SATYAM GENERIC PHARMA PVT LTD ,MUMBAI vs. DCIT, CIRCLE 13(2)(2), MUMBAI

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ITA 9318/MUM/2025Status: DisposedITAT Mumbai30 April 2026AY 2022-235 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the lower authorities had not properly verified the assessee's explanations regarding agency transactions for purchase discrepancies and had made additions for creditors solely on non-response to notices. Therefore, the matter was restored for fresh adjudication.

What were the facts?

The assessee, a pharmaceutical trading company, faced additions for alleged bogus purchases and unexplained cash credits (loans and sundry creditors). The Assessing Officer (AO) made these additions based on discrepancies in GST data and non-response to notices, which the CIT(A) confirmed ex-parte.

What were the issues?

Whether additions for bogus purchases and unexplained cash credits were justified without proper verification of the assessee's submissions and evidence, especially when the CIT(A) passed an ex-parte order.

Which sections of the Income-tax Act were involved?

Section 69C,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE BEENA PILLAI & HON’BLE JAGADISH

For Appellant: Shri Arun Kanti Datta - CIT DR
Pronounced: 30/04/2026

आदेश / ORDER PER BEENA PILLAI, JUDICIAL MEMBER: This appeal is filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the Ld. CIT(A)], dated 31/10/2025 for the A.Y. 2022- 23, on the following grounds of appeal:-

“1.The Ld. CIT(A) erred in confirming addition made by the Ld. AO u/s 69C for genuine purchases amounting to Rs. 23,31,18,652 treating the same as bogus purchase disregarding the submissions made by the appellant.

2.

The Ld. CIT(A) erred in confirming addition made by the Ld. AO u/s 68 for loan amounting to Rs. 5,40,75,445 as unexplained cash credit disregarding the facts of the case and the submission made by the appellant. 3. The Ld. CIT(A) erred in confirming addition made by the Ld. AO u/s 68 for Sundry Creditors amounting to Rs. 2,98,53,246 as unexplained cash credit disregarding the facts of the case and the submission made by the appellant. 4. That the Appellant craves leave to add, alter, amend, modify, substitute, or withdraw any of the foregoing grounds of appeal at or before the time of hearing of the appeal.” 2. The assessee is a Private Limited Company engaged in wholesale trading of medicines and also acting as a Carrying & Forwarding (C&F) Agent for pharmaceutical companies. In such capacity, the assessee sells goods at prices fixed by the principal companies and earns only commission income.

2.1. During the assessment proceedings, the Ld. AO observed a discrepancy between purchases reflected in the books and those appearing on the Insight Portal (GST data), resulting in a difference of Rs.23,31,18,652/-. The explanation of the assessee that such difference pertained to agency transactions, stock transfers, and other non-trading entries was not accepted, and the same was treated as bogus purchases, resulting in addition u/s 69C.

2.2. Further, the Ld. AO made addition of Rs.5,40,75,445/- u/s 68 in respect of loan creditors on account of non-response to notices issued u/s 133(6). Similarly, addition of Rs.2,98,53,246/- u/s 68 was made in respect of sundry creditors due to partial compliance.

2.3. Aggrieved by the order of Ld. AO assessee preferred appeal before the Ld.CIT(A). The Ld.CIT(A) dismissed the appeal of the assessee ex-parte.

Aggrieved by the order of Ld.CIT(A), assessee is in appeal before this Tribunal.

3.

Before us he Ld. AR submitted that the assessee is merely acting as a C&F Agent and the figures reflected in GST returns include agency transactions which do not constitute purchases of the assessee. It was submitted that proper reconciliation explaining the difference is available and can be substantiated with supporting documents. It was further submitted that the additions u/s 68 have been made solely on account of non-response to notices, whereas the assessee is in a position to establish identity, creditworthiness and genuineness of the creditors. The Ld. AR also submitted that due to inadvertent non-noticing of email communications, effective representation could not be made before the Ld. CIT(A).

3.1. The Ld. DR relied upon the orders of the lower authorities.

We have perused the submissions advanced by both sides in light of the records placed before this Tribunal.

4.

The primary issue relates to addition u/s 69C on account of alleged bogus purchases arising from mismatch between books and GST data. It is observed that the assessee is functioning as a C&F Agent and claims that the difference arises due to agency transactions and stock transfers. We note that the reconciliation explaining such difference has not been properly verified by the authorities below. The addition appears to have been made merely on the basis of mismatch without appreciating the nature of the assessee’s business.

4.1. We further note that, the additions made u/s 68 in respect of loan creditors and sundry creditors are primarily based on non- response to notices u/s 133(6). It is settled law that such non- response cannot be the sole basis for addition without examining the evidences that may be furnished by the assessee. We also take note of the submission that the assessee could not effectively represent its case before the Ld. CIT(A). In our view, the issues require fresh verification.

5.

Accordingly, in the interest of justice, we set aside the impugned order and restore the issues to the file of the Ld. CIT(A) for fresh adjudication. The assessee shall furnish complete reconciliation of purchases vis-à-vis GST data along with supporting evidences and also substantiate loan creditors and sundry creditors. The Ld. CIT(A) shall afford reasonable opportunity of being heard and pass a speaking order in accordance with law.

Accordingly, grounds raised by the assessee are allowed for statistical purposes.

In the result, appeal filed by assessee stands allowed for statistical purposes.

Order pronounced in the open court on 30/04/2026.

Sd/- Sd/- JAGADISH BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai Dated: 30/04/2026 Sc. Sr. P.S. Sc. Sr. P.S. Sc. Sr. P.S. Sc. Sr. P.S. Copy to: 4 SATYAM GENERIC PHARMA PVT LTD 888-B2 ARIHANT COMPLEX RETI BUNDER DABHAD B.O NANDA, 1 THANE-421302, MAHARASHTRA 2 DCIT, CIRCLE 13(2)(2), AAYAKAR BHAVAN, M.K ROAD,, MUMBAI-400020, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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