Kachwala Gems v. JCIT

288 ITR 10Supreme Court of India2007#229 most cited

What is Kachwala Gems v. JCIT authority for?

In a best judgment assessment, some guesswork is inherent, but the estimate must be fair and not arbitrary. Books of account can be rejected under Section 145(3) if the assessee fails to substantiate entries or prove the genuineness of transactions, leading to estimation of income.

332

judgments rely on this decision, according to BharatTax’s citation analysis of 367,842 Indian tax judgments — from 2015 to 2026.

Also referred to as

Kachwala Gems v. JCIT · Section 145(3) · best judgment assessment · rejection of books of account · genuineness of purchases · arbitrary estimate · onus to prove transactions · estimation of income · Section 144 · Section 69C

Also reported as

158 Taxmann 71

Sections most often in play

Section 143(3)Section 148Section 144Section 145(3)Section 147Section 68Section 69ASection 69C
Read the full judgment

Issues it is cited on

best judgment assessmentrejection of books of accountsection 145(3)section 145loose paperssection 133asection 132(4)documents seizedaccommodation entryregular assessmentsection 69cservice of notice

Judgments citing Kachwala Gems v. JCIT

Prakash Manekji Shah, Thane vs. ITO WD 3(2), Thane

In the result, assessee’s appeal is partly allowed and Revenue’s appeal is dismissed

ITA 4974/MUM/2015[2009-10]Status: DisposedITAT Mumbai21 Dec 2016AY 2009-10

Bench: Shri Saktijit Dey & Shri Ramit Kochar

For Appellant: Shri Mandar VaidyaFor Respondent: Shri Vishwas Jadhav
Section 147

…urt in Kishinchand Challaram, 125 ITR 713 (SC).” Grounds raided by the Revenue are as under:– 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in relying on the decision of Supreme Court in the case of Kanchanwala Gems Vs. JCIT 288 ITR 10(SC) and Hon'ble High Court's decision in the case of Vijay Protein, Sanjay Oil Cake Industries, etc.. 2. On the facts and in the circumstances of the case, and in law, the Hon'ble CIT(A) erred in not following the order of ITAT, Pune 3 Shri Prakash Manekji Shah in ITA No. 1411-1415 dated 20.02.2015 in the case of M/s. Kolte Patil Developers Ltd.…

ITO 16(2)(1), Mumbai vs. Ashwin Purshottam Bajaj, Mumbai

In the result , we dismiss both the appeal of the assessee as well of Revenue

ITA 5207/MUM/2014[2010-11]Status: DisposedITAT Mumbai14 Dec 2016AY 2010-11

Bench: Shri Mahavir Singh & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 4736/Mum/2014 ("नधा"रण वष" / Assessment Year : 2010-11) Shri Ashwin Purshotam The Ito – Ward 16(2)(1), बनाम/ Bajaj, Mumbai. V. C/O Shri Prakash Jhunjhunwala, Chartered Accountant, 5, Jolly Bhawan No. 2, 7 New Marine Lines, Churchgate, Mumbai – 400020. "थायी लेखा सं./Pan : Aacpb7522J .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

For Respondent: Shri Vikash Kumar Agarwal
Section 143(3)Section 145(3)Section 69C

…to further submit that even in case of best judgment assessment is passed , after rejecting the books of accounts, then, in such case, the total income is estimated, on the basis of honest guess work as per the normal profit in the industry. [Kachwala Gems - 288 ITR 10(SC). The appellant makes a prayer to adopt the concept of real income and estimate the suppressed income of Rs. 7,24,957/- (@ 45.'49% - 41.75% on Rs.1,93,83,886/-) that reasonably would have been earned in such trading activity; 1.6 The appellant to substantiate, the genuineness of the disclosed purchase and corresponding sales, relied upon the u…

Ashwin Purshotam Bajaj, Mumbai vs. ITO, Ward- 16(2)(1), Mumbai

In the result , we dismiss both the appeal of the assessee as well of Revenue

ITA 4736/MUM/2014[2010-11]Status: DisposedITAT Mumbai14 Dec 2016AY 2010-11

Bench: Shri Mahavir Singh & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 4736/Mum/2014 ("नधा"रण वष" / Assessment Year : 2010-11) Shri Ashwin Purshotam The Ito – Ward 16(2)(1), बनाम/ Bajaj, Mumbai. V. C/O Shri Prakash Jhunjhunwala, Chartered Accountant, 5, Jolly Bhawan No. 2, 7 New Marine Lines, Churchgate, Mumbai – 400020. "थायी लेखा सं./Pan : Aacpb7522J .. (अपीलाथ" /Appellant) (""यथ" / Respondent)

