DCIT-421 MUMBAI, MUMBAI vs. ESSITY INDIA PRIVATE LIMITED, MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM I.T.A. No.8144/Mum/2025 (Assessment Year:2011-12) DCIT-4(2)(1), Mumbai Essity India Private Limited MK Road, Churchgate, Mumbai- E 902, E Wing, Lotus Corporate Park, Vs. 400020 Jai Coach Junction, Goregaon (East), Mumbai-400063 PAN: AACCB6297P Revenue- अपीलाथ� / Appellant Assessee-��थ�/ Respondent :

C.O. No. 17/Mum/2026 (Assessment Year:2011-12) (Arising out of I.T.A. No.8144/Mum/2025) Essity India Private Limited DCIT-4(2)(1), Mumbai E 902, E Wing, Lotus Corporate MK Road, Churchgate, Mumbai- Park, Jai Coach Junction, Vs. 400020 Goregaon (East), Mumbai- 400063 PAN: AACCB6297P Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

: Shri Ravi Sawana a/w Ms. Neha Assesseeby Sharma & Ms. Prativa Agarwal Revenueby : Shri Hemanshu Joshi, Sr. DR Date of Hearing : 18.02.2026 Date of Pronouncement : 14.05.2026 O R D E R Per Arun Khodpia, AM: The captioned appeal is filed by the Revenue against the order of the Commissioner of Income Tax Appeals, National Faceless Appeal Centre

(NFAC), Delhi [in short, “the Ld. CIT(A)”], dated 20.09.2025 for the assessment year 2011-12, which in turn arises from the assessment order under section 143(3) of the Income Tax Act, 1961 [in short, “the Act”] dated 03.03.2014, passed by DCIT Circle 3(1), Mumbai [in short, “the Ld.AO”]. The assessee has also filed the cross-objection directed against the aforesaid appeal of the Revenue.

any evidence in support of claim of purchase from the parties. Accordingly, the Ld. AO has observed as under: “4.4 Since the assessee itself has expressed its inability to produce any documentary evidence in support of claim of purchases from these parties, the said claim cannot be allowed for the reasons discussed herein under: (a) The assessee has not provided present address of the party/supplier. (b) The assessee has not made available the details of transportation of the material purported to have purchased from the aforesaid hawala dealer, such as transportation receipts, delivery challans. The items shown to have purchased from these parties are of such a nature that they require separate transportation. (c) The assessee has not furnished any ledger account confirmation from the aforesaid dealer. (d) The assessee has also not furnished any specific details as to prove the genuiness of the purchases made from the aforesaid hawala dealers but only produced the same alleged bogus invoices (e) The deduction of VAT in the Bill also does not bolster the case of the assessee. It is because of the fact that such deduction does not prove genuineness of a particular transaction in terms of supply of material. Such deduction is basically linked with the payment aspect only and cannot establish the purpose for which payment is made. (1) The production of invoice is of no help to the assessee, since in the activity of accommodation entry, such documents are meticulously maintained both by the entry provider and entry seeker. It is also not important whether the amount is small or big and whether the assessee is having loss or profit. There may be number of reasons for seeking the accommodation entry as it leads to generation of the cash in the hands of assessee. (9) The assessee has stated that no broker was involved in the transaction. However, the assessee has also not furnished as to how it had come in the direct contact of the party. The assessee has also not furnished the name of the proprietor/partner of the firm. The assessee even has not furnished the contact number of the person to whom it had contacted for purchase of the goods as it is mentioned in the invoices that orders are placed on 'verbal' basis. (h) The onus was upon the assessee to prove the genuineness of the expenditure claimed as it was the assessee, which has made the claim. (i) The Sales Tax Department certified that the aforesaid parties are Hawala Operators after conducting independent enquiries. (1) The contention that the payment are made by account payee cheque is not a fool proof method of substantiating the assessee's claim, as it was already accepted by the persons, whose statement, deposition or affidavit that cash is returned after deducting commission/brokerage once cheque is realized. 4 (k) The Sales Tax Department made a finding and uploaded in its website the name of entities which are involved in giving bogus bills only after it carried out detailed enquiry & investigation. (1) If all the evidences point to the fact that no actual goods were supplied by the above party, then the argument of the assessee that it purchased goods in good faith is not tenable.”

assessee submitted details of expenses debited in travel account, on perusal of such details, it is observed by the Ld. AO that the assessee had merely submitted the break-up of the expenses under various heads, but did not submit any justification viz-a-viz revenue of the company or any documentary evidence in respect of any of such expenses. Subsequently, the assessee was asked, as to why disallowance of local travel allowances at the rate of 50% should not be made in line with the earlier years.

expense and hence it is paid fixed daily reimbursement to the field staff. It is further noted by the Ld. AO that the employees of company are paid two types of expenses (i) in the form of daily allowances and (ii) in the nature of fare, postage, courier expenses, Xerox, stationery expenses, miscellaneous expenses etc. 8. Ld. AO noted that the payment of daily allowance is in the nature of reimbursement, therefore, it should be supported by evidence of actual expenditure incurred by the employees, which is absolutely missing in the present case. Ld. AO further noted that such expenses are made as an application under the union agreement or internal HR source in that case the amount should have been shown as per receipt taxable in the hands of employees and appropriate TDS should have been deducted on the same, however, the fact is that the assessee has not deducted any TDS on such fixed daily allowances paid to the employees. With aforesaid observations, the Ld. AO rejected the contentions of the assessee and had disallowed 50% of the local travel expenses observing infirmity in the claim of the assessee in claiming of such expenses. Accordingly, disallowance of Rs.1,21,48,500/- was made (50% of 2,42,97,000/-).

wherein the issue was directed to the file of Ld. AO for fresh adjudication. It is noted by the Ld. AO that as per details furnished by the assessee, the gift items distributed by the assessee are of 64 types, however, the assessee failed to submit even a single bill in support of such purchase. Hence, there is no material on record to prove that such items were actually purchased by the assessee. Further, the assessee had not furnished any details regarding distribution of such items to the outside parties, instead the company has submitted copies of some internal challans, purported to have generated from its Goa Warehouse, addressed to its various divisions, and all the challans issued over the whole year are prepared by one single person in same style of handwriting. The assessee has not submitted any documentary evidence in respect of confirming receipt and distribution of gift items. No details of parties to whom such items were gifted and their receipts were produced by the assessee, therefore, no independent verification could be done by the Ld. AO.

accordance with Rule 8D. In response, the assessee submitted that “Company invested surplus money in HDFC Management at a monthly income plan and the company does not have any loan either short-term or long-term, the interest expense of Rs.12,80,000/- shown in the profit and loss account pertains to C & F security deposits. Ld. AO had considered the submissions of assessee but not agreed with the same. He referred to CBDT Circular No.14/2001 dated 22.11.2001, and had worked out the disallowance u/s 14A r.w.r 8D at the rate of 0.5% of average value of investment and had made a disallowance of Rs.2,94,640/- u/s 14A of the Act.

ITA No. 8144/Mum/2025& ITA No. CO 17/Mum/2026 Essity India Private Limited Essity India Private Limited 14. With all the aforesaid discussions by which the additions/disallowances id discussions by which the additions/disallowances id discussions by which the additions/disallowances were made by the Assessing Officer, the returned income of the assessee was re- were made by the Assessing Officer, the returned income of the assessee was were made by the Assessing Officer, the returned income of the assessee was computed by the Ld. AO vide impugned order u/s 143(3) dated 03.03.2014: by the Ld. AO vide impugned order u/s 143(3) dated 03.03.2014: by the Ld. AO vide impugned order u/s 143(3) dated 03.03.2014:

assessment year 2010-11 dated 13.12.2018 are reproduced by the Ld. CIT(A) and following the same view adopted by the Ld. AO with the additions on account of local travel allowance and ad-hoc disallowance of promotional items were deleted. 17. Regarding bogus purchases, Ld. CIT(A) discussed at length in his order but was not convinced with the contentions raised by the assessee, therefore, had confirmed the disallowance made by the Ld. AO.

(ii) Whether the purchases made by the assessee which were considered as bogus purchase by the Ld. AO and also confirmed by the Ld. CIT(A) was a justified decision on the facts and in law? – by Assessee

and promotional expense amounting to Rs.1,21,48,500/- and Rs.1,44,30,000/-, is settled, as the same was discussed on identical facts and circumstances in assessee’s own case for assessment year 2007-08 by the ITAT Mumbai in ITA No.6702/Mum/2011and set aside the same to AO for fresh adjudication, the same view has been adopted by the ITAT for assessment year 2008-09 in ITA No.6703/Mum/2011. Further, the same issue has come up before the ITAT Mumbai for assessment year 2010-11 in ITANo.3521/Mum/2015and for all these years, the issue was set aside to the file of AO for verification and fresh adjudication. It was the submission that the ld. AO vide respective orders in consequence to orders of Hon’ble ITAT for aforesaid years have deleted the entire disallowance made for the assessment year 2007-08, 2008-09 and 2010-11 in respective orders u/s 143(3) r.w.s 254 of the Act. Further for assessment year 2009-10, the CIT(A) had deleted such disallowance based on decision in earlier years, even the facts and evidence furnished were similar and the order of CIT(A) for assessment year 2009-10, which was not challenged by the department. For assessment year 2012-13he Ld. AO had passed the order dated 10.03.2015, allowing the said expenses, the assessee has submitted similar evidences before the Ld. AO as were furnished for the relevant assessment year 2011-12 under consideration in instant case. It was the submission that in view of aforesaid decisions, wherein the issue has been settled by way of consequential orders issued by the Ld. AO and also as the factum of the issue has been accepted by the Ld. CIT(A) in assessment year 2009-10 and the Ld. AO himself for assessment 13

