“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

Anil Kumar Jain, Raipur vs. Assistant Commissioner of Income Tax, Central

In the result, appeal of the assessee in ITA No

ITA 584/RPR/2025[2018-19]Status: DisposedITAT Raipur06 Jan 2026AY 2018-19

Bench: Shri Partha Sarathi Chaudhuryआयकर अपील सं./Ita Nos.584 & 585/Rpr/2025 "नधा"रण वष" /Assessment Years : 2018-19 & 2019-20 Anil Kumar Jain 34, Maruti Life Style, Ravi Shankar University, S.O, Raipur-492 010 Pan: Ahypj7657H .......अपीलाथ" / Appellant बनाम / V/S. The Assistant Commissioner Of Income Tax (Central), Bilaspur (C.G.)

For Appellant: Shri Abhishek Mahawar, CAFor Respondent: Dr. Priyanka Patel, Sr. DR

Section 144Section 145(3)Section 153ASection 3

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.” [Emphasis supplied] 21. The Division Bench of the Karnataka High Court in the case of CIT v. Anil Kumar

Ravindra Babanrao Kasar, Pune vs. ITO, Ward-7(3), Pune

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

ITA 2634/PUN/2025[2017-18]Status: DisposedITAT Pune06 Jan 2026AY 2017-18

Bench: Dr.Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.2634/Pun/2025 Assessment Year : 2017-18

For Appellant: Smt. Deepa KhareFor Respondent: Shri Sanjay Dhivare

Section 147Section 148Section 250(6)

specific information as per the Risk Management Strategy assessee was issued notice u/s.148 of the Act but thereafter due to non-compliance Best Judgment assessment has been framed u/s.147 r.w.s.144 r.w.s.144B of the Act making various additions and assessed the income of the assessee at Rs.2,36,91,279/-. Assessee

Sachin Ganpat Vadane, Solapur vs. ITO, Ward-1(1), Solapur

In the result, the appeal filed by the assessee is partly allowed

ITA 2073/PUN/2025[2019-20]Status: DisposedITAT Pune06 Jan 2026AY 2019-20

Bench: Dr.Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.2073/Pun/2025 Assessment Year : 2019-20

For Appellant: Shri Deepak GadgilFor Respondent: Shri Harshit Bari

Section 147Section 148Section 148ASection 151Section 40A(3)Section 69C

from Hindustan Eco Tech Private limited, issued notice u/s.148 of the Act and due to non- compliance on the part of the assessee best Judgment assessment has been framed and total purchases have been added u/s.69C of the Act and income assessed at Rs.12,06,959/-. 7. We further observe

Income Tax Officer, Ward - 2 (1), Varanasi vs. Prominent Datamatics Marketing Pvt. Ltd., Varanasi

ITA 135/VNS/2020[2017-2018]Status: DisposedITAT Varanasi05 Jan 2026AY 2017-2018

Bench: Shri Kul Bharat & Shri Anadee Nath Misshra

Section 124(1)(a)Section 124(2)Section 124(3)(a)Section 250(1)Section 255(4)Section 69A

facts and circumstances of the case and in law, the Ld. CIT(A) is erroneous that the order of the AO as best judgment assessment was not supported by any accounting standard or statutory provisions. 5. Right is reserve to alter, modify and to file any fresh ground of appeal ... proper inference from the same" (Page-392). Therefore, on this ground itself, the appeal deserves to be allowed. NO JUSTIFICATION FOR MAKING BEST JUDGMENT ASSESSMENT From a perusal of the discussion appearing in para 14 onwards (as appearing herein for), it is apparent that the Id. Assessing Officer has violated

Manisha Kamalkar Sadavarte, Navi Mumbai vs. Income Tax Officer, Ward - 28(2)(2), Mumbai, Navi Mumbai

In the result, the appeal of the assessee is allowed

ITA 3729/MUM/2025[2017-18]Status: DisposedITAT Mumbai01 Jan 2026AY 2017-18

Bench: Shri Vikram Singh Yadav & Shri Sandeep Singh Karhailassessment Year : 2017-18 Manisha Kamalkar Sadavarte, Income Tax Officer, 4B, Room No. 24, Ward-28(2)(2), Shree Pranav Chs, Vs. Tower-6, Sector-10, Koparkhairne, Vashi Railway Station, Navi Mumbai-400709. Commercial Complex, Pan : Duhps2971A Vashi, Navi Mumbai-400703. (Appellant) (Respondent) For Assessee : Shri Ketan Vajani For Revenue : Shri Pravin Salunkhe, Sr.Dr Date Of Hearing : 08-12-2025 Date Of Pronouncement : 01-01-2026 O R D E R Per Vikram Singh Yadav, A.M : This Is An Appeal Filed By The Assessee Against The Order Of The Learned Commissioner Of Income Tax (Appeals)-National Faceless Appeal Centre (Nfac), Delhi [„Ld.Cit(A)‟], Dated 26-03-2025, Pertaining To Assessment Year (Ay) 2017-18, Wherein The Assessee Has Taken The Following Grounds Of Appeal:

