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TMI Blog2025 (1) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is a resident in corporate entity. As stated by the Assessing Officer, the assessee is engaged in the business of manufacturer and sale of pharmaceuticals, medicinal chemicals and botanical products. In course of assessment proceedings, the Assessing Officer noticed that the assessee has debited an amount of Rs. 2,16,04,410/- towards sales and marketing expenses. Whereas, the total sales reported by the assessee during the year was Rs. 1,54,29,100/-. On further verification, he noticed that the sales and marketing expenses are on account of payment made to Nijji Healthcare Pvt. Ltd. ('NHPL'), Kolkata. He observed that the payments made by the assessee to NHPL have been claimed to be for sale/distribution of product through sales persons appointed by NHPL. The assessee further explained that NHPL is involved in providing marketing related services and to demonstrate such fact, the assessee furnished the brochures of NHPL. Upon scanning through the profile of NHPL as provided in its website, the Assessing Officer observed that NHPL is not involved in sale of products but the contract sales task includes expansion and product launch. Referring to the work profile of NHPL as me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal and issue is now pending in those years before the Assessing Officer. Proceeding further, he submitted that based on the position taken by the Department qua the expenses in A.Ys 2021-22 and 2022-23, the Assessing Office reopened the assessments for A.Ys. 2019-20 and 2020-21. In this context, he drew our attention to the reasons recorded for reopening of assessments, placed in the paper book. He submitted, though, the assessments for those two years were reopened only for the purpose of disallowance of market development expenses paid to NHPL, however, ultimately the Assessing Officer completed the assessments u/s. 147 of the Act, allowing the expenses. In this context, he drew our attention to the assessment orders passed u/s. 147 of the Act for the A.Ys 2019-20 and 2020-21 placed in Paper Book. Thus, he submitted, rather than maintaining principle of consistency, the action of the Assessing Officer is totally inconsistent. He submitted, in A.Ys 2017-18 and 2018-19 the Tribunal restored the issue to the Assessing Officer due to lack of evidence regarding the nature of expenses. However, he submitted, the factual position on the issue in the impugned assessment year is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the assessee though provided the list of employees, but not the appointment letters etc. in order to substantiate its claim. On going through the agreement, it is nowhere provided that Nijji will look after the sales of the products of the assessee. 9.1 The AO and the assessee infact from the website of the Nijji, captured the profile images. The AO held that Nijji is not involved in sales, whereas the assessee tried to establish that the Nijji is involved in geographical expansion, contract sales and marketing, contract sale solution etc. which includes complete accounting of achieving mutual agreed sales/KPI targets for the given range of products in the assigned territory. The AO also doubted the service agreement and also considered the fact that the assessee has failed to provide the details of work done by the employees as mentioned in employment list issued by Nijji. 9.2 In our considered view, on failure of assessee to provide the requisite details sought for, the same would have been asked by the AO, directly from the Nijji, for assessing the income correctly. Further, simply on the basis of images captured from the internet website, the decision about the profile o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of observation made above." 10. As could be seen from the aforesaid observations, the Coordinate Bench did not appreciate the action of the Assessing Officer in disallowing the expenses simply relying upon the work profile of NHPL taken from the website. However, since the relevant facts relating to the work profile of NHPL was not available on record, the Bench deemed it appropriate to restore the issue to the Assessing Officer to conduct necessary enquiry with regard to the profile of NHPL and nature of expenditure by calling for necessary information from the assessee and NHPL. Surprisingly, in spite of such clear directions of the Coordinate Bench, both the Assessing Officer and learned First Appellate Authority have deemed it appropriate to follow identical approach as was taken in A,Ys 2017-18 and 2018-19. More surprising is the action of learned First Appellate Authority while following non-existent orders of the learned First Appellate Authority for A. Ys 2017- 18 and 2018-19. When the assessee had specifically brought to his notice that the First Appellate orders for AYs 2017-18 and 2018-19 have been set aside by the Tribunal, we fail to understand, how he can ign ..... X X X X Extracts X X X X X X X X Extracts X X X X
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