that the entire expenditure is incurred wholly and exclusively for the purpose of promotion of the business and therefore the entire addition shall be deleted.
The Ld. CIT(A) erred in facts and law and circumstances of the case confirming the addition of Rs. 4,64,129/- under the head of conveyance simply relied on remand report of the A.O. even after furnishing the nature of the expenses incurred by the marketing staff in various places for which the reimbursement was made and this aspect was completely ignored as entire expenditure is wholly and exclusively for the purpose of business.
4. The Ld. CIT(A) erred in facts and law and confirming the addition of Rs. 1,20,000/- out of Rs. 3,43,784/- under the head preliminary expenses is totally unjustified, unwarranted and therefore shall be deleted.
5. For these and other reasons that may be urged at the time of hearing, the appellant prays the Hon’ble Tribunal to delete the additions sustained by the Ld. CIT(A).”
The brief facts of the case are that the assessee is a Private Limited 3. company engaged in trading of Pharmaceuticals Products filed its return of income for the A.Y. 2012-13 on 30/09/2012 admitting total income of Rs.4,18,626/- under the normal provisions and Rs. 4,33,452/- under the 115JB of the Act. Initially, the assessment was processed U/s. 143(1) of the Act. Subsequently the case was converted into scrutiny by issue of notice U/s. 143(2) of the Act. Considering the assessee’s non- compliance to the hearing notices, the Ld. A.O. completed the assessment U/s. 144 of the Act by making certain additions aggregating to Rs. 82,77,274/- viz;[(i) Disallowance of payments of VAT & GST – Rs.
2,89,048/-; (ii) disallowance of preliminary expenses – Rs. 3,43,784/-; (iii) Disallowance of Expenditure – Rs. 4,909/-; (iv) Disallowance of cash deposit – Rs. 24,50,000/-; (v) Disallowance difference in cash deposits – Rs. 87,637/- and (vi) Disallowance of 50% of expenditure towards business promotion and conveyance, boarding & lodging – Rs. 52,01,896/-] and raised a demand of Rs. 26,08,770/-. Aggrieved by the order of the Ld. A.O., the assessee filed an appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) granted part relief to the assessee and confirmed the addition made by the Ld. A.O. in respect of disallowance of Rs. 51,01,896/- while as restricted the disallowances in respect of PF, VAT & GST payable U/s. 43B and disallowance of expenses towards depreciation and amortization of expenses U/s. 37(1) of the Act. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.
Before us, at the outset, the Ld. AR submitted that the Ld. A.O. had passed ex-parte order U/s. 144 of the Act without affording proper opportunity to the assessee. It was further submitted that during the course of First Appellate Proceedings, the assessee could not furnish / produce the bills / vouchers and the documentary evidence before the Ld. Revenue Authorities due to paucity of time and now the assessee is in possession of the evidence to support the claim of the assessee. It is therefore, requested that the matter may be remitted back to the file of the Ld. CIT(A) in order to provide one more opportunity to the assessee to produce the evidence in support of its claim. The Ld. DR on the other hand, vehemently argued against the submissions of the Ld.AR and opposed to remit the matter back to the file of the Ld. CIT (A).
We have heard the rival submissions and carefully perused the materials on record. On examining the orders of the Ld. Revenue Authorities, it is apparent that the Ld. A.O. had passed ex-parte order U/s. 144 of the Act and the Ld. CIT(A) had partly allowed the appeal of the assessee. Before us, the Ld. AR has admitted that the assessee was not able to produce certain documentary evidence, bills and vouchers before the Ld. Revenue Authorities and the assessee is now ready to produce the same before them if an opportunity is being provided to the assessee. In this situation, considering the facts and circumstances of the case as well as the issues involved in the appeal, in the interest of justice, we hereby remit the matter back to the file of the Ld. CIT(A) to consider the disputed issues afresh and to adjudicate the same in accordance with law and on merit by providing one more opportunity to the assessee of being heard. At the same breath, We also hereby caution the assessee to promptly co-operate before the Ld. CIT(A) in the proceedings failing which the Ld. CIT(A) shall be at liberty to pass appropriate order in accordance with law and merits based on the materials on the record. It is ordered accordingly.
In the result, appeal of the assessee is allowed for statistical purposes as indicated herein above.
Pronounced in the open Court on 20th September, 2021.