year 2012-13. In absence of any variation in the evidence furnished by the assessee before the Ld. AO for the relevant assessment year 2011-12, as compared to other assessment years, the disallowance made on ad hoc basis is uncalled for and liable to be deleted. 21. It is submitted, that in view of the aforesaid facts that the issue involved herein has identical facts, identical evidence and while the Ld. AO himself has decided the issue in favour of assessee, in absence of any departure in terms of facts and evidence in the present case, the department cannot take a stand different than the stand taken for earlier as well as subsequent assessment years. It is submitted that following the rule of consistency, the assessee most humbly requests that the order of Ld. CIT(A) be upheld and the claim of assessee in relation to travel allowance be allowed. 22. Ld. Senior DR representing the revenue submitted that all the years are different years and principle of res judicata does not apply to the income tax proceedings, therefore, following the orders of ITAT in earlier years, the matter needs to be remanded back to the file of Ld. AO for fresh verification and adjudication. The order of Ld. CIT(A) therefore, was not in line with the directions of Hon’ble ITAT for the various assessment years (referred to supra). Therefore, the same needs to be set aside on this issue and the matter may be remanded back to the file of Ld. AO accordingly.

23. We have considered the rival submissions, perused the material available on record, inter alia, a decision of ITAT in assessee’s own case for earlier assessment years. The Tribunal has restored this matter of ad hoc disallowance back to the file of Ld. AO for fresh verification and adjudication, wherein in the recent order of ITAT for assessment year 2010-11 while deciding the aforesaid issue, the ITAT has observed as under: “7. We have heard the rival contentions and perused the material on record. As could be seen, the disallowance made out of travelling and promotional expenses claimed by the assessee are on ad-hoc basis and for the reason that the entire expenditure is not supported by proper evidence, However, it is the contention of the assessee before us that the entire expenditure is supported by proper evidence and given an opportunity the assessee can fully substantiate its claim. It is evident from record, similar disallowances were made by the Assessing Officer in assessee's case in assessment year 2007-08 and 2008-09. While deciding assessee’s appeal for assessment year 2007-08 in ITA no.6702/Mum/2011, the Tribunal, vide order dated 19th October 2012 restored the issues to the Assessing Officer for re-consideration. The same view was again followed by the Tribunal while disposing off assessee's appeal for assessment year 2008-09 in ITA no.6703/Mum./2011, dated 14th November 2012. The relevant observations of the Tribunal in assessment year 2008-09 are reproduced hereunder for convenience:- 3. Ground no.1 relates to ad-hoc disallowance of local travel allowance paid to the employees. In this regard, Ld Counsel mentioned that the issue raised in the present appeal is identical to the ground raised in appeal ITA No.6702/M/2011 (ΑΥ: 2007-2008). On perusal of the relevant order passed by us in the said appeal, we find that an identical issue was adjudicated and set aside to the files of AO as indicated by Ld Counsel. We find that para 7 of our order dated 19.10.2012 in the assessee's own case is relevant and the said para reads as under: "7. We have heard both the parties, perused the orders of the is an undisputed fact that there are distinctly two types of payments made to the employees of the company namely (1) Daily allowance (DA) and (ii) other reimbursements. It is also an admitted fact that the DA is a fixed amount paid to all the employees for undertaking local travel in the head quarters and outside the head quarters. The amounts are different for both the types of travels. However, there is dispute on if the said DA is paid as a case reimbursement ie employees actually incurred for undertaking the local travel or if the same paid in compliance of contractual obligation vide the Memorandum of Settlement. It is the case of the assessee that the said sum is paid as reimbursement and the assessee in possession of requisite evidence to support the same. It is an undisputed fact that the relevant evidence was neithersubmitted by the assessee nor required by the AO during the assessment proceedings: Further, it is a fact that assessee relied on Clause-11 of Memorandum of Settlement while allowance given by the 15

assessee to the employees was actually incurred or not. The perusal of para 4.4 of the impugned order does not reveal that anybody has gone into the merits of the claim as the said para is not a speaking one. Similarly, regarding the other reimbursement, the extent of facts gathered by the AO is not up to the mark and the AO prematurely arrived at the conclusion that 50% of the claim is incurred not for business purposes without examining the evidences available with the assessee. Further, regarding basis for adopting @ 50% by revenue authorities for quantifying the disallowable expenditure, in our opinion, it suffers from reasonability and as that is without any reasonable basis and revenue has not given any discussion why the said percentage is adopted and how it is a reasonable basis. Therefore, there is need for more basic facts for adjudicating the grounds raised in the appeal. Therefore, as requested by the Ld Counsel, we are of the opinion that the matter should be remanded to the files of the AO for examining the issue afresh and decide the same after affording a reasonable opportunity of being heard to the assessee. Accordingly, as discussed in the court, ground no.1 is set aside." 4. From the above, it is evident that the issue related to allowability of local travel allowance was set aside to the files of AO Considering the with certain directions as mentioned above. commonality of the issue, the said directions are relevant for the ground under consideration. Accordingly, ground no.1 is set aside. 5. Ground no.2 relates to the disallowance of promotional expenses. In this regard, Ld Counsel mentioned that the issue raised in the appeal is identical to the ground raised for the AY 2007-2008 He mentioned that the ground has to be adjudicated the same, we have perused the para 11 of our order dated 19.11.2012 and find that the same is relevant. Therefore, the same Is reproduced as under 11 We have heard both the parties on this issue of promotional expenses. It is an admitted for this thesis claim of deductio the on the assessee to produce specific evidences in respect of the assessee. The law has inbuilt provisions for taking care of the sensitivity and confidentiality issues. Claims of the assessee are allowed only after due discharge, of onus by the assessee. We also find that orders of the AO and the CIT(A) are very cryptic and cannot be described as a speaking order on the subject. Therefore, we are of the opinion that this ground should also be set aside to the files of the AO for fresh adjudication. AO shall pass a speaking order after considering the applicability of the notification/circular as well as the deicions if any on the percentage of the expenditure if any while making disallowance.Assessee shall discharge the onus properly and adequately as per the judicial pronouncements in force. Accordingly, ground no.2 is set aside." SON MINISTRY Caodannot be described as a speaking order on the subject. 6. From the above, it is evident that the promotional expenses are nothing but the expenditure incurred in purchase of gifts meant for Doctors, chemists, druggists etc. We have decided the identical issue by setting aside the same to the files of AO for fresh adjudication after considering the notification issued by the Medical Council of India and the Circular issued by the CBDT on the subject. Considering the commonality of the issue, we are of the opinion that

this ground should also be set aside to the files of AO for fresh adjudication. Accordingly, ground no.2 is set aside, 8. Though, in the impugned assessment order, the Assessing Officer has referred to the order of the Tribunal for earlier assessment years, however, on a careful reading, we found that while deciding the issues in the impugned assessment year, the Assessing Officer has not fullyfollowed / complied with the directions of the Tribunal as reproduced herein above. Therefore, we are inclined to set aside the impugned order of the learned Commissioner (Appeals) and restore both the issues back to the file of the Assessing Officer for fresh adjudication keeping in view the directions of Tribunal referred to above. It is pertinent to observe, the learned Authorised Representative has brought to our notice that while giving effect to the order of the Tribunal for assessment year 2007-08 and 2008-09, the Assessing Officer has fully allowed assessee’s claim of expenditure under both the heads. This fact should also be kept in mind by the Assessing Officer while deciding the issues under consideration. Needless to mention, the Assessing Officer must afford a reasonable opportunity of being heard to the assessee before deciding the issues. The grounds raised by the assessee are allowed for statistical purposes.”

25. Needless to say, the assessee shall be afforded with reasonable opportunity of being heard during the set aside proceedings. The grounds of appeal of Revenue, therefore are partly allowed for statistical purposes.

assessee has not provided address of the party/supplier, whereas the assessee had in fact provided address along with phone numbers of the party. The Ld. AO has not applied his mind at all to the submissions made by the assessee in support of genuineness of purchases undertaken by it from M/s. Rup International.

30. We have considered the rival submissions, perused the material available on record including the orders of Revenue Authorities.

Order pronounced in the open court on 14-05-2026.

Sd/- Sd/- (AMIT SHUKLA) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 14-05-2026. Ankit K., Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai