“best judgment assessment”

Assessment ProceduresSection 144Section 1441,400 judgments

The decision most relied on for best judgment assessment is Kachwala Gems v. JCIT (288 ITR 10), cited in 332 judgments on BharatTax.

Leading authorities on best judgment assessment

Kachwala Gems v. JCIT

288 ITR 10 · 2007 · Supreme Court

332

citing judgments

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.

Commissioner of Sales Tax v. H.M. Esufali H.M. Abdulali

90 ITR 271 · 1973 · Supreme Court

232

citing judgments

The Supreme Court established principles for best judgment assessments, stating that some guesswork is inevitable but the assessment must be bona fide, rational, and free from bias or capriciousness. An appellate authority cannot substitute its judgment for that of the Assessing Officer unless the AO's assessment is shown to be biased, irrational, vindictive, or capricious, especially when the assessee fails to provide proper accounts or counter-evidence.

CIT v. Gurubachhan Singh J. Juneja

302 ITR 63 · 2008 · High Court

147

citing judgments

When unaccounted receipts or suppressed sales are detected and books of account are rejected under Section 145(3), additions to income must be restricted to the profit element embedded in such transactions, not the entire transaction value. This profit element is to be estimated by considering the assessee's regular profit ratio as per books of account.

Man Mohan Sadani v. CIT

304 ITR 52 · 2008 · High Court

132

citing judgments

When assessing income from undisclosed or unrecorded sales, the entire sale proceeds cannot be added to the assessee's income; instead, only the net profit embedded in such unaccounted sales, determined by applying the assessee's net profit rate, should be taxed.

Brij Bhushan Lal Paraduman Kumar v. CIT

115 ITR 524 · 1978 · Supreme Court

113

citing judgments

The Supreme Court holds that an Assessing Officer, when making a best judgment assessment or estimating income, must act fairly, honestly, and rationally, basing the estimation on available material and avoiding arbitrary or capricious decisions. Adherence to natural justice principles is crucial during assessment proceedings.

CIT v. Laxminarain Badridas

5 ITR 170 · 1937 · Supreme Court

citing judgments

An income tax officer making a best judgment assessment must act honestly, not dishonestly, vindictively, or capriciously. They must make a fair estimate of the assessment, considering local knowledge, repute, and previous assessments.

State of Kerala v. C. Velukutty

60 ITR 239 · 1966 · Supreme Court

citing judgments

A best judgment assessment must be based on wisdom, truth, and legal principles, not arbitrary caprice. While it involves estimation and guesswork, this must have a reasonable nexus to available material and the case's circumstances.

Shankar Khandasari Sugar Mills v. CIT

193 ITR 669 · 1992 · High Court

citing judgments

Best judgment assessments under Section 144 must be a fair and rational estimation of income by the Assessing Officer, not capricious or arbitrary. Appellate authorities should accept clarificatory evidence to test the fairness of such assessments, even if produced for the first time.

Judgments citing best judgment assessment

Ramasamy Kalidasan, Namakkal vs. ITO, Ward-1(3), Salem

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 1982/CHNY/2025[2011-12]Status: DisposedITAT Chennai17 Sept 2025AY 2011-12

Bench: Shri George George Kand Shri S.R. Raghunathaआयकर अपील सं./Ita No.: 1982/Chny/2025 िनधा"रण वष"/Assessment Year: 2011-12 Shri Ramasamy Kalidasan, The Income Tax Officer, 1/85, Kumaripalayam, Vs. Ward 1(3), Mohanur, Salem. Namakkal – 637 015. Pan: Buipk 6746A (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri T.S.Lakshmi Venkataraman, F.C.A ""यथ" क" ओर से/Respondent By : Ms. Gouthami Manivasagam,Jcit सुनवाई क" तारीख/Date Of Hearing : 16.09.2025 घोषणा क" तारीख/Date Of Pronouncement : 17.09.2025

For Appellant: Shri T.S.Lakshmi VenkataramanFor Respondent: Ms. Gouthami Manivasagam,JCIT

