“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

Shri. Nitin Pal Singh, Jalandhar vs. Income Tax Officer Ward-3(3), Jalandhar

In the result, the appeal of the revenue bearing ITA No

ITA 65/ASR/2018[2013-14]Status: DisposedITAT Amritsar07 Jul 2023AY 2013-14

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 143(3)Section 144Section 145(3)Section 250(6)Section 68

assessment was required to be made u/s 144 of the Act by invoking provisions of section 145(3) of the Act as against best judgment assessment framed u/s 143(3) ofthe Act without invoking provisions of section 145(3) of the Act. Conclusion drawn by learned CIT(A) that “there

Income Tax Officer Ward-3(5), Jalandhar vs. Shri Nitin Pal Singh, Jalandhar

In the result, the appeal of the revenue bearing ITA No

ITA 46/ASR/2018[2013-14]Status: DisposedITAT Amritsar07 Jul 2023AY 2013-14

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 143(3)Section 144Section 145(3)Section 250(6)Section 68

Shri Rajnikant Hargovinddas Sanadia, Rajkot vs. The ITO, Ward-2 (3)(5), Rajkot

In the result, the appeal filed by the Assessee in ITA No

ITA 272/RJT/2022[2011-12]Status: HeardITAT Rajkot07 Jul 2023AY 2011-12

Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 139(1)Section 142(1)Section 144Section 148Section 271(1)(b)Section 271FSection 274

perused the materials available on record. It is undisputed fact for the Assessment Year 2011-12 assessment was completed exparte by passing Best Judgment Assessment u/s. 144 r.w.s. 147 by the Assessing Officer. For non-compliance of notice u/s. 142(1), the A.O. has levied penalty

Shri Rajnikant Hargovinddas Sanadia, Rajkot vs. The ITO, Ward-2 (3)(5), Rajkot

In the result, the appeal filed by the Assessee in ITA No

ITA 271/RJT/2022[2011-12]Status: HeardITAT Rajkot07 Jul 2023AY 2011-12

Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 139(1)Section 142(1)Section 144Section 148Section 271(1)(b)Section 271FSection 274

Giriraj Prasad Goyal, Tonk vs. ITO Tonk, Tonk

In the result, both appeals of the assessee are allowed for statistical

ITA 200/JPR/2023[2014-15]Status: HeardITAT Jaipur05 Jul 2023AY 2014-15

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

For Appellant: Sh. Shrawan Kumar Gupta (Adv.)For Respondent: Smt. Monisha Choudhary (Addl. CIT)

Section 143(3)Section 147Section 148Section 24

been held that without pointing out any error in the P&L account and audit report, the power of the best judgment assessment could not be invoked and low profit in a particular year itself cannot be a ground for invoking power of best judgment assessment. 7.2 In the case

Kalaben Pramod Shah, Mumbai vs. ITO-27(2)(1), Vashi

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

ITA 1104/MUM/2023[2011-12]Status: DisposedITAT Mumbai30 Jun 2023AY 2011-12

Bench: Shri Aby T. Varkey, Jm आयकर अपील सं/ I.T.A. No.1104/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2011-12) Kalaben Pramod Shah बिधम/ Ito-27(2)(1) 3Rd & 4Th Floor, Vashi G-6, Lal Ashish Bldg, Vs. Garodia Nagar, Ghatkopar Railway Station, Vashi- East, Mumbai-400077. 400703. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aamps4027P (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Pankaj Mall Revenue By: Shri Dharmvir D Yadav (Sr. Dr) सुनवाई की तारीख / Date Of Hearing: 27/06/2023 घोषणा की तारीख /Date Of Pronouncement: 30/06/2023 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Against The Order Of The Ld. Cit(A)/Nfac, Delhi Dated 19.12.2022 For Ay. 2011-12. 2. The Main Grievance Of The Assessee Is Against The Action Of The Ld. Cit(A) Confirming The Action Of The Ao Passed U/S 144 R.W.S 147 Of The Income Tax Act, 1961 (Hereinafter “The Act’) Wherein The Ao Has Added The Entire Purchase & Sale Consideration On Of Rs.26,52,250/- As Income & Ignored The Contention The Profit From The Transaction Should Be Taxed. 3. Regarding The Cause Of Delay In Filing Of Appeal, The Ld. Ar For Assessee, Brought To My Notice That Assessee Is An Individual Who Is More Than 75 Years Old Lady & Her Husband Was Looking After The Commodity Business & Filing Of Return Of Income Etc. However, During The Re-Assessment Proceedings, Her Husband Had By-Pass

For Appellant: Shri Pankaj MallFor Respondent: Shri Dharmvir D Yadav (Sr. DR)

Section 144

pass surgery and hospitalisation and discharge only fifty (50) days before the re-assessment was framed u/s 144 of the Act [i.e. best judgment assessment for non-participation of assessee during re- assessment proceedings]. And further it has been brought to my notice that due to medical/cardiac problems, the assessee ... supra), it has been found that assessee had reasonable cause for not appearing before the AO which led to the passing of the best-judgment assessment u/s 144 of the Act, accordingly, I am inclined to set aside the impugned order of the Ld. CIT(A) and restore the issues

Rajkamal Construction, Forth Songadh, Tapi vs. ITO, Ward-2, Bardoli, Surat

In the result, ground no.1, 2 and 4 of the appeal are allowed

ITA 1/SRT/2023[2011-12]Status: DisposedITAT Surat30 Jun 2023AY 2011-12

Bench: Shri Pawan Singh(Physical Hearing) Rajkamal Construction, Vs. The Ito, Ward-2, Opp. Paratha House, At Post: Bardoli. Vankvel, Tal: Forth Songadh, Dist: Tapi, 394670. Pan : Aahfr2719Q Appellant Respondednt

Section 143(3)Section 144Section 147Section 148Section 254(1)Section 44ASection 69C

Assessing Officer. The Assessing Officer served final show cause notice and proceeded under section 144 3 ITA. 1/SRT/2023/AY.2011-12 Rajkamal Construction for completing best judgment assessment. The Assessing Officer estimated the income @ 8% of the total receipt on Rs.26,61,595/- received from Mandavi Municipal Borough and thereby made addition

Sandeep Jain, Jaipur vs. The Income Tax Officer, Ward 6(4) Jaipur

In the result, appeal of the assessee is partly allowed

ITA 20/JPR/2023[2017-18]Status: DisposedITAT Jaipur27 Jun 2023AY 2017-18

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Manish Agarwal (C.A.)For Respondent: Smt Monisha Choudhary (Addl. CIT) a

Section 143(3)Section 80C

Anil Kumar & Co. (2016) 386 ITR 702 (Kar.), the Hon’ble High Court once again echoed the same view even while framing best judgment assessment. Identical view has been taken in large number of cases quoted on behalf of the assessee and many more. The pre-condition for estimating business ... brought any material which has any reasonable nexus to the estimation. As rightly stated on behalf of the assessee, even the best judgment assessment cannot be done in a vindictive manner and should be based on reasonable and fair estimations. Needless to say, low profit is neither the circumstance

Shri Umang Ashokbhai Sundhiya, Surat vs. Income Tax Officer, Ward - 1(3)(9), Surat

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

ITA 225/SRT/2023[2017-18]Status: DisposedITAT Surat26 Jun 2023AY 2017-18

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकर अपील सं./Ita No.225/Srt/2023 Assessment Year: (2017-18) (Physical Hearing) Shri Umang Ashokbhai Sundhiya, Vs. The Ito, Ward-1(3)(9), 33, 1St Floor, Sneh Smruti Society, Surat. Opp. Dhanmora Complex, Adajan Patia, Surat – 395009. "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Bypps8397J (Assessee) (Respondent) Assessee By Shri Akshay M. Modi, Ca Shri Vinod Kumar, Sr. Dr Respondent By Date Of Hearing 15/06/2023 Date Of Pronouncement 26/06/2023

Section 139(1)Section 142(1)Section 144Section 44A

accordingly, the AO treated the said return of income as non-est and “invalid”. The AO completed the proceedings under ‘best judgment assessment’. In absence of any tenable explanation with regard to source and nature of cash deposits of ITA.225/SRT/2023/AY.2017-18 Umang Ashokbhai Sundhiya Rs.8,56,000/- made during the demonetization

