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Income Tax Appellate Tribunal, HYDERABAD BENCH “A”, HYDERABAD
Before: SMT. P. MADHAVI DEVI & SHRI A. MOHAN ALANKAMONY
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “A”, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA No.901/Hyd/2018 Assessment Year: 2014-15 M/s. Concord Drugs Limited, Vs. DCIT, Hyderabad. Circle-1(2), PAN: AAACC 8171 D Hyderabad. (Appellant) (Respondent) Assessee by: Sri P. Murali Mohan Rao Revenue by: Smt Nivedita Biswas, DR Date of hearing: 27/08/2019 Date of pronouncement: 04/10/2019 ORDER PER A. MOHAN ALANKAMONY, AM.:
This appeal is filed by the assessee against the order of the Ld. CIT(A)-1, Hyderabad dated 26-02-2018 in appeal No.0188/CIT(A)-1, Hyd/2016-17/2017-18 passed U/s. 143(3) & U/s. 250(6) of the Act for the assessment year 2014-15.
The assessee has raised several grounds in its appeal, however, the crux of the issue is that the Ld.CIT(A) has erred by remitting back the matter back to file of AO for verification though the assessee has furnished the invoices with respect to the purchases made by it.
The brief facts of the case are that the assessee is a limited company, engaged in the business of manufacturing pharma formulations, filed its return of income on 16-09-2014, declaring its total income under the normal provisions and under the provisions of 115JB of the Act. Subsequently, the case was taken up for scrutiny and assessment was completed on 02-12-2016 wherein the Ld.AO made addition of Rs.10,18,19,329/- by disallowing the expenditure towards purchases u/s.37(1) of the Act.
During the course of scrutiny assessment proceedings, it was observed by the Ld.AO that assessee has made purchases from certain parties towards which payment was not made as detailed herein below:
S.No. Name of the Vendor Purchases debited to P&L A/c (Rs) 1 Navpad Impex 83,96,490 2 Asian Metal Printers 70,45,210 3 Chorus Labs Ltd 99,60,000 4 Sarah Impex 1,05,41,390 5 Arch Pharma 94,62,479 6 Anee Pharma 94,12,890 7 Vision 1,15,42,390 8 Asrar Enterprises 1,02,42,360 9 H.V. Technologies 1,10,24,210 10 Balaji Packers 68,96,480 11 Shiva Shakti Packaging 72,95,430 Total: 10,18,19,329
On query, assessee was unable to produce the invoices, waybills and delivery challans towards the purchases made from the aforesaid parties. The assessee had only filed the ledger account copies of certain
parties maintained in its books of accounts. It was further observed that payment to the aforesaid parties remain unpaid. Therefore, the Ld.AO came to the conclusion that the purchases debited to the Profit & Loss A/c for Rs.10,18,19,329/- is bogus. Accordingly, the Ld.AO added the same to the income of the assessee, disallowing the expenditure u/s.37(1) of the Act.
On appeal, the assessee explained before the Ld.CIT(A) that the assessee had erroneously disclosed incorrect names of its Sundry Creditors before the Ld.AO. Thereafter, the assessee submitted the invoices with respect to the purchases made for Rs.10,18,19,329/- as detailed herein below: -
S.No. Name of the Vendor Purchases claimed (Rs) 1 M/s. Satyam Enterprises 83,96,490 2 M/s. Jay Traders 70,45,210 3 M/s. Sri Venkateshwara Traders 99,60,000 4 M/s. M.S.Pharma 1,05,41,390 5 M/s. Macdeal 94,62,479 6 M/s. Drashti Enterprises 94,12,890 7 M/s. Arunjyothi Enterprises 1,15,42,390 8 M/s. Shanta Enterprises 1,02,42,360 9 M/s. Marathi Enterprises 1,10,24,210 10 M/s. Ace Pharma 68,96,480 11 M/s. Samir Pharma 72,95,430 Total: 10,18,19,329
The assessee further argued before the Ld.CIT(A) that the sale arising out of the entire purchase has been credited to the Profit & Loss A/c hence, addition made for Rs.10,18,19,329/- is unjustifiable. The
Ld.CIT(A) after examining the issue was of the view that since the discrepancy is huge, the entire documents filed by the assessee cannot be verified by obtaining remand report from the Ld.AO. Therefore, he remitted the matter back to the file of AO to verify the particulars furnished before him.
The Ld.AR vehemently argued before us that when the entire particulars were furnished before the Ld.CIT(A), he ought to have consider the same and granted relief to the assessee, but, he has erroneously remitted the matter back to the file of Ld.AO which is not appropriate. He therefore pleaded that the addition made by the Ld.AO may be deleted.
Ld.DR, on the other hand, argued in support of the order of the Ld.CIT(A).
We have heard the rival submissions and carefully perused the material on record. Since the assessee has produced additional evidence before the Ld.CIT(A) for the first time, as stipulated under the Act the Ld.CIT(A) ought to have obtained remand report from the Ld.AO and thereafter decided the matter in accordance with merit and law. It is pertinent to mention that CIT(A) does not have the power to remit back the matter to the file of AO as per Section 251(1) of the Act, by virtue of amendment in the Finance Act, 2001 w.e.f. 01-06-2001. Considering the issue before us and since the Tribunal does not have such
restrictions for remitting back the matter to the file of Ld.AO for verifying the additional evidence, we are of the view that the matter is required to be revisited by the Ld.AO afresh in the light of the fresh evidence produced by the assessee in order to avoid miscarriage of justice. Therefore, we hereby remit the matter back to the file of Ld.AO only for the limited purpose of verifying the genuineness of the purchases and the creditors with respect to the following 11 parties and thereafter pass appropriate order in accordance with merit and law:
S.No. Name of the Vendor Purchases (Rs) 1 M/s. Satyam Enterprises 83,96,490 2 M/s. Jay Traders 70,45,210 3 M/s. Sri Venkateshwara Traders 99,60,000 4 M/s. M.S.Pharma 1,05,41,390 5 M/s. Macdeal 94,62,479 6 M/s. Drashti Enterprises 94,12,890 7 M/s. Arunjyothi Enterprises 1,15,42,390 8 M/s. Shanta Enterprises 1,02,42,360 9 M/s. Marathi Enterprises 1,10,24,210 10 M/s. Ace Pharma 68,96,480 11 M/s. Samir Pharma 72,95,430 Total: 10,18,19,329
We also make it clear that the assessee shall be at liberty to furnish any fresh evidence/particulars required to establish its claim and Revenue shall examine the same providing proper opportunity to the assessee of being heard, taking into consideration of every such particulars produced by the assessee, while passing the order. It is ordered accordingly.
In the result, the appeal of assessee is treated as allowed for statistical purposes, as indicated herein above.
Pronounced in the open Court on 04th October, 2019.
Sd/- Sd/- (P. MADHAVI DEVI) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 04th October, 2019. OKK Copy to:- 1) M/s. Concord Drugs Limited C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, Ist Floor, Somajiguda, Hyderabad- 82. 2) DCIT, Circle-1(2), Hyderabad. 3) The CIT(A)-1, Hyderabad 4) The Pr. CIT-1, Hyderabad 5) The DR, ITAT, Hyderabad 6) Guard File