“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

Mr. P. Ravi, Chennai vs. ITO, Non Corporate Ward-15(3), Chennai

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

ITA 168/CHNY/2024[2017-18]Status: DisposedITAT Chennai09 Oct 2024AY 2017-18

Bench: Shri Aby T. Varkey & Shri Manoj Kumar Aggarwalआयकर अपील सं./Ita No.168/Chny/2024 िनधा"रण वष"/Assessment Year: 2017-18 V. Mr. P. Ravi, The Ito, No.2/188, Non-Corporate Ward-15(3), Vembulinayakkar Street, Chennai. Karapakkam, Chennai-600 097. [Pan: Cjkpr 3171 C] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Mr. D. Anand, AdvocateFor Respondent: Ms. R. Anita, Addl.CIT

Section 69

justice and pleaded for deletion of the same. In this regard, we note that the AO has passed order u/s.144 of the Act (best judgment assessment) and note that the AO has not called for details regarding this addition of ₹1,93,857/- and therefore, we set aside the impugned

Narayansingh J. Deora, Thane vs. ITO Ward 2(5) Thane, Thane

In the result, appeal filed by the assessee is allowed for statistical purpose in the above terms

ITA 2408/MUM/2024[2015-16]Status: DisposedITAT Mumbai08 Oct 2024AY 2015-16

Bench: Shri. Br Baskaran & Shri. Raj Kumar Chauhannarayansingh J. Deora Vs. Ito Ward 2(5), Thane 5C, Bombay Market, Station Road, Room No. 16, B Wing, 6Th Mumbai – 401101. Floor, Ashar It Park Road No. Pan: Aefpd1596M 16Z, Midc, Thane – 400604. (Appellant) (Respondent)

Section 142(1)Section 143(1)Section 143(2)Section 144Section 2Section 250

asking him to explain the facts and made submissions on or before 13.10.2017, but no response came forward from the assessee. Hence, the best judgment assessment order u/s. 144 of the Act was passed. The said order was challenged before the Ld. CIT(A) who dismissed the appeal ex-parte

Girish Ratanlal Murkya, Jalna vs. Income Tax Department National Faceless Assessment Centre, Jalna

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

ITA 920/PUN/2024[2014-15]Status: DisposedITAT Pune01 Oct 2024AY 2014-15

Bench: Shri R.K. Panda & Ms. Astha Chandra

For Appellant: Smt. Deepa KhareFor Respondent: Shri A.D. Kulkarni

Section 142(1)Section 147Section 148Section 250Section 250(1)Section 250(6)

notice issued on 22.03.2022, the Ld. Assessing Officer (“AO”) proceeded to complete the assessment on the basis of material available on record as best judgment assessment u/s 144 of the Act. The case of the assessee was reopened for the reason that the assessee had unexplained credits/cash deposits

Shrinivas Vijaykumar Chidrewar, Pune vs. ITO Ward 3(3), Pune

The appeal is ALLOWED FOR STATISTICAL

ITA 1470/PUN/2024[2014-15]Status: DisposedITAT Pune01 Oct 2024AY 2014-15

Bench: Hon’Ble Shri G. D. Padmahshali & Hon’Ble Shri Vinay Bhamoreassessment Year : 2014-2015 Shrinivas Vijaykumar Chidrewar A-38, S.No-55, H.No-1, Sadbhav Co-Op. Hsg. Society, Kothrud, Pune-411029 Pan: Ahspc3607Q. . . . . . . . Appellant V/S The Income Tax Officer, Ward-3(3), Pune. . . . . . . . Respondent

For Appellant: None for the AssesseeFor Respondent: Mr BS Rajpurohit [‘Ld. DR’]

Section 132Section 147Section 250Section 69A

indifferent in his conduct in first appellate proceedings, the Ld. NFAC reiterating the findings of the Ld. AO countenanced the addition made in best judgment assessment ITAT-Pune Page 3 of 6 Shrinivas Vijaykumar Chidrewar Vs ITO ITA No. 1470/PUN/2024 AY: 2014-15 From para 5.2 of the impugned order

Vimla Devi Meena, Dausa vs. ITO Ward- Dausa, Dausa

ITA 1034/JPR/2024[2011-12]Status: HeardITAT Jaipur01 Oct 2024AY 2011-12

Bench: SHRI SANDEEP GOSAIN (Judicial Member)

For Appellant: Shri Sarwan Kumar Gupta, Advocate &For Respondent: Shri Gautam Singh Chaudhary, JCIT D/R

Section 144Section 147Section 148Section 2Section 234ASection 250

Kochandi & Ors. vs. AGRICULTURAL INCOME TAX OFFICER(1975) 43 CCH 0749 KerHC (1976) 1976 CTR 0072 (KER) : (1977) 110 ITR 0406held 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. On this preposition

Prabhati Devi, Dausa vs. ITO Ward Dausa, Dausa

ITA 1031/JPR/2024[2011-12]Status: HeardITAT Jaipur01 Oct 2024AY 2011-12

For Appellant: Shri Sarwan Kumar Gupta, Advocate &For Respondent: Shri Gautam Singh Chaudhary, JCIT D/R

Section 144Section 147Section 148Section 234ASection 250

Kochandi & Ors.vs. Agricultural Income Tax Officer (1975) 43 CCH 0749 KerHC (1976) 1976 CTR 0072 (KER) : (1977) 110 ITR 0406held 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. On this preposition also

Mohammad Firoz, Gonda Uttar Pradesh vs. Income Tax Officer, Gonda - New

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

ITA 452/LKW/2024[2017-18]Status: DisposedITAT Lucknow30 Sept 2024AY 2017-18

Bench: Shri. Sudhanshu Srivastavaassessment Year: 2017-18 Mohammad Firoz V. The Income Tax Officer Maharani Ganj Gonda - New Gonda Tan/Pan:Aaqpf6166J (Appellant) (Respondent) Appellant By: Shri A. P. Sinha, Advocate Respondent By: Shri Sanjeev Krishna Sharma, D.R. Date Of Hearing: 18 09 2024 Date Of Pronouncement: 30 09 2024 O R D E R

For Appellant: Shri A. P. Sinha, AdvocateFor Respondent: Shri Sanjeev Krishna Sharma, D.R

Section 133(6)Section 142(1)Section 144Section 271BSection 44A

assessee’s bank account from the Bank, the Assessing Officer issued show cause notice dated 30.04.2019 to the assessee for passing best judgment assessment under section 144 of the Act along with notice under section 142(1) of the Act. In response to the show-cause notice, the assessee filed

Ajit Madhukar Valsangkar, Pune vs. ACIT, Central Circle 1(3), Pune

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

ITA 1412/PUN/2024[2016-17]Status: DisposedITAT Pune30 Sept 2024AY 2016-17

Bench: Shri Satbeer Singh Godara & Shri Inturi Rama Raoआयकर अपील सं. / Ita No.1412/Pun/2024 "नधा"रण वष" / Assessment Year : 2016-17

For Appellant: Shri Jayant G. Pendse &For Respondent: Shri Amol Khairnar

Section 132Section 142(1)Section 153CSection 250

appellant neither complied with notice u/s.153C nor notice u/s.142(1). In the circumstances, the Assessing Officer (AO) vide order dated 31.12.2021 passed the best judgment assessment u/s.153C r.w.s.144 of the Act by bringing to tax the undisclosed capital gains of Rs.12,03,125/-. 3. Being aggrieved by the above assessment

Assistant Commissioner of Income Tax, Exemptions, Circle, Jaipur, Jaipur Rajasthan vs. Navratan Vidha Mandir Shiksha Samiti, Jaipur Rajasthan

In the result appeal filed by the Department is dismissed and the C

ITA 201/JPR/2024[2012-13]Status: DisposedITAT Jaipur27 Sept 2024AY 2012-13

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri P.C.Parwal, CAFor Respondent: Shri Arvind Kumar, CIT-DR

Section 11Section 11(5)Section 13(1)(d)Section 145(3)

provisions, the Assessing officer has a discretionary power to reject books of account as assessed by an assessee and complete his assessment by "Best Judgment Assessment" It is Assessing Officer's duty to determine the method of accounting regularly employed by an assessee and assess the income, profit and loss ... accordance with such method of accounting Sub-section (3) of Section 143 empowers the Assessing Officer to make Best Judgment Assessment as provided under Section 144. There are three circumstances, which are - -If not satisfied with the correctness or completeness of accounts, -or If either cash or mercantile system

Dhaval Housing, Mumbai vs. DCIT Circle 23(1), Mumbai

In the result appeal of the assessee is allowed

ITA 453/MUM/2024[2017-2018]Status: DisposedITAT Mumbai27 Sept 2024AY 2017-2018

Bench: Shri Satbeer Singh Godara & Shri Girish Agrawalassessment Year: 2017-18

For Appellant: Shri Satish Mody, AdvocateFor Respondent: Smt. Mahita Nair, Sr. DR

Section 143(3)Section 145

incomplete or unreliable and reject the same before proceeding to make his own best assessment. Rejection of books of accounts should precede the best judgment assessment. Provisions contained in Section 144 r.w.s. 145 amply suggest that ld. Assessing 8 Dhaval Housing, AY 2017-18 Officer derives authority to make additions ... 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

Kamakshiben Mayashankar Vyas, Mahuva vs. The Income Tax Officer, Ward-1(9), Bhavnagar

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

ITA 408/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad26 Sept 2024AY 2017-18

Bench: Shri T.R. Senthil Kumar & Shri Makarand V. Mahadeokarआयकर अपील सं /Ita No.408/Ahd/2024 िनधा"रण वष" /Assessment Year : 2017-18 Kamakshiben Mayashankar The Income Tax Officer बनाम/ Vyas Ward-1(9) V/S. Gundarana Mahuva Bhavnagar Bhavnagar – 364 295 (Gujarat) "थायी लेखा सं./Pan: Aqhpv 6393 E (अपीलाथ%/ Appellant) (&' यथ%/ Respondent) Assessee By : Shri B.R. Popat, Ar Revenue By : Shri Rignesh Das, Sr.Dr सुनवाई की तारीख/Date Of Hearing : 19/09/2024 घोषणा की तारीख /Date Of Pronouncement: 26/09/2024 आदेश/O R D E R Per Makarand V. Mahadeokar, Am:

For Appellant: Shri B.R. Popat, ARFor Respondent: Shri Rignesh Das, Sr.DR

Section 115BSection 142(1)Section 144Section 272BSection 69A

failure to furnish any explanation or details about the cash deposits, the AO invoked Section 144 of the Act to make a best judgment assessment based on the available material. The AO treated the cash deposits and credit entries amounting to Rs.2,64,72,058/- in the assessee’s bank

Ashok Ramchandra Panse, Pune vs. Income Tax Officer Ward 12(1), Pune

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

ITA 1706/PUN/2024[2012-13]Status: DisposedITAT Pune26 Sept 2024AY 2012-13

Bench: Shri Satbeer Singh Godara & Shri Inturi Rama Raoआयकर अपील सं. / Ita No.1706/Pun/2024 "नधा"रण वष" / Assessment Year : 2012-13

For Appellant: Shri Saurabh PatilFor Respondent: Shri B.S. Rajpurohit

Section 139(1)Section 142(1)Section 144Section 148Section 250Section 69A

complied with notice u/s.148 nor to notice u/s.142(1). In the circumstances, the Assessing Officer vide order dated 23.12.2019 was constrained to pass best judgment assessment u/s.144 r.w.s.147, bringing to tax the said sums as unexplained money u/s.69A of the Act/Income from Business or Profession” respectively. 3. Being aggrieved

Shivratan Motilal Rathi, Jalna vs. Income Tax Officer, Ward-1, Jalna

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

ITA 1705/PUN/2024[2010-11]Status: DisposedITAT Pune26 Sept 2024AY 2010-11

Bench: Shri Satbeer Singh Godara & Shri Inturi Rama Raoआयकर अपील सं. / Ita No.1705/Pun/2024 "नधा"रण वष" / Assessment Year : 2010-11

For Appellant: Shri Smruti SabnisFor Respondent: Shri B.S. Rajpurohit

Section 139(1)Section 142(1)Section 144Section 148Section 250

appellant neither complied with notice u/s.148 nor notice u/s.142(1). In the circumstances, the AO vide order dated 27.02.2015 was constrained to pass best judgment assessment u/s.144 r.w.s.147 of the Act by bringing to tax his share of investment in the cost of construction of the said buildings of Rs.22

Gnaneswar Kantekar, Yadagirigutta vs. ITO., Ward-1, Suryapet

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

ITA 593/HYD/2024[2017-18]Status: DisposedITAT Hyderabad26 Sept 2024AY 2017-18

Bench: Shri Prakash Chand Yadav & Shri Madhusudan Sawdia

For Appellant: Shri Bhupal Goud, C.AFor Respondent: : Ms. Kavitha Rani, SR-DR

Section 142(1)Section 144Section 69A

However, there was no response from the side of assessee. Thereafter the Assessing Officer completed the assessment u/s.144 of the Act. During the best judgment assessment proceedings the Assessing Officer observed that there are credits of Rs.95,79,297/- in SBI account of the assessee. Finally, the Assessing Officer made

Retain Tie Up Private Limited, Kolkata vs. Assistant Commisioner of Income Tax, Kolkata

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

ITA 1030/KOL/2024[2015-16]Status: DisposedITAT Kolkata26 Sept 2024AY 2015-16

Bench: Shri Sanjay Garg & Shri Sanjay Awasthii.T.A. No.1030/Kol/2024 Assessment Year: 2015-16 Retain Tie Up Pvt. Ltd………………....…………….......…....………....Appellant 42/1, Bb Ganguly Street, Kolkata – 700012. [Pan: Aafcr1153D] Vs. Acit, Ward-1(3), Kolkata......................................................…..…..... Respondent Appearances By: None Appeared On Behalf Of The Appellant. Shri A. Kundu, Cit-Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : September 26, 2024 Date Of Pronouncing The Order : September 26, 2024 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 22.03.2024 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. No One Has Put In Appearance On Behalf Of The Assessee Despite Notice, Therefore, We Proceed To Decide The Appeal After Hearing The Ld. Dr & Perusing The Materials Available On Record. 3. The Assessee In This Appeal Has Taken The Following Grounds Of Appeal: “1. On Facts & Circumstances Of The Case, The Learned Cit(A) Has Grossly Erred In Not At All Considering The Written Submissions As Uploaded By The Appellant Company & Thereby By Passing A Non- Speaking Order, Without Even Discussing The Merits Of The Case And

Section 144Section 14ASection 250Section 69

asked to explain the source of the said investments, there were no response from the assessee. The Assessing Officer, under the circumstances, passed best judgment assessment u/s 144 of the Act and added the said new investments of Rs.1,00,00,000/- as income of the assessee from unexplained sources

Satyendra Kumar Vyas, Bhopal vs. CIT(A), National Faceless Appeal Centre, Delhi

In the result, the appeal filed by the assessee is dismissed as barred by

ITA 284/IND/2024[2017-18]Status: DisposedITAT Indore26 Sept 2024AY 2017-18

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 249

compliance on behalf of the assessee to the notice issued u/s 142(1) of the Act and consequently the assessment was framed as best judgment assessment u/s 144 of the Act. Thus due to the non-cooperative conduct of the assessee CIT(A) declined to condone the delay. From

Vimladevi Agrotech Limited, Kota vs. ACIT, WD -1(2), Kota

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

ITA 1065/JPR/2024[2014-15]Status: DisposedITAT Jaipur26 Sept 2024AY 2014-15

Bench: The Date Of Hearing.

For Appellant: Shri Devang Gargieya, AdvocateFor Respondent: Shri Gautam Singh Chaudhary, JCIT D/R

Section 144Section 147Section 250Section 271BSection 44A

liberty to pass order after considering the material placed on record.” 3.1 The impugned assessment is not a best judgment assessment as contemplated by law: It is submitted that the AO also did not meet with the requirements of making a “best judgment assessment”. It is submitted that while making ... kindly be made to the commentary by the ld. Authors Chaturvedi Pethisaria Vol. 3 Edition V at page 4932, reproduced hereunder verbatim:- “Best Judgment assessment – how to be made? – In making a best judgment assessment the Assessing Officer must not act dishonestly or vindictively or capriciously because he must exercise

Income Tax Officer, Ward-1(2)(1), Ahmedabad vs. Chhaganlal Dalaji Soni, Ahmedabad

In the result, the appeal of the Department is dismissed

ITA 531/AHD/2024[2018-19]Status: DisposedITAT Ahmedabad25 Sept 2024AY 2018-19

Bench: Smt. Annapurna Gupta & Shri Siddhartha Nautiyal

For Appellant: Shri Milin Shah, A.RFor Respondent: Shri B.P. Srivastava, Sr. DR

taxpayer in similar business was higher than one declared by assessee, profit as declared by assessee could not be disturbed and best judgment assessment made by Assessing Officer was liable to be set aside. In this case, High Court made the following observations: It is well-settled that while making ... best judgment assessment, the Assessing Officer should do so on a rational basis and without any bias. [Para 18] ITO vs. Chhaganlal Dalaji Soni Asst.Year –2018-19 - 7– Thus, even assuming for the sake of argument that the assessee's profit and loss account was rightly discarded by the Assessing

Income-Tax Officer, Vejalpur, Ahmedabad vs. Kamleshbhai Prajapati, Ahmedabad

In the result, the appeal of the Department is dismissed

ITA 127/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad25 Sept 2024AY 2017-18

Bench: Smt. Annapurna Gupta & Shri Siddhartha Nautiyal

For Appellant: Shri Rajesh Shah, A.RFor Respondent: Shri B.P. Srivastava, Sr. DR

Section 115Section 139Section 142(1)Section 144Section 69A

treated by the Assessing Officer as unexplained under Section 69A of the Income Tax Act. As a result, the Assessing Officer made a best judgment assessment under Section 144 of the Act, holding that the total amount of Rs 1,16,53,881/- in his bank account was unexplained income

Bharati Vilas Malusare, Mandangad vs. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC)

In the result, the appeal of assessee is treated as allowed for statistical purpose

ITA 707/PUN/2024[2017-18]Status: DisposedITAT Pune25 Sept 2024AY 2017-18

Bench: Shri R.K. Panda & Ms. Astha Chandra

For Appellant: Shri Prasad S. BhardariFor Respondent: Shri B.S. Rajpurohit

Section 142(1)Section 144Section 69A

case and informing that if she does not comply to the said show cause notice, the assessment shall be completed by passing best judgment assessment order u/s 144 of the Act on the 2 ITA No.707/PUN/2024, AY 2017-18 basis of material available on record. The assessee was requested