ASHLAND INDIA PRIVATE LIMITED,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX - 15(1)(1), MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA Nos. 2050 and 2051/MUM/2026 Assessment Years: 2018-19 and 2021-22 Ashland India Private Limited Assistant Commissioner of 8th Floor, R City Offices, Income Tax - 15(1)(1), Above R City Mall, LBS Marg, Mumbai Vs. Ghatkopar West, S.O. Mumbai - 400086 (PAN: AAGCA5023J) (Appellant) (Respondent) Present for: Assessee : Shri Ketan Ved, Shri Bhavesh Makhija and and Ms. Deepa Bakhru, CA Revenue : Shri Surendra Mohan, Sr. DR Date of Hearing : 13.05.2026 Date of Pronouncement : 01.06.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: These two appeals filed by the assessee are against the orders of CIT(A)/National Faceless Appeal Centre (NFAC), Delhi, vide order nos. ITBA/NFAC/S/250/2025-26/1083841024(1), dated 18.12.2025 and ITBA/NFAC/S/250/2025-26/1083478242(1), dated 09.12.2025, passed against the assessment order by National e-Assessment Centre, Delhi and Assessment Unit, Income Tax Department, u/s. 143(3) and 143(3) r.w.s.144B of the Income-tax Act (hereinafter referred to as the “Act”), dated 24.02.2021 and 13.12.2022, for Assessment Years 2018- 19 and 2021-22, respectively.

2 ITA Nos. 2050 and 2051/Mum/2026 Ashland India Pvt. Ltd. AYs 2018-19 and 2021-22 ITA No. 2050/MUM/2026

3 ITA Nos. 2050 and 2051/Mum/2026 Ashland India Pvt. Ltd. AYs 2018-19 and 2021-22 made to the block of intangible asset for computing the taxable income for the year under consideration. 3.3 The Appellant prays that the Assessing Officer be directed to allow the depreciation amounting to INR 1,36,27,430 on intangible asset under section 32 of the Act. Without Prejudice to the above, 4. The learned CIT(A) erred in confirming the double disallowance in relation to intangible asset made by Assessing Officer 4.1 The learned CIT(A) failed to appreciate that addition of INR 5,45,09,718 towards purchase of intangible asset as an unexplained investment and a disallowance of deprecation of INR 1,36,27,430 on the same claimed under section 32 of the Act, results in a double disallowance. 4.2 The Appellant prays that the Assessing Officer be directed to delete the addition made towards the cost of intangible asset as unexplained investment and allow the depreciation on the same. 5. Levy of interest under section 234A, 234B and 234D of the Act 5.1 The learned CIT(A) erred in confirming the interest under sections 234A, 234B and 234D of the Act amounting to INR 11,11,498, INR 1,69,79,203 and INR 1,944 respectively. 5.2 The learned CIT(A) erred in not appreciating the fact that the Appellant has filed the return of income for AY 2018-19 within the due date prescribed under the Act and accordingly, no interest under section 234A of the Act is applicable. 5.3 The learned CIT(A) further erred not appreciating that once the abovementioned disallowances are deleted, the question of levy of interest under section 234B and 234D of the Act would not arise. 5.4 The Appellant prays that the Assessing Officer be directed that no interest be charged under sections 234A, 234B and 234D of the Act. 6. Initiation of penalty proceeding under section 270A of the Act 6.1 The learned CIT(A) erred in confirming the initiation of penalty proceeding under section 270A of the Act. 6.2 The learned CIT(A) erred in not appreciating the fact that the Appellant has not under reported any income 6.3 The Appellant prays that the Assessing Officer be directed to drop the penalty proceeding Initiated under section 270A of the Act. Without prejudice to the above, 7. Dismissal of the appeal filed by the Appellant without providing adequate opportunity 7.1 The Appellant submits that considering the facts and circumstances of its case, and in the law, the learned CIT(A) erred in perfunctorily dismissing the appeal filed by the Appellant without adjudicating the issues on merits. 7.2 The learned CIT(A) failed to appreciate that the Appellant requested for providing more time in view of GST deadline and erred in passing the order without adhering to the

4 ITA Nos. 2050 and 2051/Mum/2026 Ashland India Pvt. Ltd. AYs 2018-19 and 2021-22 request of the Appellant and providing adequate opportunity to the Appellant, which is in violation of principle of natural justice. 7.3 On the facts and in the circumstances of the case and the law prevailing on the subject, the order passed by the learned CIT(A) is bad-in-law and void-ab-initio and hence, ought to be set aside. 8. General 8.1 Each of the above grounds of appeal is without prejudice to the other. 8.2 The Appellant craves leave to add to, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal as it may be advised. ITA No. 2051/MUM/2026 1. Erroneously confirming that the Appellant has not disclosed true and fair view of the affairs of the business 1.1 The learned CIT(A) erred in confirming that the Appellant has not disclosed true and fair view of the affairs of the business and consequently, confirming an addition of INR 8,92,68,640 to the total income. 1.2 The learned CIT(A) further erred in confirming the following observations made by Assessing Officer and failed to appreciate the submissions of the Appellant in its correct perspective: A. Erroneously allegation on the genuineness of purchases made during the year  The learned CIT(A) erroneously confirmed the allegation of the Assessing Officer that the purchases made by the Appellant during the year were not genuine.  The learned CIT(A) failed to appreciate that the Assessing Officer did not substantiate the basis of his claim that substantial purchases were made from the suppliers, who are either non-filer/ filers or have filed non-business ITR or has reflected a substantially lower turnover.  The learned CIT(A) also failed to appreciate the fact brought out before the Assessing Officer that the Appellant has timely filed its GST returns for each month disclosing the purchases and sales made during the month.  The learned CIT(A) erred in not appreciating that the amount debited to the profit and loss account on account of purchases made from Ashland Industries Europe GmbH was INR 7,32,87,039 vis-a-vis the amount appearing in sundry creditors i.e. INR 1,10,67,90,204 (which was inclusive of dividend paid), as clarified by the Appellant in the statement of facts filed before the learned CIT(A). Accordingly, since the amount debited to the profit and loss account is lower than the amount reflected under the details of sundry creditors (which was inclusive of dividend declared during the year), the disallowance on account of the same cannot be warranted. B. Erroneously confirming that advances written off during the year are not eligible for deduction under section 37 of the Act.

5 ITA Nos. 2050 and 2051/Mum/2026 Ashland India Pvt. Ltd. AYs 2018-19 and 2021-22  The learned CIT(A) erred in confirming that advances written off during the year are not eligible for deduction under section 37 of the Act.  The learned CIT(A) failed to appreciate that: a) the advances were given by the Appellant in the past in its regular course of business and were wholly and exclusively for the purpose of its business; b) the advances claimed as allowable were revenue in nature; c) the Appellant itself had disallowed an amount of INR 1,53,71,461 being amount incurred of capital in nature and written off during the year under consideration; d) despite of several efforts made by the Appellant, the advances become irrecoverable during the year and accordingly, written off in the books of account. C. Erroneously confirming that shortage of stock reported in the tax audit report is incorrect  The learned CIT(A) erred in confirming the conclusion made by Assessing Officer that the shortage of stock reported in the tax audit report is incorrect.  The learned CIT(A) erred in confirming the comparison carried out by the Assessing Officer as per tax audit report vis-à-vis the value of closing stock reflected in the audited financials.  The learned CIT(A) failed to appreciate that the quantitative details reported in tax audit report are in respect of only principally traded items, whereas the details provided in the financials were comprehensive in respect of all the stocks traded by the Appellant. D. Erroneously confirming the observations made by Assessing Officer on payment of advance tax and claim of refund of the same  The learned CIT(A) erred in confirming the observations made by the Assessing Officer on the payment of advance tax and claim of refund.  The learned CIT(A) failed to appreciate that the Appellant has provided the relevant explanations in relation to its estimated profit and the rationale for advance tax.  The learned CIT(A) further erred in not appreciating that the submissions made by the Appellant that the lockdown restrictions imposed across the country adversely affected its business operations. 1.3 Without prejudice to the above, the Appellant submits that the same cannot be the basis of making the adjustment to the profit (before exceptional items and tax) as per the audited financial statements. 1.4 The Appellant prays that the Assessing Officer be directed to delete the adjustment of INR 8,92,68,640 made to the total income. 2. Erroneous estimation of income based on the financials of past years and consequent disallowance of INR 8,92,68,640.