For Appellant: Shri Ketan VajaniFor Respondent: Shri Pravin Salunkhe, Sr.DR

Section 144Section 69A

file any explanation regarding the nature and source of cash deposits during the assessment proceedings and the AO, therefore, has passed the best judgment assessment, wherein he has taken into consideration the information received from HDFC bank in terms of bank statement along with KYC details of the assessee

Pallavi Kamal Shah, Mumbai vs. Income Tax Officer, Income Tax Department

In the result, appeal of the assessee is dismissed

ITA 6317/MUM/2024[2013-2014]Status: DisposedITAT Mumbai31 Dec 2025AY 2013-2014

Bench: Shri Pawan Singh& Smt. Renu Jauhri(Physical Hearing) Pallavi Kamal Shah Ito, Ward-30(1)(1), Mumbai A-601, Bhimsen Chs Ltd., Marve Vs Maharashtra-400051. Road, Malad West, Maharashtra - 400064. [Pan: Avops7447Q] Appellant / Assessee Respondent / Revenue

Section 124Section 142Section 143(2)Section 144Section 144BSection 144B(1)(xiv)Section 144B(1)(xvi)Section 147Section 148Section 254(1)

reassessment order passed by the JAO is bad in law and liable to be quashed WITHOUT FURTHER PREJUDICE TO THE ABOVE: IV. Best judgment Assessment under section 144 of the Act: 4.1 On the facts and in the circumstances of the case and in law the NFAC erred in upholding ... order dated 24th September 2021 passed under section 144 of the Act under best judgment assessment. 4.2 While doing so, the NFAC failed to appreciate that: (i) The necessary conditions for invoking the provisions of section 144 of the Act were not fulfilled; (ii) as per notice dated: 13th September

John D Silva, Mangalore vs. Income Tax Officer, Ward-2(1), Mangalore

In the result, the appeal filed by the assessee is allowed

ITA 615/BANG/2025[2017-18]Status: DisposedITAT Bangalore30 Dec 2025AY 2017-18

Bench: Shri Waseem Ahmed & Shri Soundararajan K.Assessment Year : 2017-18

For Respondent: Shri Ravishankar S V

Section 115BSection 142(1)Section 143(2)Section 144Section 250Section 68

under section 144 is totally erroneous and is not tenable as per law. The Page 4 of 11 assessing officer may resort to best judgment assessment, the power of which shall be exercised judicially and not violating the principles of natural justice. 7. The learned AO concluded the assessment

Hemmanahally Siddachari Nagamani, Mandya Karnataka vs. Income Tax Officer Ward1 & Tps Mandya, Mandya

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

ITA 1618/BANG/2025[2017-18]Status: DisposedITAT Bangalore30 Dec 2025AY 2017-18

Bench: Shri Waseem Ahmed & Shri Soundararajan K.Assessment Year : 2017-18 Mrs. Hemmanahally Siddachari Nagamani, Near Sathygraha The Income Tax Soudha, Officer, B M Road, Ward – 1 & Tps, Shivapura Maddur, Mandya. Vs. Mandya Dt – 571 429. Pan: Abnpn7222R Appellant Respondent

For Appellant: Shri Siddesh Gaddi, CAFor Respondent: Shri Balusamy N., JCIT-DR

Section 115BSection 133(6)Section 139(5)Section 142(1)Section 147Section 156Section 234ASection 249Section 271ASection 69

This fact was not disputed by the revenue. 8. Considering the said facts and also considering the fact that the assessment is a best judgment assessment, we are inclined to condone the delay in filing the appeal before the Ld. CIT(A) on condition that the assessee should

Gopal Aggarwal, Faridabad vs. ITO(OSD)-Faridabad, Faridabad

In the result, appeal of the assessee is allowed

ITA 1678/DEL/2025[2017-18]Status: DisposedITAT Delhi30 Dec 2025AY 2017-18

For Appellant: Manish Kumar, AdvocateFor Respondent: Shri Manish Gupta, Sr. DR

examination of cash deposit only , but the A'O in utter violation of CBDT Instruction and circulars by rejecting the books passed the best judgment assessment order arbitrarily by treating the entire credit receipts as trading receipts for the purpose of tax without fulfilling prescribed instruction of CBDT

