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TMI Blog2020 (9) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaining to the said R&D expenses, the AO made the addition of the said amount of Rs. 1,10,48,321/-. 2.1 The assessee went on appeal before the CIT(A) and the ld. CIT(A) deleted the said disallowance on the basis of the additional evidence and the submissions made by the ld. AR during the appeal hearing before first Appellate Authority. 3. Against the order of ld. CIT(A), the revenue is in appeal before us. 4. Before us, the ld. DR submitted that the ld. CIT(A) has accepted the additional evidence in the form of bills, vouchers for consumables, which have been filed for the first time before the ld. CIT(A). He further submitted that the survey u/s 133A was conducted in the premises of the assessee and statements of the Sr. Executives were recorded wherein they had stated that no separate expenditure was incurred for acquiring material for R&D work and the entire raw materials required for R&D were procured from the regular purchases for production. He further submitted that the assessee had failed to produce original bills/vouchers to substantiate R&D expenditure at the time of survey as well as in the assessment proceedings. Therefore argued that the ld. CIT(A) ought not to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the ABS u/s 133(6) does not contain the same. Therefore the AO rejected the explanation of the assessee and made the addition of Rs. 19,80,08,010/-. Against which, the assessee went on appeal before the ld. CIT(A). 8.1 Before the ld. CIT(A), the assessee filed reconciliation statement and the ld. CIT(A) did not find any difference between sales reported by the assessee and the ABS, thus deleted the addition of consignment sales difference of Rs. 19,80,08,010/- ,hence, the department is in appeal before us. 9. We have heard the rival contentions and perused the material placed on record. In the instant case, the AO made the addition of Rs. 19,80,08,010/- on account of under reporting of consignment sales. As per the information received from the consignee, the sales were Rs. 94.70 crores as against the admitted sales of Rs. 74.90 crores. During the assessment proceedings, the AO gave opportunity to the assessee to file reconciliation statement and on perusal of the reconciliation statement, the AO found the discrepancies with regard to sales made to M/s Adley Formulation, opening stock of consignment and the cancellation of cheques etc. The ld. CIT(A) merely relied on the reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t expenditure attributable interest free advances made by the assessee to the group concerns i.e. SV's Remedies Ltd. 13. The contention of the revenue is that the assessee has advanced interest free funds to SV's Remedies Ltd. out of interest bearing borrowed funds, hence, the disallowance needs to be made u/s 36(1)(iii) of the Act. 14. The contention of the ld. AR is that the assessee is having interest free funds, out of which, the assessee has advanced the sums and therefore, no disallowance is called for. 15. We have considered the rival submissions and perused the material on record. No information was placed before us to substantiate, whether the assessee has advanced interest free funds or interest bearing borrowed funds to it's group concerns. Hence, this issue also needs verification at the end of the AO with regard to the availability of interest free funds and both the counsels have agreed to remit the matter back to the fie of the AO to verify the facts. Accordingly the issue is remitted back to the file of the AO with a direction to examine whether the assessee has made advances out of interest free funds or interest bearing funds and decide the issue afresh on meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in the books of accounts the claim of the assessee cannot be brushed aside merely because the assessee has not submitted the supporting documents. In this case the assessee is maintaining the regular books of accounts which were produced before the AO. The assessee also duty bound to explain the discrepancies with the books of accounts and the supporting documents. The correctness of the entries made in the ABS and the reconciliation submitted by the assessee needs verification. It appears to us that there were some issues which need to be verified relating to the accounts of ABS. As discussed in Paras 8 to 10 of this order, the AO made the addition of Rs. 19.80 crores due to under reporting of sales in respect of ABS. We are of the opinion that the account of ABS needs to be verified in detail to ascertain the factual position. Therefore we remit the matter back to the file of AO with a direction to cause necessary enquiries with M/s ABS Mercantile Pvt Ltd and decide the issue afresh on merits. Needless to say that opportunity should be given to the assessee. 21. The issue in ground No. 3 is with regard to the differences in purchases debited to the Profit and Loss account an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,06,656/- paid to M/s Feroz Tejarat Co. 25. The AO during the survey proceedings, found that the company had paid huge commission to one Mr. Feroz Tejarath, who is based at overseas for AY 2012-13 to AY 2015-16. It was further noticed that the complete amount of commission claimed on this account, for all these years was shown as payable on the date of survey. When the assessee was asked to provide documentary evidence in support of the genuineness of the commission expenses claimed, the assessee failed to provide the relevant documentary evidence despite sufficient opportunities were given. The AO, therefore, disallowance said amount of Rs. 1,75,06,656/-, which was confirmed by the CIT(A). Aggrieved, the assessee is in appeal before us. 26. We have heard the submissions of both the parties and perused the material on record. Before the ld. CIT(A), the assessee submitted that Feroz Tejarath is the sales agent to book orders from Alborz Bulk Pharma Co. The assessee fixes the sale price and the said commission agent adds his commission to the said sale price as agreed between both of them. The assessee stated to have been placed the following evidences before the ld. CIT(A): * In ..... 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