Section 144Section 250

five notices issued from the office of the First Appellate Authority. Further, we also notice that the assessment has been completed on best judgment assessment u/s. 144 r.w.s. 147 of the Act. 4. The Ld.AR for the assessee submitted that the order passed by the FAA is ex-parte

Jitudan Ravatdan Gadhvi, Patan vs. The ITO, Ward-3, Patan

In the result, the appeal of the assesse is partly allowed

ITA 1033/AHD/2025[2012-13]Status: DisposedITAT Ahmedabad16 Sept 2025AY 2012-13

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Respondent by: Shri Rajenkumar M Vasavda, Sr. DRFor Respondent: Shri Rajenkumar M Vasavda, Sr. DR

Section 142(1)Section 144Section 148Section 249(2)Section 249(3)Section 250Section 271(1)(c)Section 5

deposits and bank interest was primarily based on the absence of compliance by the assessee during the assessment proceedings, which concluded in a best judgment assessment under section 144 of the Act. However, before us, the assessee has furnished a detailed explanation substantiating the source of cash deposits in question

No. 4091 Mallasamudram Paccs Ltd., Namakkal vs. ITO, Ward-1, Namakkal

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 1983/CHNY/2025[2018-19]Status: DisposedITAT Chennai16 Sept 2025AY 2018-19

Bench: Shri George George Kand Shri S.R. Raghunatha

For Appellant: Shri T.S. Lakshmi VenkataramanFor Respondent: Ms. Gouthami Manivasagam,JCIT

Section 119(2)(b)Section 139(1)Section 144Section 147Section 148Section 250

four notices issued from the office of the First Appellate Authority. Further, we also notice that the assessment has been completed on best judgment assessment u/s. 147 r.w.s. 144 r.w.s.144B of the Act. 3. The Ld.AR for the assessee submitted that FAA had dismissed the appeal by passing

Muthuramalingam, Thoothukudi vs. ITO, Ward-1, Tutucorin

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 1965/CHNY/2025[2015-16]Status: DisposedITAT Chennai16 Sept 2025AY 2015-16

Bench: Shri George George Kand Shri S.R. Raghunathaआयकर अपील सं./Ita No.: 1965/Chny/2025 िनधा"रण वष"/Assessment Year: 2015-16 Shri Muthuramalingam, The Income Tax Officer, 6/166-11, Pilliyar Kovil Street, Vs. Ward 1, Indra Nagar, Kovilpatti, Tuticorin. Thoothukudi – 628 501. Pan: Ajfpm 4981Q (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri Veerabathran Prasantham, Advocate ""यथ" क" ओर से/Respondent By : Ms. Gouthami Manivasagam,Jcit सुनवाई क" तारीख/Date Of Hearing : 16.09.2025 घोषणा क" तारीख/Date Of Pronouncement : 16.09.2025

For Appellant: Shri Veerabathran PrasanthamFor Respondent: Ms. Gouthami Manivasagam,JCIT

Section 144Section 147Section 250

three notices issued from the office of the First Appellate Authority. Further, we also notice that the assessment has been completed on best judgment assessment u/s. 147 r.w.s. 144 r.w.s.144B of the Act. 3. The Ld.AR for the assessee submitted that FAA had dismissed the appeal by passing

Koshal Kishor Sharma, Jaipur vs. DCIT(Intl. Tax.) Jaipur, Jaipur

In the result, appeals of the assessee are allowed

ITA 862/JPR/2025[2015-16]Status: DisposedITAT Jaipur15 Sept 2025AY 2015-16

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI GAGAN GOYAL (Accountant Member)

For Appellant: Shri Shrawan Kumar Gupta, AdvFor Respondent: Shri Dharam Singh Meena, JCIT-DR

Section 147Section 148ASection 234ASection 250Section 271(1)(c)Section 69Section 69A

Kochandi&Ors.vs. AGRICULTURAL INCOME TAX OFFICER(1975) 43 CCH 0749 KerHC (1976) 1976 CTR 0072 (KER) : (1977) 110 ITR 0406 held that Assessment—Best judgment assessment—Validity—Notice not served on assessee in accordance with Order V, rr. 17, 18 & 19 etc.—Ex parte assessment not valid. 4. Violation

Koshal Kishor Sharma, Jaipur vs. DCIT(Intl. Tax), Jaipur

In the result, appeals of the assessee are allowed

ITA 861/JPR/2025[2015-16]Status: DisposedITAT Jaipur15 Sept 2025AY 2015-16

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI GAGAN GOYAL (Accountant Member)

For Appellant: Shri Shrawan Kumar Gupta, AdvFor Respondent: Shri Dharam Singh Meena, JCIT-DR

Section 147Section 148ASection 234ASection 250Section 271(1)(c)Section 69Section 69A

Shri Ambai Gramin Bigarsheti Sah Pat Sanstha Maryadit Radhanagari, Radhanagari Kolhapur vs. ITO, Ward 1(5), Kolhapur

In the result, appeal of the assessee is allowed for statistical purposes

ITA 401/PUN/2024[2017-18]Status: DisposedITAT Pune15 Sept 2025AY 2017-18

Bench: Dr.Manish Borad

For Appellant: Shri Pramod S ShingteFor Respondent: Shri Manoj Tripathi

Section 144Section 249(4)(b)Section 250Section 69ASection 80P

placed before me. Against the addition for unexplained cash deposit u/s.69A at Rs.10,86,200/- made by the ld. Assessing Officer in the Best Judgment Assessment framed u/s.144 of the Act for A.Y. 2017-18, assessee preferred appeal before ld.CIT(A). However, ld.CIT(A) dismissed the appeal for statistical purposes ... order of ld.CIT(A) deserves to be set aside. However, the assessee failed to appear before the ld. JAO resulting into Best Judgment Assessment and the ld. Counsel for the assessee before me has furnished the paper book running into 55 pages including copy of cash book, bank statements, declaration

Smt. Sudha Loyalka, New Delhi vs. ITO, New Delhi

In the result, appeal of the assessee is partly allowed

ITA 399/DEL/2017[2012-13]Status: DisposedITAT Delhi12 Sept 2025AY 2012-13

Bench: Shri Anubhav Sharma & Shri Manish Agarwal[Assessment Year : 2012-13] Smt. Sudha Loyalka, Vs Ito, Prop.Tirupati Industries, 2/1, Ward-35(2), Block-41, Singh Sabha Road, New Delhi Shakti Nagar, Delhi-110007. Pan-Aabpl6055D Appellant Respondent Appellant By Dr.Rakesh Gupta, Adv., Shri Somil Aggarwal, Adv. & Shri Deepesh Garg, Adv. Respondent By Shri Narpat Singh, Sr.Dr Date Of Hearing 24.06.2025 Date Of Pronouncement 12.09.2025 Order Per Manish Agarwal, Am : The Present Appeal Is Filed By Assessee Against The Order Dated 01.12.2016 Passed By Ld. Commissioner Of Income Tax (A)-12, New Delhi [“Ld.Cit(A)”] In Appeal No. 26/15-16 U/S 250 Of The Income Tax Act, 1961 [“The Act”] Arising Out Of Assessment Order Dated 18.03.2015 Passed U/S 143(3) Of The Act Pertaining To Assessment Year 2012-13. 2. Brief Facts Of The Case Are That The Assessee Is An Individual & Filed Her Return Of Income On 27.09.2012, Declaring Total Income Of Inr 3,52,180/-. The Case Of Assessee Was Selected For Scrutiny For The Reason “Large Amount Of Sundry Creditors”. Assessee Is Engaged In The Business Of Trading Of Fabrics & Readymade Garments Under The Name & Style As M/S. Tirupati Industries. The Assessee Has Shown Total Sundry Creditors Of Inr 6,77,21,342/- Which Includes Inr 3,48,88,095/- Under The Title “Retail Creditors Control Account”. In Order To Examine The Genuineness Of These Creditors, Ao Issued Notice U/S 133(6) Of The Act To 27 Parties Out Of Which Notices Issued To 20 Parities Amounting To Inr 2,78,20,495/- Were Returned Back For The Reason “Wrong Address/Incomplete Address/Non-Existed” Etc. The Ao Thereafter, Discussed Each Of The Parties To Whom Notices Were Sent & Reached To The Conclusion That These Parties Are Non-Existent & Made The Addition Of Inr 3,50,94,758/- As Bogus Creditors.

Section 133(6)Section 143(3)Section 250Section 37Section 69C

Estimation of Profits and Rejection of Books: This is not a case where the AO rejected books of account and made a best judgment assessment. Instead, it is a case of specific unverified liabilities. The assessee's attempt to invoke GP-based estimation principles is inapplicable, as the books themselves

Dy. Commissioner of Income Tax, Kitchlu Nagar vs. Abir Knits Pvt. Ltd., Focal Point

In the result, appeal of the Revenue is dismissed

ITA 496/CHANDI/2025[2018-19]Status: DisposedITAT Chandigarh11 Sept 2025AY 2018-19

Bench: SHRI. RAJPAL YADAV (Vice President), SHRI. KRINWANT SAHAY (Accountant Member)

For Appellant: NoneFor Respondent: Shri Manav Bansal, CIT, DR

Section 115BSection 133ASection 144Section 145(3)Section 251(1)(a)Section 271A

rightly invoked the amended proviso to section 251(1)(a), which specifically empowers the first appellate authority, in cases arising out of best judgment assessments under section 144, to set aside such assessment and remit the matter to the file of the Assessing Officer for a fresh decision. We find

Nexgen Animators Pvt. Ltd., Chennai vs. ITO, Corporate Ward-4(1), Chennai

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 782/CHNY/2025[2017-18]Status: DisposedITAT Chennai11 Sept 2025AY 2017-18

Bench: Shri George George Kआयकर अपील सं./Ita No.: 782/Chny/2025 िनधा"रण वष"/Assessment Year: 2017-18

For Appellant: Shri P.M. Kathir, AdvocateFor Respondent: Shri Y. Sudarshan, JCIT

Section 133(6)Section 142(1)Section 143(3)Section 144Section 148Section 250Section 69A

Since assessee did not respond to the notices issued calling of the source of cash deposits, the AO issued show-cause notice proposing best judgment assessment u/s.144 of the Act. Since there was no response to show-cause notice issued, assessment was completed u/s.144 of the Act vide order dated ... omitted to take note of the notices issued from the office of the AO. Therefore, the proceeding before the AO culminated in a best judgment assessment u/s.144 of the Act. The Ld.AR submitted that before the FAA though written submissions were given with reference to legal grounds raised before

Mahendra Prasad Yadav, Dipadihkalan vs. ITO-1 Ambikapur, Ambikapur

In the result, appeal of the assessee is dismissed

ITA 526/RPR/2025[2017-18]Status: HeardITAT Raipur10 Sept 2025AY 2017-18

Bench: Shri Partha Sarathi Chaudhuryआयकर अपील सं./Ita No.526/Rpr/2025 "नधा"रण वष" /Assessment Year : 2017-18 Mahendra Prasad Yadav Principal Saraswati Shishu Mandir, Dipadihkalan, Shankargarh, Surguja (C.G.)-497 118 Pan: Aebpy7047Q .......अपीलाथ" / Appellant बनाम / V/S. The Income Tax Officer-1, Ambikapur (C.G.) ……""यथ" / Respondent

For Appellant: Shri S.K Sharma, AdvocateFor Respondent: Dr. Priyanka Patel, Sr. DR

Section 144Section 147Section 251

Accordingly, the appeal is hereby set aside for fresh re- assessment order De-Novo.” 3. That since the assessment was completed as best judgment assessment u/s. 144 of the Act, the Ld. CIT(Appeals)/NFAC vide its power through the amendment vide Finance Act, 2024 as per Section

Potu Janardhan Rao, Warangal vs. ITO., Ward-1, Warangal

In the result, the appeal in ITA No

ITA 1072/HYD/2025[2018-19]Status: DisposedITAT Hyderabad10 Sept 2025AY 2018-19

Bench: Us: 2. Succinctly Stated, The Ao, Based On Information That The Assessee Had Made Cash Deposits Of Rs. 1.08 Crores In His Current Account With Andhra Bank (Now Union Bank Of India) & Made Withdrawals Of Rs. 93.24 Lacs From The Said Bank Account, Initiated Proceedings U/S 147 Of The Act.

Section 133(6)Section 144Section 147Section 148Section 148ASection 251(1)(a)Section 69A

aforesaid amendment in Section 251 of the Act, now stands vested with the jurisdiction to set-aside and refer back a best judgment assessment order passed u/s 144 of the Act to the file of the AO for framing a fresh assessment, but the same cannot justify the refraining ... rather than adopting an him as per the “Proviso” to Section 251(1) of the Act set aside and refer back the impugned best judgment assessment order passed u/s 144 of the Act for framing of fresh assessment by the AO. To sum up, the CIT(A) is obligated

Deputy Commissioner of Income Tax, Delhi vs. Artex Textile Private Limited, Delhi

Appeal is dismissed

ITA 5005/DEL/2024[2017-18]Status: DisposedITAT Delhi10 Sept 2025AY 2017-18

Bench: Shri Satbeer Singh Godara & Shri S. Rifaur Rahman

For Appellant: Dr. Kapil Goel, AdvocateFor Respondent: Shri Manoj Kumar, Sr. DR

Section 142Section 142(1)Section 143(2)Section 144

allude to the settled position of law that the books of account have to be necessarily rejected before the AO proceeds to the best judgment assessment upon fulfilment of conditions mentioned in the Act. The underlying rationale behind such an action is to meet the standards of correct computation

Pravin Kumar Balwant Birhade, Pune vs. Ward 8(1), Pune

In the result, appeal of the assessee is allowed for statistical purposes

ITA 687/PUN/2025[2012-13]Status: DisposedITAT Pune08 Sept 2025AY 2012-13

Bench: Dr.Manish Borad & Shri Vinay Bhamore

For Appellant: Shri Ravi PahlaniFor Respondent: Shri Harshit Bari

Section 144Section 250

dealt with the merits of the case and further note that the assessment order has also been framed u/s.144 of the Act as Best Judgment Assessment. Under these given facts and circumstances and considering the prayer made by ld. Counsel for the assessee, we deem it proper to remit back

Jayanth Gaddipati, Guntur vs. Income-Tax Officer, Ward-2(3), Guntur

In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove

ITA 310/VIZ/2025[2017-18]Status: DisposedITAT Visakhapatnam04 Sept 2025AY 2017-18

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकर अपील सं./ I.T.A. No.310/Viz/2025 ("नधा"रण वष" / Assessment Year: 2017-18) Jayanth Gaddipati, Vs. Income Tax Officer, Guntur. Ward-2(3), Pan: Bbmpg1369Q Guntur. (अपीलाथ"/ Appellant) (""यथ"/ Respondent) अपीलाथ" क" ओर से/ Appellant By : Sri I. Kama Sastry, Ca ""याथ" क" ओर से / Respondent By : Dr. Aparna Villuri, Sr. Ar सुनवाई क" तार"ख / Date Of Hearing : 12/08/2025 घोषणा क" तार"ख/Date Of : 04/09/2025 Pronouncement O R D E R Per Duvvuru Rl Reddy:

For Appellant: Sri I. Kama Sastry, CAFor Respondent: Dr. Aparna Villuri, Sr. AR

Section 133(6)Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 144Section 3Section 69A

bank accounts. Further, the assessee was also requested to furnish objections, if any, for completion of scrutiny assessment proceedings ex-parte under best judgment assessment U/s. 3 Jayanth Gaddipati vs. ITO 143(3) r.w.s 144 of the Act by taking into account the total cash deposits

Sampathi Venkata Subbaiah, Tirupati vs. DCIT, Central Circle, Tirupati

In the result, appeal of the assessee is allowed for statistical purposes

ITA 455/HYD/2025[2012-13]Status: DisposedITAT Hyderabad04 Sept 2025AY 2012-13

Bench: Shri Manjunatha G & Shri Ravish Sood

For Appellant: Sri S. Rama Rao, AdvocateFor Respondent: Sri Aluru Venkata Rao, Sr. AR

property. Once again, the assessee did not choose to file any response to the show-cause notice. Therefore, the Assessing Officer passed best Judgment assessment order under section 144 r.w.s.148 of the Income Tax Act, 1961 and determined the total income of the assessee at Rs.47,68,000/- by making

Income Tax Officer, Ward-3(1)(1), Ahmedabad., Vejalpur vs. Gopalbhai Umarbhai Bharavad, Viramgam

In the result, appeal filed by the Revenue is allowed

ITA 19/AHD/2025[2016-17]Status: DisposedITAT Ahmedabad03 Sept 2025AY 2016-17

Bench: The Final Hearing Of The Appeal.”

For Appellant: Shri Arvind Kumbhare, Sr.DRFor Respondent: Shri Hem Chhajed, AR

Section 143(3)Section 144Section 250Section 251(1)(a)

further states that in such circumstances where the assessee does not cooperate in the assessment proceedings “the AO shall frame a best judgment assessment on the basis of material which he has gathered after giving a final show notice to the assessee.” As noted above, clearly the purport of Section

Shri Sevagiri Maharaj Deosthan, Satara vs. Income Tax Officer - Exemption Ward 1(1), Pune

In the result, appeal of the assessee is allowed for statistical purposes

ITA 1348/PUN/2025[2017-18]Status: DisposedITAT Pune03 Sept 2025AY 2017-18

Bench: Dr.Manish Borad

For Appellant: Shri Kaushal JainFor Respondent: Shri Sanjay Dhivare

Section 142(1)Section 144Section 250

Shri Sevagiri Maharaj Deosthan 3. At the outset, ld. Counsel for the assessee submitted that since the order of ld. Assessing Officer is best judgment assessment framed u/s.144 of the Act and secondly assessee failed to comply with the notices of hearing issued by ld.CIT(A), prayer has been made

Pavan Kumar Bhagat, Saharsa vs. ITO, Ward-3(4), Saharsa, Sahara

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 281/PAT/2024[2017-18]Status: DisposedITAT Patna02 Sept 2025AY 2017-18

Bench: Shri Sonjoy Sarma & Shri Rakesh Mishra

Section 115BSection 143(2)Section 144Section 147Section 148Section 250Section 37Section 69A

order of assessment passed under Section 144 read with Section 147 of the Act by the Ld. assessing officer is far from best judgment assessment as envisaged in law. 8. For that the Id assessing officer has erred in not taking into consideration the return of income filed under Section

M/S Kanak Vrindavan Resorts Limited, Jaipur vs. Income Tax Officer, Ward 6(2), Jaipur

In the result, the appeal of the assessee is allowed

ITA 543/JPR/2025[2016-17]Status: DisposedITAT Jaipur02 Sept 2025AY 2016-17

Bench: SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member), SHRI NARINDER KUMAR (Judicial Member)

For Appellant: Sh. Tarun Mittal, CAFor Respondent: Sh. Gautam Singh Choudhary, Addl. CIT

Section 143(1)(a)Section 143(2)Section 143(3)Section 145Section 37

basis of the rejection appears to be best judgment of assessment done by him. The rejection of the books should precede the best judgment assessment. On facts, the Revenue has not been able to show any defect in the respondent's records which would warrant rejection of the books ... making a best judgment assessment. Thus, on facts the view taken by the Tribunal is a possible view. Therefore, no substantial question of law arises. Thus not entertained." In the case of Pr. CIT v. Marg Ltd. [2017] 84 taxmann.com 52 (Mad.), Hon’ble High Court of Madras has held