BRILLIANT BIO PHARMA LIMITED,HYDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX , CIRCLE-1(3), HYDERABAD

Brief facts of the case are, the assessee, engaged in the business of manufacture and trading medicines, filed its return of income for the AY 2011-12 on 29/09/2011 admitting total income of Rs. 3,35,002/-. Subsequently, the assessee filed its revised return of income on 03/03/2012 admitting total income of Rs. 42,29,255/- under normal provisions and book profit of Rs. 1,17,80,308/- under the provisions of section 115JB of the Income-tax Act, 1961 ( in short ‘the Act’). The return was processed u/s 143(1) of the Act. Subsequently, the case was converted to scrutiny as per the CBDT Instructions. Accordingly, notices u/s 143(2) and 142(1) were issued and served on the assessee.

Aggrieved with the above order, assessee preferred an appeal before the CIT(A).

Before the CIT(A), assessee filed ledger extracts and bank statements reflecting the share application money and made a

Aggrieved by the order of CIT(A), the assessee is in appeal before us raising the following grounds of appeal: “I) The addition of share application money to the total income returned, is not correct when the assessee company received the same through banking channel, and the same is reflected in the bank accounts of the company. 2) The Assessing Officer has not attempted to verify the genuineness of the transactions with the help of the material that was on record and has added back share application money to the total income. 3) On the above and other grounds that may arise during the course of appeal, the appellant prefers this appeal, requesting the honourable IT AT for an order of deletion of the addition.”

At the time of hearing, ld. AR of the assessee submitted that AO has completed the assessment based on the information available before him and it is normal to get suspicion on the transactions. He should have raised before the assessee and got clarified, but, AO has not given any opportunity to the assessee to clarify the queries/suspicion before completing the assessment. However, assessee has submitted the relevant bank statements, ledger extracts in the books of the assessee as well as in the books of the parties before CIT(A). He submitted that all the parties, who were invested in the company are trade creditors, who are having dealings with the company and submitted that all the parties have now submitted their confirmation letters confirming the investment of share application money in the assessee’s company. All these evidences are submitted as additional evidences which were not submitted before the tax authorities. He prayed that one more opportunity may be extended to the assessee to submit all the evidences before tax authorities and therefore, the matter may be remitted back to AO for verification.

Considered the rival submissions and perused the material on record. During the assessment proceedings, assessee has filed addresses and PAN details before the AO and the AO has completed the assessment based on the information available on record by making certain additions. However, assessee has submitted bank statements and ledger extracts before CIT(A). We notice that CIT(A) has not considered any of the above informations and has not even referred in her order. Now, before us, assessee has filed confirmation letters from the above investors since the AO has made this addition for the reason that the assessee has not submitted any confirmation letters or produced any of the above persons before him for confirmation. Since these additional evidences need verification, we are inclined to remit this issue back to the file of AO to verify the additional evidences filed by the assessee as well as his submissions and decide the issue in accordance with law after providing reasonable opportunity of being heard to the assessee. At the same time, we direct the assessee also to file all the relevant information before the AO and, if necessary, produce the above persons before the AO for verification, as per the directions of the AO, in order to verify in the light of the provisions of section 68 of the Act.