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        Name of Raw Material             Over-Invoicing/kg
        Meta-Chloro Aniline (MCA)                             Rs.30/-
        Paracetamol                                           Rs.20/-
        Erythromycin Estolate                                Rs.200/-

8.5 Aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) is noted to have examined the contemporaneous facts available on record and thereafter, he himself is observed to have undertaken detailed comparative exercise of the each of the above products procured by the assessee from the five (suppliers). The Ld. CIT(A) noted that, the average price paid by the assessee for purchase of MCA and Paracetamol from M/s Sarna Chemicals Pvt Ltd and M/s Farmson Pharmaceuticals Pvt Ltd respectively was commensurate with the average prices paid to other vendors. The Ld. CIT(A) is noted to have accordingly partly deleted the addition made in respect of these purchases. With regard to the purchase of Erythromycin Estolate made from M/s Anuh Pharma Ltd, ITA No.879 to 883/M/2021 & Others (Assessee & Revenue) A.Y Nos. 2009-10 to AY. 14-15 IPCA Laboratories Ltd M/s Mehta API Pvt Ltd, M/s Calyx Chemicals and Pharmaceuticals Ltd, the Ld. CIT(A) noted that, the assessee had not purchased this particular raw material from any other vendors. Hence in absence of any comparative details, the Ld. CIT(A) is noted to have confirmed the addition. Being aggrieved by this order of the Ld. CIT(A), both the assessee and the Revenue are in appeal before us.

8.10 Moreover, before us, the Ld. AR for the assessee has also demonstrated through the details of purchases that the purported statements obtained from the three (3) employees regarding over- invoicing was also not corroborated by the given facts of the case. He has thus shown us that the admission obtained by them was untrue and hence their retractions should not be discarded straightaway. The Ld. AR has accordingly pointed out apparent fallacies in the manner in which the AO inferred over-invoicing from the vendors in question. The Ld. AR showed us that the AO had cited instances and made comparison on selective data. For instance, it was shown to us, that the AO had cherry picked six (6) transactions of M/s Sarna Chemicals Pvt Ltd as opposed to the twenty (20) transactions undertaken during the entire year. Likewise, in the case of purchases from M/s Mehta API Private Limited, the AO has picked up only two (2) out of thirteen (13) transactions actually entered into by the assessee. The Ld. AR has shown us similar cherry-picking exercise in almost all cases. It was shown to us that, if the overall transactions were compared, the rates were commensurate and the differences were minimal. Hence, the purported values of over-invoicing obtained from these employees were not backed by the given facts of the case. We also find merit in the submissions of the Ld. AR that the price comparison undertaken by ITA No.879 to 883/M/2021 & Others (Assessee & Revenue) A.Y Nos. 2009-10 to AY. 14-15 IPCA Laboratories Ltd the lower authorities was inherently flawed as the lower authorities had failed to consider the functional, economic and risk differences amongst different vendors. The Ld. AR pointed out that, the terms of contract and terms of payment varied across vendors and hence an apple-to-apple comparison was not possible until functional adjustments were made. The Ld. AR also showed us that there were quantitative differences as well. He explained that it is well-known that bulk purchases carry discounted value in comparison to small/retail purchases. The Ld. AR also brought to our notice certain quality differences as well, which according to him, would have a bearing on the price. For instance, he took us through the different grades of paracetamol used in Indian market, European market and other countries. He accordingly explained that the rates of paracetamol varied across different grades. Having regard to the foregoing, we overall find merit in the assessee's plea that the benchmarking exercise conducted by the lower authorities suffered from several infirmities and was therefore unreliable.