ITO-12(2)(1), MUMBAI, AAYKAR BHAWAN MUMBAI V. EMPEEF CHEMICALS PVT LTD, MUMBAI

ITA 9390/MUM/2025

AI Insights

The case involves Empeef Chemicals Pvt Ltd, which faced an addition of Rs. 19,12,778 as bogus purchases during the assessment year 2010-11. The Assessing Officer (AO) initially levied a penalty under section 271(1)(c) corresponding to the full amount of the addition. However, the CIT(A) later restricted this penalty to 10% of the bogus purchases, following a precedent from the ITAT in a similar case for the assessment year 2009-10. The Revenue appealed against this decision, arguing that the CIT(A) erred in restricting the penalty based on the ITAT's previous order, as no relief on quantum had been allowed for the year under consideration. The ITAT, after reviewing the submissions and precedents, decided to uphold the CIT(A)'s decision and directed the AO to recompute the penalty based on the revised addition of 10% of the bogus purchases.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 848142 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2026
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2010-2011
• Appeal Filed On: 30-12-2025
• Other Referred Cases: ITA No. 5124/Mum/2017, ITA No. 77/MUM/2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RITESH MISRA
• Assessee Lawyers: ASHOK GOSAR
• Keywords: Set aside; Bogus purchase; Bogus
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) & SHRI SANDEEP KARHAIL (JUDICIAL MEMBER) ITA No. 9390/MUM/2025 Assessment Year: 2010-11 ITO – 12(2)(1) Room No. 145, 1st Floor, MK Road, Aayakar Bhawan, Mumbai. Vs. Empeef Chemicals Pvt Ltd 12, Veena Apartments opp Bhagvati Hospitals, SVP Road, Borivali (W), Mumbai – 400092 PAN – AAACE1386N Appellant Respondent Assessee by : Shri Ashok Gosar Revenue by : Shri Ritesh Misra, CIT-DR Date of Hearing : 24/03/2026 Date of pronouncement : 27/03/2026 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 17.10.2025 passed by the Ld. Commissioner of Income tax (Appeals) / National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2010-11. The grounds raised by the Revenue are reproduced as under: 1. \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the quantum of Printed from counselvise.com penalty based on the order of the Hon'ble ITAT in the assessee case on quantum addition for A.Y. 2009 the facts that no relief on quantum has been allowed for the year under consideration\". 2. The appellant craves leave to add, amend, or alter any of the above grounds of appeal before or during the course of hearing, in the interest of justice. 2. We have heard the rival submissions of the parties and perused the relevant material placed on record. is a private Limited Company. was assessed u/s 143(3) r.w.s.147, where in t addition of Rs.19,12,778/ bogus purchases. He thereafter, levied penalty u/s 271(1)© of the Act corresponding the amount of addition. But, the Coordinate Bench of Tribunal order dated 23/02/2018) 10 % of the bogus purchases. The ld CIT(A) accordingly restricted the penalty to 10% of such relevant finding of ld CIT(A) is reproduced as under: 5.2 I have carefully considered the assessment order, penalty order, the grounds of appeal, orders of the Hon'ble ITAT, Mumbai, the written submissions and the arguments and conten appellant as well as other relevant material on record. I have also taken into consideration the arguments and the reasoning/rationale behind the addition(s)/disallowance(s) made by the assessing officer in the assessment order. Accordingly, t grounds of appeal raised by the appellant are adjudicated as hereunder: Empeef Chemicals Pvt Ltd ITA Nos. penalty based on the order of the Hon'ble ITAT in the assessee case on quantum addition for A.Y. 2009-10 without appreciating the facts that no relief on quantum has been allowed for the year under consideration\". llant craves leave to add, amend, or alter any of the above grounds of appeal before or during the course of hearing, in the interest of justice. We have heard the rival submissions of the parties and perused the relevant material placed on record. The is a private Limited Company. The income for A.Y. 2010 was assessed u/s 143(3) r.w.s.147, where in the AO made ion of Rs.19,12,778/- being 100 percent of alleged He thereafter, levied penalty u/s 271(1)© corresponding the amount of addition. But, the Coordinate Bench of Tribunal in ITA No. 5124/Mum/2017 ( order dated 23/02/2018) restricted said quantum addition to 10 % of the bogus purchases. The ld CIT(A) accordingly restricted the penalty to 10% of such bogus purchases. The relevant finding of ld CIT(A) is reproduced as under: 5.2 I have carefully considered the assessment order, penalty order, the grounds of appeal, orders of the Hon'ble ITAT, Mumbai, the written submissions and the arguments and conten appellant as well as other relevant material on record. I have also taken into consideration the arguments and the reasoning/rationale behind the addition(s)/disallowance(s) made by the assessing officer in the assessment order. Accordingly, t grounds of appeal raised by the appellant are adjudicated as Empeef Chemicals Pvt Ltd., 2 ITA Nos. 9390/MUM/2025 penalty based on the order of the Hon'ble ITAT in the assessee 10 without appreciating the facts that no relief on quantum has been allowed for the year llant craves leave to add, amend, or alter any of the above grounds of appeal before or during the course of hearing, in We have heard the rival submissions of the parties and The assessee The income for A.Y. 2010-11 he AO made percent of alleged He thereafter, levied penalty u/s 271(1)© corresponding the amount of addition. But, the ITA No. 5124/Mum/2017 ( restricted said quantum addition to 10 % of the bogus purchases. The ld CIT(A) accordingly bogus purchases. The relevant finding of ld CIT(A) is reproduced as under: 5.2 I have carefully considered the assessment order, penalty order, the grounds of appeal, orders of the Hon'ble ITAT, Mumbai, the written submissions and the arguments and contentions of the appellant as well as other relevant material on record. I have also taken into consideration the arguments and the reasoning/rationale behind the addition(s)/disallowance(s) made by the assessing officer in the assessment order. Accordingly, the grounds of appeal raised by the appellant are adjudicated as Printed from counselvise.com 5.3 It is observed that the appellant has filed an appeal before the Hon'ble ITAT, Mumbai against the assessment order. The Hon'ble ITAT vide order dated 23.02.2018 has held in para \"At the time of hearing, the learned representative for the assessee referred to the decision of the Tribunal in ITA No. 77/MUM/2017 dated 03.06.2017 in assessee's own case for assessment year 2009 addition with regard unexplained purchases has been restricted to 10% of such unexplained purchases. Following the said precedent, which has been rendered under identical circumstances, I find no reason to distract from the precedent in his own case dated 0306 CIT appeals is set aside and the assessing officer is directed to restrict the addition to 10% of the stated purchase. In the result the appeal of the assessee is partly allowed.\" 5.4 The appellant has contended tha under section 271(1) (c) is liable to be deleted; however, it is noted that the Hon'ble ITAT, Mumbai, relevant assessment year vide order dated 23.02.2018, has restricted the addition on accou the total purchases. In view of the binding nature of the said judgment, the basis for levy of penalty undergoes a material change. Consequently, the penalty cannot be sustained on the entire amount as originally computed by can it be entirely deleted as claimed by the appellant. Accordingly, the appeal is partly allowed, and the Assessing Officer is directed to recompute the penalty afresh in accordance with the revised addition sustained at 10% of purchases, as per the directions of the Hon'ble ITAT, Mumbai. 3. We note that Coordinate Bench of the Tribunal vide order date 23.02.2018 assessment year under consideration disallowance of the bogus purchases to the extent of 10% of Empeef Chemicals Pvt Ltd ITA Nos. 5.3 It is observed that the appellant has filed an appeal before the Hon'ble ITAT, Mumbai against the assessment order. The Hon'ble ITAT vide order dated 23.02.2018 has held in para 4 are below: \"At the time of hearing, the learned representative for the assessee referred to the decision of the Tribunal in ITA No. 77/MUM/2017 dated 03.06.2017 in assessee's own case for assessment year 2009-10, wherein in a similar situation, the tion with regard unexplained purchases has been restricted to 10% of such unexplained purchases. Following the said precedent, which has been rendered under identical circumstances, I find no reason to distract from the precedent in his own case dated 0306.2017 (Supra). Accordingly, the order of CIT appeals is set aside and the assessing officer is directed to restrict the addition to 10% of the stated purchase. In the result the appeal of the assessee is partly allowed.\" 5.4 The appellant has contended that the entire penalty levied under section 271(1) (c) is liable to be deleted; however, it is noted that the Hon'ble ITAT, Mumbai, in the appellant's own case for the relevant assessment year vide order dated 23.02.2018, has restricted the addition on account of bogus purchases to 10% of the total purchases. In view of the binding nature of the said judgment, the basis for levy of penalty undergoes a material change. Consequently, the penalty cannot be sustained on the entire amount as originally computed by the Assessing Officer, nor can it be entirely deleted as claimed by the appellant. Accordingly, the appeal is partly allowed, and the Assessing Officer is directed to recompute the penalty afresh in accordance with the revised addition sustained at 10% of purchases, as per the directions of the Hon'ble ITAT, Mumbai. Coordinate Bench of the Tribunal vide order date 23.02.2018 in ITA No. 5124/Mum/2017 