This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) 11, Chennai, dated

27.01.2015 and pertains to assessment year 2010-11. 2 I.T.A. No.1205/Mds/15

2. The first ground of appeal is with regard to disallowance of financial assistance said to be received from Government of West Bengal.

3. We have heard Shri J. Chandrasekaran, the Ld. representative for the assessee and Dr. B. Nischal, the Ld. Departmental Representative. The assessee-company is admittedly engaged in manufacturing and trading of drugs and pharmaceutical products. The assessee received assistance under West Bengal Industrial Promotion (Assistance to Industrial Units) from Government of West Bengal to the extent of `10,51,900/-. The CIT(Appeals) found that in the assessees own case for assessment year 2001-02, the Madras High Court confirmed a similar disallowance. The judgment of Madras High Court is reported in (2008) 307 ITR 387. The CIT(Appeals) has followed the judgment of Madras High Court and confirmed the order of the Assessing Officer. Since a similar cash assistance for the assessment year 2001-02 was disallowed by the Assessing Officer and the same was confirmed by the CIT(Appeals) by following the judgment of Madras High Court, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the disallowance made by the 3 I.T.A. No.1205/Mds/15 Assessing Officer. Therefore, this Tribunal has no reason to interfere with the order of the lower authority. Accordingly, the order of the CIT(Appeals) is confirmed.

4. The next ground of appeal is with regard to disallowance of `74,44,944/- made on account of unexplained purchases.

5. Shri J. Chandrasekaran, the Ld. representative for the assessee, submitted that the assessee has purchased Turkey towels and umbrellas in the course of business activity and the same were given to the distributors/dealers towards sales promotion. The Assessing Officer found that the companies from which the assessee purchased the Turkey towels and umbrellas, were identified as suspicious Hawala dealers. Therefore, the Assessing Officer without further investigation disallowed the claim of the assessee by doubting the purchases made by the assessee. According to the Ld. representative, the existence of Subhiksha Enterprises and Mihir Enterprises is not doubted. The sales tax authorities of Maharashtra Government allotted TIN (Tax Identification Number) to the above parties. Merely because the above parties were shown as suspicious Hawala dealers in the website of Maharashtra Sales Tax Department that does not mean 4 I.T.A. No.1205/Mds/15 that the assessee has not purchased Turkey towels and umbrellas from the above said parties. It is for the Assessing Officer to examine those parties and find out whether the assessee has actually purchased the Turkey towels and umbrellas. In the absence of any such investigation, the CIT(Appeals) is not justified in confirming the disallowance made by the Assessing Officer.

6. On the contrary, Dr. B. Nischal, the Ld. Departmental Representative, submitted that the assessee claims that Turkey towels and umbrellas were purchased to the extent of `74,44,944/- from Subhiksha Enterprises and Mihir Enterprises. The Assessing Officer found that Subhiksha Enterprises and Mihir Enterprises are suspicious Hawala dealers and the same was disclosed in the website of Maharashtra Sales Tax Department. Therefore, according to the Ld. D.R., the assessee could not have purchased the Turkey towels and umbrellas from those parties.

7. We have considered the rival submissions on either side and perused the relevant material available on record. The assessee claims that Turkey towels and umbrellas were purchased to the extent of `74,44,944/-. The Assessing Officer disallowed the claim of the assessee on the ground that the Maharashtra Sales Tax 5 I.T.A. No.1205/Mds/15 Department identified Subhiksha Enterprises and Mihir Enterprises as suspicious Hawala dealers. This Tribunal is of the considered opinion that what was disclosed in the website is that Subhiksha Enterprises and Mihir Enterprises are suspicious Hawala dealers. There is no indication in the website that they are not dealing in Turkey towel and umbrella. Therefore, it is for the Assessing Officer to verify further whether Subhiksha Enterprises and Mihir Enterprises are in fact dealing in Turkey towel and umbrella. Since such an exercise was not done, this Tribunal is of the considered opinion that the matter needs to be verified. Accordingly, the orders of the lower authorities are set aside and the issue of purchase of Turkey towel and umbrella is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh in the light of the materials available on record including the information available in the website of Maharashtra Sales Tax Department with regard to Subhiksha Enterprises and Mihir Enterprises and examine all the concerned persons including a responsible officer of Sales Tax Department of Maharashtra Government, who is dealing with Subhiksha Enterprises and Mihir Enterprises and thereafter decide the matter in accordance with law after giving a reasonable opportunity to the assessee. 6 I.T.A. No.1205/Mds/15

8. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced on 18 th March, 2016 at Chennai. sd/- sd/- (. ) (... ) (A. Mohan Alankamony) (N.R.S. Ganesan) /Accountant Member  /Judicial Member /Chennai, 5/Dated, the 18 th March, 2016. Kri. / -67 87/Copy to:

1. ,/Appellant

2. -.,/Respondent

3. 9 ()/CIT(A)-11, Chennai-34

4. 9/CIT, Chennai-3, Chennai

5. 7 -/DR

6. ( /GF.