For Respondent: Shri Vikash Kumar Agarwal
Section 143(3)Section 145(3)Section 69C

…to further submit that even in case of best judgment assessment is passed , after rejecting the books of accounts, then, in such case, the total income is estimated, on the basis of honest guess work as per the normal profit in the industry. [Kachwala Gems - 288 ITR 10(SC). The appellant makes a prayer to adopt the concept of real income and estimate the suppressed income of Rs. 7,24,957/- (@ 45.'49% - 41.75% on Rs.1,93,83,886/-) that reasonably would have been earned in such trading activity; 1.6 The appellant to substantiate, the genuineness of the disclosed purchase and corresponding sales, relied upon the u…

Smec International Pty. Ltd., New Delhi vs. ADIT, Intl. Taxation, New Delhi

In the result, appeal is allowed partly for statistical purpose

ITA 5926/DEL/2012[2008-09]Status: DisposedITAT Delhi30 Nov 2016AY 2008-09

Bench: Sh. H.S. Sidhu & Sh. O.P. Kantassessment Year: 2008-09 Vs. Adit, Intl. Taxation, Range-2, M/S. Smec International Pvt. Ltd., Bansal’S Flat, P-39 , 1St New Delhi Floor, South Extension, Part-2, New Delhi Pan : Aaics3406K (Appellant) (Respondent) Appellant By Sh. R. M. Mehta, Ca Respondent By Sh. Anuj Arora, Cit(Dr) Date Of Hearing 21.09.2016 Date Of Pronouncement 30.11.2016 Order Per O.P. Kant, A.M.: This Appeal By The Assessee Is Directed Against Order Dated 17/10/2012 Passed By The Assessing Officer Under Section 143(3) Read With Section 144C Of The Income-Tax Act, 1961 (In Short ‘The Act’) For Assessment Year 2008-09. The Impugned Order Has Been Passed Giving Effect To The Direction Of Dispute Resolution Panel (In Short ‘Drp’). The Grounds Raised In Appeal Were Modified Through An Application Dated 24/09/2015, Which Are Reproduced As Under: “ 1. Whether On The Facts & In The Circumstances Of The Case, The Assessing Officer Has Erred In Rejecting Books Of Account As There Are No Descrepancies & The Lower Profit Is No Reason To Reject The Books Of Account & The A O Is Also Wrong In Holding That The Separate Project Wise

Section 143(3)Section 144CSection 163Section 40Section 44BSection 44D

…IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘G’ NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER Assessment Year: 2008-09 Vs. ADIT, Intl. Taxation, Range-2, M/s. SMEC International Pvt. Ltd., Bansal’s Flat, P-39 , 1st New Delhi Floor, South Extension, Part-2, New Delhi PAN : AAICS3406K (Appellant) (Respondent) Appellant by Sh. R. M. Mehta, CA Respondent by Sh. Anuj Arora, CIT(DR) Date of hearing 21.09.2016 Date of pronouncement 30.11.2016 ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 17/10/2012 passed by the Assessing Officer und…

Rajasthan Club, New Delhi vs. ADIT(E), New Delhi

In the result, appeal of the assessee is allowed

ITA 2649/DEL/2010[2002-03]Status: DisposedITAT Delhi19 Oct 2016AY 2002-03

Bench: Sh. H.S. Sidhu & Sh. O.P. Kantassessment Year: 2002-03 Vs. Adit(E), Inv. Circle-Ii, New Rajasthan Club, Dp-22, Pitampura, New Delhi Delhi Pan : Aaatr6043G (Appellant) (Respondent) Appellant By S/Sh. Gautam Jain & P.K. Kamal, Advocates Respondent By Sh. F.R. Meena, Sr.Dr Date Of Hearing 10.08.2016 Date Of Pronouncement 19.10.2016 Order Per O.P. Kant, A.M.: This Appeal By The Assessee Is Directed Against Order Dated 22/03/2010 Passed By The Learned Commissioner Of Income-Tax (Appeals)-Xi, New Delhi, For Assessment Year 2002-03 Raising Following Grounds: “ 1. The Appellant, Rajasthan Club Is Engaged In Charitable Activity During The Financial Year 2001-02. The Appellant Is A Regular Income Tax Assessee & Assessed To Income Tax For The Last Several Years. All Income, Assets & Investments Are Disclosed To Income Tax Department In Regular Income Tax Returns. 2. On The Facts & In The Circumstances Of The Case & In Law The Learned Assessing Officer & Commissioner Of Income Tax (Appeal) Was Incorrect & Unjustified In Making A Reference Of The Property In This Case To The Valuation Officer Without Any Reason Basis & Evidence.

Section 11Section 12ASection 143(3)

…r the books of accounts of the assessee. In support, thereof, the learned Authorized Representative relied on the following decisions: 1. 76 ITR 690(SC) state of Orissa versus maharaja Sh. BP Singh Deo. 2. 60 ITR 239 (SC) state of Kerala versus C Velukutty 3. 288 ITR 10 (SC), Kachwala Gems versus CIT 8.2 On the other hand, the learned Sr. Departmental Representative, relied on the order of the lower authorities. 8.3 We have heard the rival submissions and perused the material on record. We find that the Assessing Officer has not pointed out any specific vouchers or bill in respect of the expenses which were not f…

Jai Hind Paper Mart, Mumbai vs. ITO 14(2)(3), Mumbai

In the result, both the appeals of assessee and revenue are dismissed

ITA 6134/MUM/2014[2009-10]Status: DisposedITAT Mumbai28 Sept 2016AY 2009-10

Bench: Shri R.C. Sharma, Am & Shri Sandeep Gosain, Jm आमकय अऩीर सं./I.T.A. No.6134 /Mum/2014 (निर्धारण वषा / Assessment Year: 2009-10) M/S. Jai Hind Paper Mart Income Tax Officer 14(2)(3), 3Rd Floor, Earnest House 186, Hiramanek Bldg, बिधम/ Dadiseth Agiary Lane, Nariman Point, Vs. Chira Bazar, Mumbai-400 021. Mumbai-400 002. स्थामी रेखा सं./जीआइआय सं ./Pan/Gir No. Aaafj3532E (अऩीराथी /Appellant) (प्रत्मथी / Respondent) : आमकय अऩीर सं./I.T.A. No.6144 /Mum/2014 (निर्धारण वषा / Assessment Year: 2009-10) Income Tax Officer 14(2)(3), M/S. Jai Hind Paper Mart 3Rd Floor, Earnest House 186, Hiramanek Bldg, बिधम/ Nariman Point, Dadiseth Agiary Lane, Vs. Mumbai-400 021. Chira Bazar, Mumbai-400 002. स्थामी रेखा सं./जीआइआय सं ./Pan/Gir No. Aaafj3532E (अऩीराथी /Appellant) (प्रत्मथी / Respondent) : अऩीराथी की ओय से / Appellant By : Shri Ratan Samul प्रत्मथी की ओय से/Respondent By : Shri K. Ravi Kiran

For Appellant: Shri Ratan SamulFor Respondent: Shri K. Ravi Kiran
Section 143(1)Section 148

…4 dt.14-02-2014] in similar and identical issues has adopted GP @ 15% of the alleged purchases made by the appellant. In the case of Kachwala Gems vs. Joint Commissioner of Income Tax 6 ITA No.6134&6144/M/2014 (A.Y. 2009-10) M/s. Jai Hind Paper Mart [2007] 288 ITR 10 (SC) it has been held as under :- “ It is well settled that in a best judgment assessment there is always a certain degree of guess work. No doubt the authorities concerned should make an honest and fair estimate of the income even in a best judgment assessment, and should not act arbitrarily. “In view of the above facts and circumstances of the c…

ACIT, New Delhi vs. Sh. Inderpal Singh Wadhawan, New Delhi

In the result ground No. 2 of the appeal of the assessee is allowed

ITA 952/DEL/2013[2007-08]Status: DisposedITAT Delhi08 Jul 2016AY 2007-08

Bench: I.C.Sudhir & Shri Prashant Maharishiinder Pal Singh Wadhawan, Jcit, E/1/7, Ii Nd Floor, East Patel Vs. Circle-33, Nagar, New Delhi New Delhi Pan: Aarps6904L (Appellant) (Respondent) Acit, Inder Pal Singh Wadhawan, Circle-33(1), Room No.1505, E/1/7, Ii Nd Floor, Vs. 15Th Floor, Dr. Shyama Prasad East Patel Nagar, New Delhi Mukherjee Civil Centre, New Delhi Pan: Aarps6904L (Appellant) (Respondent) Inder Pal Singh Wadhawan, Acit, E/1/7, Ii Nd Floor, East Patel Circle-33, Vs. Nagar, New Delhi New Delhi Pan: Aarps6904L (Appellant) (Respondent) Acit, Inder Pal Singh Wadhawan, Circle-33(1), Room No.1505, 15Th E/1/7, Ii Nd Floor, Vs. Floor, Dr. Shyama Prasad East Patel Nagar, New Delhi Mukherjee Civil Centre, Pan: Aarps6904L New Delhi (Appellant) (Respondent)

For Appellant: Sh. Ajay Wadhwa, AdvFor Respondent: Sh. Vijay Verma, CIT DR
Section 142Section 143(3)Section 68

…e a defect in the books of accounts of the appellant and therefore, such books of accounts are liable to be rejected u/s 145(3) of the IT Act, 1961. This view is also supported by the decision of the Hon'ble Supreme Court in the case of JCIT vs. Kachwala Gems 288 ITR 10 (SC). Therefore, the action of the Assessing Officer in not rejecting the books of accounts of the appellant and simply disallowing the purchases on estimate basis is unjustified and unwarranted. It is only after the rejection of books of accounts that the appellants profit or loss can be estimated at a reasonable level and after considering the r…

ACIT, New Delhi vs. M/S Vardan Fashion, New Delhi

In the result ground No. 3 of the appeal of the assessee is dismissed

ITA 950/DEL/2013[2007-08]Status: DisposedITAT Delhi08 Jul 2016AY 2007-08

Bench: I.C.Sudhir & Shri Prashant Maharishivardan Fashions, Jcit, E-1/7, 2Nd Floor, East Patel Range-33, Vs. Nagar, New Delhi New Delhi Pan:Aacfv0423H (Appellant) (Respondent) Acit, Vardan Fashions, Circle-33(1) E-1/7, 2Nd Floor, East Patel Vs. New Delhi Nagar, New Delhi Pan:Aacfv0423H (Appellant) (Respondent)

For Appellant: Sh. Ajay Wadhwa, AdvFor Respondent: Sh. Vijay Verma, CIT DR
Section 142Section 40

…e a defect in the books of accounts of the appellant and therefore, such books of accounts are liable to be rejected u/s 145(3) of the IT Act, 1961. This view is also supported by the decision of the Hon'ble Supreme Court in the case of JCIT vs. Kachwala Gems 288 ITR 10 (SC). Therefore, the action of the Assessing Officer in not rejecting the books of accounts of the appellant and simply disallowing the purchases on estimate basis is unjustified and unwarranted. It is only after the rejection of books of accounts that the appellants profit or loss can be estimated at a reasonable level and after considering the r…

Mr. Inder Pal Singh Wadhawan, New Delhi vs. ACIT, New Delhi

In the result ground No. 2 of the appeal of the assessee is allowed

ITA 1589/DEL/2013[2008-09]Status: DisposedITAT Delhi08 Jul 2016AY 2008-09

Bench: I.C.Sudhir & Shri Prashant Maharishiinder Pal Singh Wadhawan, Jcit, E/1/7, Ii Nd Floor, East Patel Vs. Circle-33, Nagar, New Delhi New Delhi Pan: Aarps6904L (Appellant) (Respondent) Acit, Inder Pal Singh Wadhawan, Circle-33(1), Room No.1505, E/1/7, Ii Nd Floor, Vs. 15Th Floor, Dr. Shyama Prasad East Patel Nagar, New Delhi Mukherjee Civil Centre, New Delhi Pan: Aarps6904L (Appellant) (Respondent) Inder Pal Singh Wadhawan, Acit, E/1/7, Ii Nd Floor, East Patel Circle-33, Vs. Nagar, New Delhi New Delhi Pan: Aarps6904L (Appellant) (Respondent) Acit, Inder Pal Singh Wadhawan, Circle-33(1), Room No.1505, 15Th E/1/7, Ii Nd Floor, Vs. Floor, Dr. Shyama Prasad East Patel Nagar, New Delhi Mukherjee Civil Centre, Pan: Aarps6904L New Delhi (Appellant) (Respondent)

For Appellant: Sh. Ajay Wadhwa, AdvFor Respondent: Sh. Vijay Verma, CIT DR
Section 142Section 143(3)Section 68

…e a defect in the books of accounts of the appellant and therefore, such books of accounts are liable to be rejected u/s 145(3) of the IT Act, 1961. This view is also supported by the decision of the Hon'ble Supreme Court in the case of JCIT vs. Kachwala Gems 288 ITR 10 (SC). Therefore, the action of the Assessing Officer in not rejecting the books of accounts of the appellant and simply disallowing the purchases on estimate basis is unjustified and unwarranted. It is only after the rejection of books of accounts that the appellants profit or loss can be estimated at a reasonable level and after considering the r…

Mr. Inder Pal Singh Wadhawan, New Delhi vs. JCIT, New Delhi

In the result ground No. 2 of the appeal of the assessee is allowed

ITA 1155/DEL/2013[2007-08]Status: DisposedITAT Delhi08 Jul 2016AY 2007-08

Bench: I.C.Sudhir & Shri Prashant Maharishiinder Pal Singh Wadhawan, Jcit, E/1/7, Ii Nd Floor, East Patel Vs. Circle-33, Nagar, New Delhi New Delhi Pan: Aarps6904L (Appellant) (Respondent) Acit, Inder Pal Singh Wadhawan, Circle-33(1), Room No.1505, E/1/7, Ii Nd Floor, Vs. 15Th Floor, Dr. Shyama Prasad East Patel Nagar, New Delhi Mukherjee Civil Centre, New Delhi Pan: Aarps6904L (Appellant) (Respondent) Inder Pal Singh Wadhawan, Acit, E/1/7, Ii Nd Floor, East Patel Circle-33, Vs. Nagar, New Delhi New Delhi Pan: Aarps6904L (Appellant) (Respondent) Acit, Inder Pal Singh Wadhawan, Circle-33(1), Room No.1505, 15Th E/1/7, Ii Nd Floor, Vs. Floor, Dr. Shyama Prasad East Patel Nagar, New Delhi Mukherjee Civil Centre, Pan: Aarps6904L New Delhi (Appellant) (Respondent)

For Appellant: Sh. Ajay Wadhwa, AdvFor Respondent: Sh. Vijay Verma, CIT DR
Section 142Section 143(3)Section 68

…e a defect in the books of accounts of the appellant and therefore, such books of accounts are liable to be rejected u/s 145(3) of the IT Act, 1961. This view is also supported by the decision of the Hon'ble Supreme Court in the case of JCIT vs. Kachwala Gems 288 ITR 10 (SC). Therefore, the action of the Assessing Officer in not rejecting the books of accounts of the appellant and simply disallowing the purchases on estimate basis is unjustified and unwarranted. It is only after the rejection of books of accounts that the appellants profit or loss can be estimated at a reasonable level and after considering the r…

M/S Vardaan Fashion, New Delhi vs. JCIT, New Delhi

In the result ground No. 3 of the appeal of the assessee is dismissed

ITA 1143/DEL/2013[2007-08]Status: DisposedITAT Delhi08 Jul 2016AY 2007-08

Bench: I.C.Sudhir & Shri Prashant Maharishivardan Fashions, Jcit, E-1/7, 2Nd Floor, East Patel Range-33, Vs. Nagar, New Delhi New Delhi Pan:Aacfv0423H (Appellant) (Respondent) Acit, Vardan Fashions, Circle-33(1) E-1/7, 2Nd Floor, East Patel Vs. New Delhi Nagar, New Delhi Pan:Aacfv0423H (Appellant) (Respondent)

For Appellant: Sh. Ajay Wadhwa, AdvFor Respondent: Sh. Vijay Verma, CIT DR
Section 142Section 40

…e a defect in the books of accounts of the appellant and therefore, such books of accounts are liable to be rejected u/s 145(3) of the IT Act, 1961. This view is also supported by the decision of the Hon'ble Supreme Court in the case of JCIT vs. Kachwala Gems 288 ITR 10 (SC). Therefore, the action of the Assessing Officer in not rejecting the books of accounts of the appellant and simply disallowing the purchases on estimate basis is unjustified and unwarranted. It is only after the rejection of books of accounts that the appellants profit or loss can be estimated at a reasonable level and after considering the r…

ITO 21(2)(4), Mumbai vs. Yogesh Mahendra Pandya, Mumbai

In the result, the appeal filed by the Revenue is partly allowed for statistical purpose

ITA 2893/MUM/2012[2007-08]Status: DisposedITAT Mumbai30 Nov 2015AY 2007-08

Bench: Shri Amit Shukla & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 2893/Mum/2012 ("नधा"रण वष" / Assessment Year : 2007-08)

For Appellant: None
Section 133(6)Section 143(2)Section 143(3)

…acts and circumstances of the case and several discrepancies in the accounts, the CIT(A) rejected books of accounts u/s 145 of the Act and estimated the GP rate of 20% on turnover keeping in view the ratio of decision of Hon’ble Supreme Court in Kachwala gems 288 ITR 10(SC) whereby the Hon’ble Supreme Court has held that in best judgment assessment there is always some degree of guess work in absence of proper and correct accounts and only requirement is that the guess work should be honest and fair. The CIT(A) has cited several reasons in his orders dated 29.02.2012 for rejecting books of accounts of the assesse…