6 ITA Nos. 2050 and 2051/Mum/2026 Ashland India Pvt. Ltd. AYs 2018-19 and 2021-22

2.1 The learned CIT(A) erred in confirming the action of Assessing Officer in relation to computing the profit (before exceptional items and tax) based on the ratio of average rate of profit to the total revenue of immediately preceding 2 previous years. 2.2 The learned CIT(A) erred in confirming the following observations made by Assessing Officer:  The Appellant has not disclosed the true affairs of the business of the Company;  the expenses claimed in the audited accounts being computed at 102.48% of the total revenue is unusual even if COVID restrictions are concerned. 2.3 The learned CIT(A) failed to appreciate that the books of account of the Appellant are audited and there is no qualification in the Auditor's report for the year under consideration. 2.4 The Appellant prays that the Assessing Officer be directed to delete the adjustment made to the profit (before exceptional items and tax) and consequent addition amounting to INR 8,92,68,640 made to the total income. 3. Levy of interest under section 234A of the Act 3.1 The learned CIT(A) erred in confirming the interest levied under section 234A of the Act amounting to INR 3,38,560. 3.2 The learned CIT(A) erred in not appreciating the fact that the appellant has filed its return for the captioned year within the due date prescribed under the Act and accordingly, no interest under section 234A of the Act is payable. 3.3 Without prejudice to the above, the learned CIT(A) erred in not appreciating that once the aforementioned disallowances are deleted, the question of levy of interest under section 234A of the Act does not arise. 3.4 The Appellant prays that the Assessing Officer be directed to delete the interest levied under section 234A of the Act. 4. Levy of interest under section 234B of the Act 4.1 The learned CIT(A) erred in confirming the interest under levied section 2348 of the Act amounting to INR 17,77,440. 4.2 The learned CIT(A) erred in not appreciating that once the aforementioned disallowances are deleted, the question of levy of interest under section 2348 of the Act would not arise. 4.3 The appellant prays that the learned CIT(A) be directed to delete the interest levied under section 234B of the Act. 5. Initiation of penalty proceedings under section 270A of the Act 5.1 The learned CIT(A) erred in confirming the initiation of penalty proceeding under section 270A of the Act. 5.2 The learned CIT(A) erred in not appreciating the fact that the Appellant has not under reported any income

7 ITA Nos. 2050 and 2051/Mum/2026 Ashland India Pvt. Ltd. AYs 2018-19 and 2021-22

5.3 The Appellant prays that the Assessing Officer be directed to drop the penalty proceeding initiated under section 270A of the Act. Without prejudice to the above, 6. Dismissal of the appeal filed by the Appellant without providing adequate opportunity 6.1 The Appellant submits that considering the facts and circumstances of its case, and in the law, the learned CIT(A) erred in perfunctorily dismissing the appeal filed by the Appellant without adjudicating the issues on merits. 6.2 The learned CIT(A) failed to appreciate that the Appellant requested for providing more time and erred in passing the order without adhering to the request of the Appellant and providing adequate opportunity to the Appellant, which is in violation of principle of natural justice. 6.3 On the facts and in the circumstances of the case and the law prevailing on the subject, the order passed by the learned CIT(A) is bad-in-law and void-ab-initio and hence, ought to be set aside. 7. General 7.1 Each of the above grounds of appeal is without prejudice to the other. 7.2 The Appellant craves leave to add to, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal as it may be advised.

8 ITA Nos. 2050 and 2051/Mum/2026 Ashland India Pvt. Ltd. AYs 2018-19 and 2021-22 3.1. In this respect, we note that assessee is engaged in the business of manufacturing, trading, import and export of chemicals and allied products and rendering technical and business support services. It filed its return of income on 30.11.2018, reporting total income at Rs.24,56,87,890/-. Subsequently, a revised return was filed on 29.03.2019, with revised total income at Rs.23,20,60,460/- The case was selected for complete scrutiny under the e-Assessment Scheme, 2019 on issues relating to reduction of income in revised return, refund claim, duty drawback, ICDS compliance and adjustment and investment in intangible assets.

3.2. Assessee had duly explained its case along with filing an objection on the re-opening proceedings. However, assessment was completed by making following additions:-

i) disallowance of depreciation – Rs.1,36,27,430/- ii) Unexplained investment – Rs.5,45,09,718/-

9 ITA Nos. 2050 and 2051/Mum/2026 Ashland India Pvt. Ltd. AYs 2018-19 and 2021-22 been dismissed for want of submissions and documentary evidences from the assessee. Before us, ld. Counsel for the assessee submitted that an opportunity may be given to the assessee to make its representation for which an assurance was given that all the necessary submissions shall be made as and when called for. On confrontation of the submission made by the ld. Counsel of the assessee to the ld. Sr. DR, no objections were raised for the restoration as prayed.

5.1. Considering the fact that assessee had made all the required submissions before the ld. Assessing Officer which were available on record and could have been considered by the ld. CIT(A), but not done so, in the interest of justice and fair play, we find it appropriate to remit the matter back to the file of ld. CIT(A) for de novo meritorious adjudication on the grounds of the appeal taken at the first appellate stage. We also direct the assessee to be diligent and cooperative in attending the hearings and make its submissions for expeditious and effective disposal of the appeal. It should not seek adjournments unless warranted by compelling reasons.

10 ITA Nos. 2050 and 2051/Mum/2026 Ashland India Pvt. Ltd. AYs 2018-19 and 2021-22 8. Similar circumstances exist for the other appeal for Assessment Year 2021-22 which is also remitted back to the file of ld. CIT(A) in terms of the same observations and findings as noted above.

Order is pronounced in the open court on 01.06.2026 Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member Dated: 01.06.2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai