DEPUTY COMMISSIONER OF INCOME TAX -13(2)(2), MUMBAI vs. SUNPHARMA DISTRIBUTORS LIMITED, MUMBAI
What did the Tribunal hold?
The Tribunal allowed the assessee's application for admission of additional evidence. The reasoning was that the documents were in furtherance of earlier submissions, relevant for just and complete adjudication, and necessary for reaching a legitimate conclusion on the controversy. The Tribunal relied on the decision in Jeypore Timber & Veneer Mills (P.) Ltd. v. CIT. Consequently, since the admitted additional evidence required detailed factual verification, the Tribunal restored the matter back to the file of the CIT(A) for fresh adjudication after verifying these documents and providing an opportunity of hearing to the parties. The Tribunal explicitly stated that this decision did not reflect on the merits of the dispute. In light of this, the Revenue's appeal was also sent back to the CIT(A) for a fresh decision. The appeals were allowed for statistical purposes.
What were the facts?
The appeals by the assessee and the Revenue pertain to Assessment Year 2020-21. The assessee is challenging an order dated 26.03.2024 passed by the National Faceless Appeal Centre, Delhi/CIT(A) under Section 250 of the Income Tax Act, 1961. The primary ground raised by the assessee is the disallowance of a provision for sales return amounting to Rs. 10.67 Crore. This disallowance was made by the Assessing Officer (AO) and confirmed by the CIT(A) on the basis that the assessee had not provided the 'basis' for arriving at this figure, and that the assessee was under no obligation to incur such expenditure. The assessee sought to admit additional evidence, including detailed calculations for the provision, its reversal in a subsequent year, and the AO's order for AY 2022-23, under Rule 29 of the ITAT Rules, 1963.
What were the issues?
1. Whether the Tribunal should admit additional evidence, including detailed calculations of provision for sales return and related documents, as per Rule 29 of the ITAT Rules, 1963, for the proper adjudication of the appeal concerning Assessment Year 2020-21. Assessee's contention: The assessee argued that the additional documents were necessary for a detailed calculation of the provision and its subsequent reversal, and that the AO's order for AY 2022-23 was relevant. The assessee relied on the decision in Jeypore Timber & Veneer Mills (P.) Ltd. v. CIT [(1982) 137 ITR 415 (Gau)]. Revenue's contention: The Revenue contested the appeal and requested its dismissal.
Which sections of the Income-tax Act were involved?
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- Jeypore Timber & Veneer Mills (P.) Ltd. v. CIT8 citing137 ITR 415 · 1982 · HC
Income Tax Appellate Tribunal, “B” BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN & HONBLE SMT. RENU JAUHRI
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
PER SANDEEP GOSAIN, JM: These are appeals by the assessee and the Revenue for A.Y. 2020-21. They were heard together and are being disposed of by this common order. 2. The appeal filed by the assessee challenging the impugned order dated 26.03.2024 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi/CIT(A), for the A.Y 2020-21. 3. At the very outset, we noticed that the assessee in his appeal has raised ground in respect of disallowance of provision for sale return of Rs. 10.67 Crore. As per records the said disallowance has been made the AO and confirmed by Ld. CIT(A) on the ground that the assessee has not provided the ‘basis’ for arriving at the amount of Rs. 10.67 Crores as ‘provision for sales return’ and the assessee is under no obligation to incur such expenditure.
In this regard it is submitted by Ld. AR that although the assessee has made detailed submissions in response to the above objections but the revenue authority have not agreed with the submissions of the assessee, therefore now assessee felt it necessary to bring on record, further detailed calculation of the provisions made for the year under consideration as well as for the subsequent assessment year. Further assessee also wants to bring on record the facts regarding the reversal of the provision made in the subsequent year. Apart the assessee also wants to place on record the order of the AO for the A.Y 2022-23 passed u/s 143(3) of the Act as the same is relevant for adjudication therefore made an application under Rule 29 of the ITAT Rules, 1963 for admission of above documents as additional evidence.
On the other hand Ld. DR contested the said appeal and requested for dismissal of the same.
We have heard both the parties and perused the material placed on record as well as orders passed by the revenue authorities. From the records we noticed that the facts are not disputed to the extent of disallowance of ‘provision for sales return’ of Rs. 10.67 crore on the ground that assessee has not provided the “basis” for arriving at the said amount as ‘provision for sales return’. Therefore, under these circumstances further details are now being filed by the assessee by way of additional evidence and these details are very necessary for reaching to the legitimate conclusion and for adjudicating the controversy/ issue once for all.
Since these above documents are in furtherance of earlier documents filed by the assessee, hence are relevant for the purpose of just and complete adjudication therefore while relying upon the decision of Hon’ble Guwahati High Court in the case of Jeypore Timber & Veneer Mills (P.) Ltd. v. CIT [(1982) 137 ITR 415 (Gau)], we allow the application filed by the assessee and admit the documents detailed above as additional evidence.
Since we have admitted additional evidence and all the documents now admitted as additional evidence needs detailed factual verification. Therefore in our considered view, the present matter needs to be restored back to the file of CIT(A). Therefore the present appeal is restored back to the file of CIT(A) for fresh adjudication after verification of the documents relied upon by the assessee by way of additional evidence. Needless to mention after providing opportunity of hearing to the parties. The assessee shall not seek any adjournment on frivolous grounds and remain cooperative during the course of proceedings.
Before parting we make it clear that our decision to restore the matter back to the file of CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the CIT(A) independently in accordance with law.
In view of our decision in above, the matter has been restored and therefore appeal filed by the Revenue in A.Y. 2020-21 is also sent back to the file of Ld. CIT(A) for fresh decision in accordance with law.
In the result, both the appeals filed by the assessee and Revenue stand allowed for statistical purpose.
Order pronounced in the open court on 11.06.2025.
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