ANUBHAV ENGINEERING CO,MUMBAI vs. INCOME TAX OFFICER , VASHI

आदेश / ORDER PER BEENA PILLAI, JUDICIAL MEMBER:

Present appeal filed by assessee arises out of the order passed by Ld. Commissioner of Income tax (Appeals)-25, Mumbai [hereinafter referred to as the “Ld.CIT(A)”], dted 22/12/2017, for A.Y. 2010-11, on the following grounds of appeal:-

ITA 1151/MUM/2026 ANUBHAV ENGINEERING CO “1) Ground-1 - The learned Assessing officer has erred in making adhoc disallowances of general office expenses without any proof OR justifications. Ground 2 - The learned assessing officer has erred in making additions to income on reasons completely unrelated to the reopening of the assessment. Ground-3- The appellant requests leave to add, alter, OR remove any further grounds.” 2. Brief facts of the case are as under:-

Assessee is a partnership firm engaged in the business of civil construction. It filed its return of income for A.Y. 2010-11 on 06/10/2010 declaring total income at Rs.55,72,641/-. Subsequently, on the basis of information received from the Investigation Wing, Mumbai, that the assessee had allegedly obtained accommodation purchase bills from parties identified as hawala dealers by the Maharashtra Sales Tax Department, the assessment was reopened by issuance of notice u/s 148 of the Act on 07/11/2014. In response thereto, the assessee requested that the original return of income filed on 06/10/2010 be treated as the return filed pursuant to the notice issued u/s 148 of the Act.

2.1. Thereafter, the assessment was completed u/s 143(3) r.w.s. 147 of the Act vide order dated 22/03/2015 determining the total income at Rs.60,43,330/- as against the returned income of Rs.55,72,641/-. While framing the reassessment, the Ld. AO made an addition of Rs.1,51,453/- by treating purchases allegedly made from M/s K.K. Enterprises as non-genuine and further disallowed a sum of Rs.3,19,234/-, being 15% of certain indirect expenses comprising conveyance expenses, other expenses, staff welfare expenses and telephone expenses.

ITA 1151/MUM/2026 ANUBHAV ENGINEERING CO Aggrieved, by the order passed by the Ld.AO, the assessee preferred appeal before the Ld. CIT(A).

2.2. The Ld. CIT(A), after considering the facts and submissions of the assessee, restricted the addition on account of alleged bogus purchases to 12.5% of such purchases, amounting to Rs.18,933/- , and granted relief for the balance amount. However, the disallowance of Rs.3,19,234/- made by the Ld. AO on account of office/indirect expenses was confirmed.

Aggrieved by the order passed by Ld.CIT(A), the assessee is in further appeal before the Tribunal.

3.1. Per contra, the Ld.DR relied upon the findings of the Ld.CIT(A) and submitted that the addition sustained by the first appellate authority was in accordance with the settled principles governing estimation of profit embedded in non-genuine purchases. It was therefore submitted that no interference was called for in the impugned order.

ITA 1151/MUM/2026 ANUBHAV ENGINEERING CO We have perused the submissions advanced by both sides in light of the record placed before us.

4.1. At the same time, we find merit in the contention of the assessee that it is engaged in the business of civil construction, a line of business where profit margins are generally lower than those prevailing in trading concerns. The purpose of sustaining an addition in such cases is to bring to tax only the profit element embedded in the purchases and not the entire purchase value. Therefore, while estimating such profit element, the nature of business carried on by the assessee assumes significance.

4.2. Considering the totality of facts and circumstances of the case, we find that the assessee is engaged in civil construction activities and, as submitted before us, earns a gross profit margin in the range of 2% to 3%. In our considered view, the rate of 12.5% adopted by the Ld.CIT(A) appears to be on the higher side considering the peculiar facts of the present case and the nature of business carried on by the assessee. Therefore, in order to adopt a fair, reasonable and equitable approach, we deem it appropriate to restrict the addition to 10% of the alleged non-genuine purchases as against 12.5% sustained by the Ld.CIT(A). The Ld.AO is directed to recompute the addition accordingly.

ITA 1151/MUM/2026 ANUBHAV ENGINEERING CO Thus, Ground Nos. 1 and 2 raised by the assessee are partly allowed.

In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on 22/06/2026.

Sd/- Sd/- JAGADISH BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai Dated: 22/06/2026 SC. Sr. P.S. Copy to: ANUBHAV ENGINEERING CO, 470-40, RAMTEKDI, DR. CG GIDWANI ROAD, CHEMBUR, MUMBAI 1 - 400074, MUMBAI-400074, MAHARASHTRA INCOME TAX OFFICER , IT OFFICE, VASHI RAILWAY 2 STATION BUILDING, MUMBAI - 400703, MUMBAI-400703, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE