आयकर अपीलीय अधिकरण, हैदराबाद पीठ में

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A” , HYDERABAD BEFORE SHRI LALIET KUMAR, HON’BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER ITA No.1059/Hyd/2024 Assessment Years: 2020-21 M/s. Maithri Laboratories Vs. The Assistant Private Limited, Commissioner of Income Hyderabad. Tax, Central Circle 2(4), Hyderabad.

PAN : AACCM8213E (Appellant) (Respondent)

ITA No.1124/Hyd/2024 Assessment Years: 2020-21 The Assistant M/s. Maithri Laboratories Commissioner of Income Private Limited, Tax, Central Circle 2(4), Hyderabad.

Hyderabad.

PAN : AACCM8213E (Respondent) (Appellant)

Assessee by: Shri M.V. Prasad, C.A. and Shri K.S. Rajendra Kumar.

Revenue by: Shri B. Bala Krishna, CIT-DR.

Date of hearing: 23.12.2024 Date of pronouncement: 04.02.2025

O R D E R

PER BENCH :

The cross appeals filed by the assessee, as well as the Revenue are directed against the order of the learned Commissioner of Income Tax (Appeals) – 12 dated 13.08.2024. Since, the facts are identical and issues are common but for the figures, for the sake of convenience, these two appeals were heard together and are being disposed of, by this consolidated order.

2. The grounds raised by the assessee in ITA No.1059/Hyd/2024 for A.Y. 2020-21 read as under :

“1.The order of the Ld. CIT(A) is erroneous on the facts of the case and contrary to the provisions of law.

2. The Ld. CIT(A) erred on facts and in law in not allowing the claim of additional deduction of expenditure of Rs.1,05,97,782/- as evidenced by the entries of cash outflows in the names of the employees found in the seized material against the gross unaccounted cash receipts from sale of spent solvents and scrap of Rs.1,02,22,479/- for arriving at the real income thereon.

3. In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in failing to consider the notarized affidavits of the employees and labour contractors furnished as additional evidence which substantiate the additional claim of expenditure towards labour payments by corroborating and supplementing the entries of cash outflows in the names of the employees found in the seized material.

4. In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the deduction of expenditure to the extent of Rs.10,22,248/- only on estimate basis at 10% of the gross unaccounted cash receipts from sale of spent solvents and scrap.”

2.1. The grounds raised by the Revenue in ITA No.1124/Hyd/2024 for A.Y. 2020-21 read as under :

“1. The Ld. CIT (Appeals) erred both on facts and in law in granting relief to the assessee

2. The CIT(A) erred in reducing the income returned u/s 153A of the Act by allowing 10% of gross amount realized on sale of spent solvent.

3. The Ld. CIT(A) erred in granting relief of 10% on sale of spent solvent towards unsubstantiated alleged payments to workers for handling hazardous waste in the absence of demonstrable contemporaneous evidence.

4. The Ld. CIT(A) ought to have considered the fact that 150% of the purchases were treated as trade advances in view of the CBDT Circular No. 19/2017 and the balance positive balances alone were considered for the purpose of calculation of Deemed. Dividend.

5. The Ld.CIT(A) erred in appreciating the fact that the outstanding debit balance of M/s. MSN Laboratories Pvt. Ltd. is in fact loan/advance which attracts the provisions of section 2(22)(e) of the Act.

3. The brief facts of the case are that the appellant company is engaged in the business of manufacturing of bulk drugs and formulation product. A search and seizure operation under Section 132 of the Income Tax Act, 1961 was carried out in M/s. MSN Group of cases on 24.02.2021. The appellant M/s. Maithri Laboratories Private Limited is one of the companies covered under Section 132 of the Income Tax Act, 1961 as part of the search. Consequent to search, notice under Section 153A of the Act dated 05.10.2021 was issued to the assessee. In response, the assessee filed