Salim, Panipat vs. ITO, Ward-4, Panipat

In the result, appeal of the Assessee is dismissed

ITA 5816/DEL/2024[2009-2010]Status: DisposedITAT Delhi30 Dec 2025AY 2009-2010

Bench: SHRI ANUBHAV SHARMA (Judicial Member), SHRI. KRINWANT SAHAY (Accountant Member)

For Appellant: NoneFor Respondent: Shri Manish Gupta, Sr. DR

Section 139Section 142(1)Section 144Section 148Section 271(1)(c)Section 274Section 69A

wrongly completed the scrutiny Asstt u/s 144 of income tac act 1961. So the Assessment u/s 144 as best judgment Assessment are illegal unjustified & against the nature of law 2. That the AO has made Addition on account of cash deposit in bank account no 240010100113625maintained with Axis Bank

Hardayal Milk Products Private Limited, Shikohabad vs. DCIT, Circle-2(2)(1), Firozabad

In the result, the appeal preferred by the assessee is partly

ITA 342/AGR/2025[2013-14]Status: DisposedITAT Agra29 Dec 2025AY 2013-14

Bench: : Shri S. Rifaur Rahman & Shri Sunil Kumar Singhassessment Year: 2013-14

Section 143(2)Section 145(3)

submitted that sub-section (3) of Section 145 empowers the Assessing Officer to disregard the books of accounts and proceed to make a best judgment assessment under Section 144 only under any of the following three conditions: 8 | P a g e (i). Where he is not satisfied about ... Esufali H. M. Abdulali [1973] 90 ITR 271 (SC), lays down the law as follows: The distinction between a 'best judgment' assessment and assessment based on the accounts submitted by an assessee must be borne in mind. Sometimes there may be innocent or trivial mistakes in the accounts maintained

Swaran Singh, Mohali vs. Income Tax Officer, Mohali

The appeal is allowed for statistical purposes

ITA 1132/CHANDI/2025[2017-18]Status: DisposedITAT Chandigarh29 Dec 2025AY 2017-18

Bench: Shri Laliet Kumar & Shri Manoj Kumar Aggarwal

For Appellant: Shri Ajay Chauhan, AdvocateFor Respondent: Dr. Ranjit Kaur, Addl. CIT, Sr.DR

Section 144Section 250Section 250(6)

assessment in this case was originally completed by the Assessing Officer (AO), Ward 6(4), Chandigarh. The order was passed under Section 144 (Best Judgment Assessment) on 17/12/2019. The AO assessed the income at Rs. 3,33,190/-, leading to a total demand of Rs. 99,37,160/-, including interest

Ranjeet Singh, Kurukshetra vs. ITO Ward-1, Kurushetra, Kurukshetra

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

ITA 271/CHANDI/2025[2020-2021]Status: DisposedITAT Chandigarh24 Dec 2025AY 2020-2021

Bench: SHRI. LALIET KUMAR (Judicial Member), SHRI. MANOJ KUMAR AGGARWAL (Accountant Member)

For Appellant: Shri Abhinav Gupta, Advocate (Virtual Mode)For Respondent: Dr. Ranjit Kaur, Addl. CIT, Sr. DR

Section 144Section 144BSection 69A

Income Tax Act, 1961, without considering the expenses of Rs. 91,23,890/- claimed by the assessee. Even in a best judgment assessment under Section 144, in the absence of any reply from the assessee, the AO, after taking into account the gross receipts, ought to have considered the expenses ... justice and the requirement for a fair adjudication suggest that the assessee should be given one final opportunity to substantiate his claims. A "Best Judgment Assessment" should still aim for a reasonable estimate rather than a purely punitive addition. 10. In view of the above, and to meet the ends

DCIT., Central Circle-1(3), Hyderabad vs. Light House Movie Makers LLP, Hyderabad

In the result, both the appeals filed by the revenue are dismissed

ITA 318/HYD/2024[2019-20]Status: DisposedITAT Hyderabad24 Dec 2025AY 2019-20

Bench: Shri Manjunatha G & Shri Ravish Soodआ.अपी.सं /Ita No.297/Hyd/2024 (निर्धारण वर्ा/Assessment Year:2015-16) Dy. Commissioner Of Income Shri Atchi Reddy Kovvuri, Vs. Hyderabad Tax, Pan : Adopk6018R Central Circle 1(3), Hyderabad. (Appellant) (Respondent) आ.अपी.सं /Ita Nos.318 & 319/Hyd/2024 (निर्धारण वर्ा/Assessment Years:2019-20 & 2020-21) Dy. Commissioner Of Income M/S. Light House Movie Makers Vs. Llp, Hyderabad. Tax, Pan : Aagfl8979H Central Circle 1(3), Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessees By: Shri A. Srinivas, C.A. रधजस् व द्वधरध/Revenue By: Smt. U Mini Chandran, Cit-Dr सुिवधई की तधरीख/Date Of Hearing: 18/11/2025 घोर्णध की तधरीख/Pronouncement: 24/12/2025 आदेश/Order Per Manjunatha G, A.M. : These Appeals Are Filed By Revenue Against The Separate Orders Passed By The Learned Commissioner Of Income Tax (Appeals)-11, Hyderabad, All Dated 19.11.2024 For The

For Respondent: Smt. U Mini Chandran, CIT-DR

Section 132Section 139Section 142(1)Section 153C

Assessing Officer concluded the assessment to the best of his knowledge as per the information available on record and passed ex parte best judgment assessment order u/s.153C r.w.s. 144 of the Act and determined the total income of the assessee at Rs.6,25,46,902/-, by making additions towards

DCIT., Central Circle-1(3), Hyderabad vs. Atchi Reddy Kovuuri, Hhyderabad

In the result, both the appeals filed by the revenue are dismissed

ITA 297/HYD/2024[2015-16]Status: DisposedITAT Hyderabad24 Dec 2025AY 2015-16

For Respondent: Smt. U Mini Chandran, CIT-DR

Section 132Section 139Section 142(1)Section 153C

Bombay Tyres, Navi Mumbai vs. Income Tax Officer-15(1)(1), Mumbai

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

ITA 6608/MUM/2025[2017-18]Status: DisposedITAT Mumbai24 Dec 2025AY 2017-18

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Respondent byFor Respondent: Shri Leyaqat Ali Aafaqui, Sr. AR

Section 133(6)Section 142(1)Section 144Section 144ASection 147Section 250Section 270ASection 272A(1)(d)

Nos.6605/Mum/2025 & ors. M/s. Bombay Tyres Ld. AO and hence assessment order dated 28.06.2019 was passed u/s. 144 r.w.s. 144A of the Act being best judgment assessment where the Ld. AO determined total income at Rs.3,50,08,587/- after making an addition on cash deposit amounting to Rs.3

Bombay Tyres, Navi Mumbai vs. Income Tax Officer-15(1)(1), Mumbai

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

ITA 6607/MUM/2025[2017-2018]Status: DisposedITAT Mumbai24 Dec 2025AY 2017-2018

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Respondent byFor Respondent: Shri Leyaqat Ali Aafaqui, Sr. AR

Section 133(6)Section 142(1)Section 144Section 144ASection 147Section 250Section 270ASection 272A(1)(d)

Bombay Tyres, Navi Mumbai vs. Income Tax Officer-15(1)(1), Mumbai

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

ITA 6606/MUM/2025[2017-2018]Status: DisposedITAT Mumbai24 Dec 2025AY 2017-2018

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Respondent byFor Respondent: Shri Leyaqat Ali Aafaqui, Sr. AR

Section 133(6)Section 142(1)Section 144Section 144ASection 147Section 250Section 270ASection 272A(1)(d)

Bombay Tyres, Navi Mumbai vs. Income Tax Officer-15(1)(1), Mumbai

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

ITA 6605/MUM/2025[2017-2018]Status: DisposedITAT Mumbai24 Dec 2025AY 2017-2018

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm

For Appellant: Respondent byFor Respondent: Shri Leyaqat Ali Aafaqui, Sr. AR

Section 133(6)Section 142(1)Section 144Section 144ASection 147Section 250Section 270ASection 272A(1)(d)

Saravanan, Tiruppur vs. ITO, Ward-1(1), Tiruppur

In the result, both the appeals filed by the assessee are partly allowed

ITA 2556/CHNY/2025[2015-16]Status: DisposedITAT Chennai22 Dec 2025AY 2015-16

Bench: Shri Manu Kumar Giri & Shri S. R. Raghunatha

For Appellant: Shri. S. Bhupendran, AdvocateFor Respondent: Ms. Gouthami Manivasagam, JCIT

Section 147Section 148Section 251(1)(a)

after obtaining the remand report from the Assessing Officer. We note that it is a settled position of law that even in a best judgment assessment, the estimation of income should be fair, reasonable, and based on some material or rational basis, and not purely arbitrary. 10. In the present