Meera Saratchandran Nair, Mumbai vs. ITO Ward 34(3)(2), Mumbai

ITA 658/MUM/2023[2013-14]Status: DisposedITAT Mumbai22 Jun 2023AY 2013-14

Bench: Shri Kuldip Singhassessment Year: 2013-14

For Appellant: Shri Bhupendra Shah, A.RFor Respondent: Shri Joginder Singh, D.R

Section 10Section 10(38)Section 142(1)Section 144Section 147Section 157Section 234Section 271Section 271(1)(c)

which the assessee has received 1/4th share, but assured to file the Dmat account shortly. In these circumstances the AO proceeded to make best judgment assessment estimating the addition of Rs.97,824/- being 8% of the contract of Rs.12,22,800/- and also computed the short term capital gain (STCG ... documents brought on record by the assessee, however, all these documents need to be examined by the AO, who has earlier made best judgment assessment, by providing an opportunity of being heard to the assessee. So the addition of Rs.20,48,190/- challenged vide ground No.2 by the assessee

Manveer Singh, Ghaziabad vs. ITO, Ward-1(4), Ghaziabad

In the result, the appeal of the assessee is allowed

ITA 2976/DEL/2022[2012-13]Status: DisposedITAT Delhi20 Jun 2023AY 2012-13

Bench: Dr. B. R. R. Kumar

For Appellant: NoneFor Respondent: Sh. Om Parkash, Sr. DR

Section 144Section 148Section 69

erred in relying only on the information of the Annual Information Report without making independent enquiries and framing the best judgment assessment without verifying the complete bank account of the Appellant. 3. That on the facts and in the circumstances of the case, Ld. CIT (A) has erred

Shri Tirlok Singh Through Legal Heir Gurnam Singh, Gurdaspur vs. Income Tax Officer Ward, Gurdaspur

Appeals of the assessee are disposed of in the manner discussed as above

ITA 71/ASR/2023[2017-18]Status: DisposedITAT Amritsar09 Jun 2023AY 2017-18

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjeei.T.A. No. 70 & 71/Asr/2023 Assessment Year: 2017-18 Tarlok Singh Through Legal Heir The Ito Gurnam Singh Dorangla Ward Gurdaspur-143521- Punjab Gurdaspur

For Appellant: Shri Rohit Kapoor, CA and Shri V.S. Aggarwal, ITP

Section 144Section 271BSection 273BSection 44A

deterrent in nature and not for earning revenue. The remedy available with the Assessing Officer lies in framing of best judgment assessment under the provisions of Section 144 of the Act, as he did and not to impose multiple penalties under section 272A(1)(d) of the Act again

Shri Tirlok Songh Through Legal Heir Gurnam Singh, Gurdaspur vs. Income Tax Officer Ward, Gurdaspur

Appeals of the assessee are disposed of in the manner discussed as above

ITA 70/ASR/2023[2017-18]Status: DisposedITAT Amritsar09 Jun 2023AY 2017-18

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjeei.T.A. No. 70 & 71/Asr/2023 Assessment Year: 2017-18 Tarlok Singh Through Legal Heir The Ito Gurnam Singh Dorangla Ward Gurdaspur-143521- Punjab Gurdaspur

For Appellant: Shri Rohit Kapoor, CA and Shri V.S. Aggarwal, ITP

Section 144Section 271BSection 273BSection 44A

DCIT 1(1), Indore vs. M/S Maa Umiya Agritech Pvt. Ltd., Indore

In the result, appeal of Revenue is dismissed

ITA 89/IND/2022[2012-13]Status: DisposedITAT Indore08 Jun 2023AY 2012-13

Bench: Shri Vijay Pal Rao & Shri B.M. Biyanidcit 1(1) M/S. Maa Umiya Agritech Pvt. Ltd. Indore 119, A.B. Road, Aloo Pyaj Mandi, Vs. Indore (Appellant / (Revenue) (Assessee) Pan: Aabcn8230F Revenue By Shri P.K. Mishra, Cit-Dr Respondent By Shri S.S. Solanki, Ar Date Of Hearing 11.04.2023 Date Of Pronouncement 08.06.2023

Section 12ASection 138Section 144Section 145

Kerala vs. C. Velukutty reporte, MODUIR 24 Hon'ble Supreme Court held that though there is an element of guesswork in a "best judgment assessment". it should not be a wild one, but should have reasonable nexus to the available material and the circumstances in each case. Though the section

DCIT, CC-2, Jaipur vs. M/S. Royal Jewellers, Jaipur

The appeal of the assessee is partly allowed and that of the revenue stands dismissed

ITA 177/JPR/2020[2017-18]Status: DisposedITAT Jaipur07 Jun 2023AY 2017-18

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

For Appellant: Sh. Manish Agarwal (CA)For Respondent: Sh. Sanjay Dhariwal (CIT) &

Section 132Section 143Section 143(3)Section 145(3)Section 68

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh lanhi xkslkbZ] U

M/S. Royal Jewellers, Jaipur vs. DCIT, Central Circle, Jaipur

The appeal of the assessee is partly allowed and that of the revenue stands dismissed

ITA 116/JPR/2020[2017-18]Status: DisposedITAT Jaipur07 Jun 2023AY 2017-18

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

For Appellant: Sh. Manish Agarwal (CA)For Respondent: Sh. Sanjay Dhariwal (CIT) &

Section 132Section 143Section 143(3)Section 145(3)Section 68

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh lanhi xkslkbZ] U

ACIT, Circle-47(1), New Delhi vs. Ashish Bansal, Delhi

In the result, the appeal of revenue is dismissed

ITA 7427/DEL/2018[2015-16]Status: DisposedITAT Delhi02 Jun 2023AY 2015-16

For Appellant: Shri Ved Jain, AdvFor Respondent: Shri Kanav Bali, Sr. DR

Section 145(3)

have not been followed by the assessee, the A.O. may reject the books o accounts of the assessee and resort to best judgment assessment for ascertaining the taxable income of the assessee. The Id. Counsel also pointed out that in the present case, the AO, without complying with the requirement ... under the Act have not been followed by the assessee, AO may reject the books of accounts of the assessee and resort to best judgment assessment. 12. In the present case of the appellant the AO in the assessment order has not given any finding complying with conditions given

Dinesh Sharma, Noida vs. ITO Ward-1(3), Noida

In the result, the appeal of the assessee in ITA No

ITA 3668/DEL/2019[2014-15]Status: DisposedITAT Delhi01 Jun 2023AY 2014-15

Bench: Shri N.K. Billaiya & Shri Anubhav Sharma

For Appellant: NoneFor Respondent: Shri Shankar Lal Verma, Sr. DR

Section 144Section 156Section 56

Assessment Year 2014-15. 2. The grievances of the assessee read as under: “1. That the Assessing officer have passed the impugned best judgment assessment order u/s 144 of Income Tax Act, 1961, dated 15/12/2016, along with notice of demand u/s 156 of the Income Tax Act, 1961, that

The Kosamba Mercantile Co-Op. Bank Ltd., Surat vs. The Income Tax Officer, Ward - 1, Bardoli

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

ITA 201/SRT/2023[2011-12]Status: DisposedITAT Surat31 May 2023AY 2011-12

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकर अपील सं./Ita No.201/Srt/2023 Assessment Year: (2011-12) (Physical Hearing) The Kosamba Merchantile Co. Op. The Ito, Ward-1, Vs. Bank Ltd., Bardoli. 1, Shrinidhi, Zanda Chowk, Tarsadi, Kosamba, Surat - 394120 "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aabft4785E (Appellant) (Respondent)

Section 144Section 148

before the Assessing Officer. We also note that Assessing Officer passed the order as per the provisions of section 144 of the Act, “Best judgment assessment”. That is Assessing Officer did not pass order on merit. Hence, we are of the view that one more opportunity should be given

Five Starconstruction Company, Bhilai vs. The Deputy Commissioner of Income Tax, Circle- 1(1), Bhilai

The appeal of the assessee is partly allowed in terms of our aforesaid observations

ITA 45/RPR/2018[2014-15]Status: DisposedITAT Raipur29 May 2023AY 2014-15

Bench: Shri Ravish Sood & Shri Arun Khodpiaआयकर अपील सं. / Ita No.45/Rpr/2018 "नधा"रण वष" / Assessment Year : 2014-15 Five Star Construction Company Plot No.96-97, Light Industrial Area, Chawani Chowk, Bhilai (C.G)-490026 Pan : Aaaff4316L .......अपीलाथ" / Appellant बनाम / V/S. The Deputy Commissioner Of Income Tax-1(1), Bhilai (C.G.) ……""यथ" / Respondent

For Appellant: Shri R.B Doshi, CAFor Respondent: Shri Piyush Tripathi, Sr. DR

Section 133ASection 143(2)Section 144Section 40A(3)Section 68Section 69C

assessee, then, the A.O may make an assessment in the manner provided in Sec.144. In so far the framing of a best judgment assessment is concerned, the manner for framing of such assessment can be traced in Sec.144 of the Act, which reads as under: “144(1) If any person