for the assessment year under consideration has restricted the disallowance of the bogus purchases to the extent of 10% of Empeef Chemicals Pvt Ltd., 3 ITA Nos. 9390/MUM/2025 5.3 It is observed that the appellant has filed an appeal before the Hon'ble ITAT, Mumbai against the assessment order. The Hon'ble 4 are below: \"At the time of hearing, the learned representative for the assessee referred to the decision of the Tribunal in ITA No. 77/MUM/2017 dated 03.06.2017 in assessee's own case for 10, wherein in a similar situation, the tion with regard unexplained purchases has been restricted to 10% of such unexplained purchases. Following the said precedent, which has been rendered under identical circumstances, I find no reason to distract from the precedent in .2017 (Supra). Accordingly, the order of CIT appeals is set aside and the assessing officer is directed to restrict the addition to 10% of the stated purchase. In the result t the entire penalty levied under section 271(1) (c) is liable to be deleted; however, it is noted in the appellant's own case for the relevant assessment year vide order dated 23.02.2018, has nt of bogus purchases to 10% of the total purchases. In view of the binding nature of the said judgment, the basis for levy of penalty undergoes a material change. Consequently, the penalty cannot be sustained on the the Assessing Officer, nor can it be entirely deleted as claimed by the appellant. Accordingly, the appeal is partly allowed, and the Assessing Officer is directed to recompute the penalty afresh in accordance with the revised addition sustained at 10% of the bogus purchases, as per the directions of the Hon'ble ITAT, Mumbai. Coordinate Bench of the Tribunal vide in ITA No. 5124/Mum/2017 for the has restricted the disallowance of the bogus purchases to the extent of 10% of Printed from counselvise.com the addition made by the Ld.AO Tribunal (supra) is reproduced as under: 4. At the time of hearing the learned representative for the assessee referred 77/Mum/2017 dated 30.06.2017 in assessee’s own case for the A.Y 2009-10, wherein in a similar situation, the addition with regard to unexplained purchases. Following the said precedent, which has been rendered un reason to distract from the precedent in assessee’s own case dated 30.06.2017 (supra). Accordingly, the order of CIT(A) is set aside and the Assessing Officer is directed to restrict the addition to 10% of the stated 4. The Ld. CIT(A) has also to the extent of the disallowance of the 10%, therefore we do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and a The sole ground of the appeal of the R dismissed. 5. In the result, the appeal dismissed. Order pronounced in the open Court on Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Empeef Chemicals Pvt Ltd ITA Nos. he addition made by the Ld.AO. The relevant finding of Tribunal (supra) is reproduced as under: At the time of hearing the learned representative for the assessee referred to the decision of the Tribunal in ITA No. 77/Mum/2017 dated 30.06.2017 in assessee’s own case for the 10, wherein in a similar situation, the addition with regard to unexplained purchases. Following the said precedent, which has been rendered under identical circumstances, I find no reason to distract from the precedent in assessee’s own case dated 30.06.2017 (supra). Accordingly, the order of CIT(A) is set aside and the Assessing Officer is directed to restrict the addition to 10% of the stated purchases. he Ld. CIT(A) has accordingly sustained the penalty also to the extent of the disallowance of the 10%, therefore we do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. e ground of the appeal of the Revenue is accordingly In the result, the appeal of the Revenue stands ounced in the open Court on 27/03/2026. Sd/- SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Empeef Chemicals Pvt Ltd., 4 ITA Nos. 9390/MUM/2025 . The relevant finding of At the time of hearing the learned representative for the to the decision of the Tribunal in ITA No. 77/Mum/2017 dated 30.06.2017 in assessee’s own case for the 10, wherein in a similar situation, the addition with regard to unexplained purchases. Following the said precedent, der identical circumstances, I find no reason to distract from the precedent in assessee’s own case dated 30.06.2017 (supra). Accordingly, the order of CIT(A) is set- aside and the Assessing Officer is directed to restrict the addition sustained the penalty also to the extent of the disallowance of the 10%, therefore we do not find any infirmity in the order of the Ld. CIT(A) on ccordingly we uphold the same. evenue is accordingly evenue stands /2026. OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Dated: 27/03/2026 KRK, SR. PS Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Empeef Chemicals Pvt Ltd ITA Nos. Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Empeef Chemicals Pvt Ltd., 5 ITA Nos. 9390/MUM/2025 (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "