← All Phrases

“rejection of books of account”

ICDS & AccountingSection 145(3)Section 145(3)1,303 judgments

The decision most relied on for rejection of books of account is Lalchand Bhagat Ambica Ram v. CIT (37 ITR 288), cited in 570 judgments on BharatTax.

Leading authorities on rejection of books of account

Lalchand Bhagat Ambica Ram v. CIT
37 ITR 288 · 1959 · Supreme Court
570
citing judgments

Where an assessee maintains regular books of account, and these books are not rejected or found defective by the Assessing Officer, any cash deposits or available cash shown in the cash book, if sufficient to cover the transaction, cannot be treated as unexplained income or an addition under sections 68 or 69A.

CIT v. President Industries
258 ITR 654 · 2002 · High Court
471
citing judgments

When books of account are rejected and unaccounted sales or receipts are discovered, the income addition is restricted to the net profit element embedded in these undisclosed transactions, not the entire sale proceeds or receipts, especially if corresponding purchases are not proven to be outside the books.

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.

Sreelekha Banerjee v. CIT
49 ITR 112 · 1963 · Supreme Court
281
citing judgments

An assessee must explain the source of entries in their account books and prove that the sums are not income; the department is not initially required to prove anything. However, the department cannot unreasonably reject a good explanation, thereby converting valid proof into no proof.

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.

N.K. Proteins Ltd. v. DCIT
84 Taxmann.com 195 · 2017 · Supreme Court
204
citing judgments

When purchases are found to be entirely bogus and based on fictitious invoices from non-existent or unconfirmed suppliers, the entire amount of such purchases is liable to be added back as unexplained expenditure, not merely a percentage thereof.

Indwell Constructions v. CIT
232 ITR 776 · 1998 · High Court
188
citing judgments

When an assessee's income is estimated after rejecting their books of account, further additions or disallowances for specific expenses are generally not permissible, as the estimation already accounts for these.

Sargam Cinema v. CIT
328 ITR 513 · 2010 · Supreme Court
172
citing judgments

For an Assessing Officer to make a valid reference to the Departmental Valuation Officer for the estimation of the cost of construction, the books of accounts must first be rejected under Section 145(3) of the Income-tax Act.

Judgments citing rejection of books of account

Skanda Infra Projects, Kurnool vs. ACIT, Central Circle - 2(3), Hyderabad

ITA 525/HYD/2025[2022-23]Status: DisposedITAT Hyderabad20 Aug 2025AY 2022-23

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... found in the course of search action. The assessee never earned substantial profits, which is also evident from the seized record itself. Rejection of books of account 3. In view of the overall facts and circumstances, which are now very much part of the record, it is submitted that there

Skanda Infra Projects, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 524/HYD/2025[2021-22]Status: DisposedITAT Hyderabad20 Aug 2025AY 2021-22

Bench: Shri Vijay Pal Rao & Shri Manjunatha Gsl. No.

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... found in the course of search action. The assessee never earned substantial profits, which is also evident from the seized record itself. Rejection of books of account 3. In view of the overall facts and circumstances, which are now very much part of the record, it is submitted that there

Skanda Infra Projects, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 523/HYD/2025[2020-21]Status: DisposedITAT Hyderabad20 Aug 2025AY 2020-21

Bench: Shri Vijay Pal Rao & Shri Manjunatha Gsl. No.

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... found in the course of search action. The assessee never earned substantial profits, which is also evident from the seized record itself. Rejection of books of account 3. In view of the overall facts and circumstances, which are now very much part of the record, it is submitted that there

Skanda Infra Projects, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

In the result, all the appeals filed by the different Assessee’s are allowed

ITA 522/HYD/2025[2019-20]Status: DisposedITAT Hyderabad20 Aug 2025AY 2019-20

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), the assessee challenged the rejection of books of accounts and estimation of 14% profit on disclosed 21 ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos.308 to 311/Hyd./2025. turnover and also estimation

Skandhanshi Infra Projects India Private Limited, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 521/HYD/2025[2022-23]Status: DisposedITAT Hyderabad20 Aug 2025AY 2022-23

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

For Appellant: Mr. C. Srinivas Reddy [IRS-Retd.]

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... found in the course of search action. The assessee never earned substantial profits, which is also evident from the seized record itself. Rejection of books of account 3. In view of the overall facts and circumstances, which are now very much part of the record, it is submitted that there

Skandhanshi Infra Projects India Private Limited, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 520/HYD/2025[2021-22]Status: DisposedITAT Hyderabad20 Aug 2025AY 2021-22

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... such an exercise will be contrary to the facts and goes against the spirit of the very basis of re-assessment proceedings. Rejection of books of account 4. It is submitted that there is no case to reject the books of accounts of the assessee. However

Skandhanshi Infra Projects India Private Limited, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 519/HYD/2025[2020-21]Status: DisposedITAT Hyderabad20 Aug 2025AY 2020-21

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... found in the course of search action. The assessee never earned substantial profits, which is also evident from the seized record itself. Rejection of books of account 3. In view of the overall facts and circumstances, which are now very much part of the record, it is submitted that there

Skandhanshi Infra Projects India Private Limited, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 518/HYD/2025[2019-20]Status: DisposedITAT Hyderabad20 Aug 2025AY 2019-20

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... found in the course of search action. The assessee never earned substantial profits, which is also evident from the seized record itself. Rejection of books of account 3. In view of the overall facts and circumstances, which are now very much part of the record, it is submitted that there

Skanda Infra Projects India Private Limited, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

In the result, all the appeals filed by the different Assessee’s are allowed

ITA 517/HYD/2025[2022-23]Status: DisposedITAT Hyderabad20 Aug 2025AY 2022-23

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), the assessee challenged the rejection of books of accounts and estimation of 14% profit on disclosed 21 ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos.308 to 311/Hyd./2025. turnover and also estimation

Skanda Infra Projects India Private Limited, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 516/HYD/2025[2021-22]Status: DisposedITAT Hyderabad20 Aug 2025AY 2021-22

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... found in the course of search action. The assessee never earned substantial profits, which is also evident from the seized record itself. Rejection of books of account 3. In view of the overall facts and circumstances, which are now very much part of the record, it is submitted that there

Skanda Infra Projects India Private Limited, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 515/HYD/2025[2020-21]Status: DisposedITAT Hyderabad20 Aug 2025AY 2020-21

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... found in the course of search action. The assessee never earned substantial profits, which is also evident from the seized record itself. Rejection of books of account 3. In view of the overall facts and circumstances, which are now very much part of the record, it is submitted that there

Skanda Infra Projects India Private Limited, Kurnool vs. ACIT, Central Circle-2(3), Hyderabad

In the result, all the appeals filed by the different Assessee’s are allowed

ITA 514/HYD/2025[2019-20]Status: DisposedITAT Hyderabad20 Aug 2025AY 2019-20

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), the assessee challenged the rejection of books of accounts and estimation of 14% profit on disclosed 21 ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos.308 to 311/Hyd./2025. turnover and also estimation

ACIT., Central Circle-2(3), Hyderabad vs. Skandhanshi Infra Projects India Pvt. Ltd., Bangalore

ITA 311/HYD/2025[2022-23]Status: DisposedITAT Hyderabad20 Aug 2025AY 2022-23

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... found in the course of search action. The assessee never earned substantial profits, which is also evident from the seized record itself. Rejection of books of account 3. In view of the overall facts and circumstances, which are now very much part of the record, it is submitted that there

ACIT., Central Circle-2(3), Hyderabad vs. Skandhanshi Infra Projects India Pvt. Ltd., Bangalore

In the result, all the appeals filed by the different Assessee’s are allowed

ITA 310/HYD/2025[2021-22]Status: DisposedITAT Hyderabad20 Aug 2025AY 2021-22

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), the assessee challenged the rejection of books of accounts and estimation of 14% profit on disclosed 21 ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos.308 to 311/Hyd./2025. turnover and also estimation

ACIT., Central Circle-2(3), Hyderabad vs. Skandhanshi Infra Projects India Pvt. Ltd., Bangalore

ITA 309/HYD/2025[2020-21]Status: DisposedITAT Hyderabad20 Aug 2025AY 2020-21

Bench: Shri Vijay Pal Rao & Shri Manjunatha Gsl. No.

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... found in the course of search action. The assessee never earned substantial profits, which is also evident from the seized record itself. Rejection of books of account 3. In view of the overall facts and circumstances, which are now very much part of the record, it is submitted that there

ACIT., Central Circle-2(3), Hyderabad vs. Skandhanshi Infra Projects India Pvt. Ltd., Bangalore

In the result, all the appeals filed by the different Assessee’s are allowed

ITA 308/HYD/2025[2019-20]Status: DisposedITAT Hyderabad20 Aug 2025AY 2019-20

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

arrive at the correct turnover and income of the assessee during the year. In view of the above discrepancies, the Assessing Officer rejected the books of accounts in terms of sec.145(3) of the Income Tax Act, 1961 and estimated the net profit of 14% on turnover disclosed ... assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), the assessee challenged the rejection of books of accounts and estimation of 14% profit on disclosed 21 ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos.308 to 311/Hyd./2025. turnover and also estimation

Peeyush Agarwal, Jaipur, Rajasthan vs. ITO, Ward 1(5), Jaipur, Rajasthan

In the result Ground and 1 and 2 raised by the assessee are allowed

ITA 488/JPR/2025[2017-18]Status: DisposedITAT Jaipur19 Aug 2025AY 2017-18

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

For Appellant: Shri Vijay Goyal, C.A. &For Respondent: Mrs. Alka Gautam, CIT
Section 115BSection 143(2)Section 143(3)Section 145(3)Section 250Section 68Section 69A

following grounds:- “1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in rejecting the books of accounts u/s 145(3) of the Income Tax Act, 1961 whereas no specific finding in the assessment order by ld AO for invoking of provision section ... accounts but at the same time he nowhere mentioned that the books of accounts has been accepted. The Ld. CIT(A) rejected the books of accounts 9 Peeyush Agarwal, Jaipur. in the appeal order on the ground unreliable and unexplained very high cash holdings immediately before demonetization, abrupt and abnormal

Arihant Enterprise, Ahmedabad vs. The ITO, Ward-7(2)(1), Ahmedabad

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

ITA 590/AHD/2025[2017-18]Status: DisposedITAT Ahmedabad19 Aug 2025AY 2017-18

Bench: Dr. B.R.R. Kumar, Vice-Ms Suchitra Kamble

For Appellant: Shri Tushar Hemani, Sr. AdvocateFor Respondent: Shri Abhijit, Sr DR
Section 115BSection 143(3)Section 145(3)Section 234ASection 270ASection 36(1)(iii)Section 68

following grounds of appeals: 1. The Ld. CIT(A) has erred in law and on facts of the case in upholding rejection of books of accounts u/s. 145(3) of the Act. 2. The Ld. CIT(A) has erred in law and on facts of the case in confirming ... Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal. Ground No. 1 – Rejection of books of accounts Ground Nos. 5 & 6 – Addition of Rs.43,88,500/- u/s 68 of the Act., Ground No. 7 & 8 – Application of Section 115BBE

Deputy Commissioner of Income Tax, Amritsar vs. Smt. Jyoti Saroop Grover, Malout

Appeal stand dismissed

ITA 434/ASR/2024[2021]Status: DisposedITAT Amritsar18 Aug 2025

Bench: Hon’Ble Shri Manoj Kumar Aggarwal, Am & Hon’Ble Shri Udayan Das Gupta, Jm 1. आयकर अपील सं./ Ita No. 335/Asr/2024 (िनधा"रण वष" / Assessment Year: 2021-22) Ms. Jyoti Saroop Grover Dcit - Central Circle (Prop. Ms. Sant Metal Industries) Amritsar बनाम/ Vs. Sekhu Road, Ward No 7 Punjab-143001 Malout, Punjab – 152 107 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Ajrpg-8929-P (अपीलाथ"/Appellant) : (""थ" / Respondent) & 2. आयकर अपील सं./ Ita No. 434/Asr/2024 (िनधा"रण वष" / Assessment Year: 2021-22) Dcit - Central Circle Ms. Jyoti Saroop Grover Amritsar (Prop. Ms. Sant Metal Industries) बनाम/ Vs. Punjab-143001 Sekhu Road, Ward No 7 Malout, Punjab – 152 107 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Ajrpg-8929-P (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/Appellant By : Sh. Sudhir Sehgal (Advocate) –Ld.Ar ""थ"कीओरसे/Respondent By : Sh. Abhishek Pal Garg (Cit) – Ld. Dr सुनवाईकीतारीख/Date Of Hearing : 17-07-2025 घोषणाकीतारीख /Date Of Pronouncement : 18-08-2025 आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Cross-Appeals For Assessment Year (Ay) 2021-22 Arises Out Of An Order Of Ld. Commissioner Of Income Tax (Appeals)-5, Ludhiana

For Appellant: Sh. Sudhir Sehgal (Advocate) –Ld.ARFor Respondent: Sh. Abhishek Pal Garg (CIT) – Ld. DR
Section 133(6)Section 143(3)Section 69C

other decisions as referred to by Ld. AR and placed on record similarly supports our aforesaid view. 8. So far as the rejection of books of accounts by Ld. CIT(A) and estimation of profit of 1% on sales is concerned, we find that there is no basis to reject

Jyoti Saroop Grover Prop. Ms Sant Metal Industries Sekhu Road, Ward 7 Malout, Punjab vs. The AO NFAC Delhi Jurisdictional AO the ACIT Central Circle Amritsar, Punjab

Appeal stand dismissed

ITA 335/ASR/2024[2021-22]Status: DisposedITAT Amritsar18 Aug 2025AY 2021-22

Bench: Hon’Ble Shri Manoj Kumar Aggarwal, Am & Hon’Ble Shri Udayan Das Gupta, Jm 1. आयकर अपील सं./ Ita No. 335/Asr/2024 (िनधा"रण वष" / Assessment Year: 2021-22) Ms. Jyoti Saroop Grover Dcit - Central Circle (Prop. Ms. Sant Metal Industries) Amritsar बनाम/ Vs. Sekhu Road, Ward No 7 Punjab-143001 Malout, Punjab – 152 107 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Ajrpg-8929-P (अपीलाथ"/Appellant) : (""थ" / Respondent) & 2. आयकर अपील सं./ Ita No. 434/Asr/2024 (िनधा"रण वष" / Assessment Year: 2021-22) Dcit - Central Circle Ms. Jyoti Saroop Grover Amritsar (Prop. Ms. Sant Metal Industries) बनाम/ Vs. Punjab-143001 Sekhu Road, Ward No 7 Malout, Punjab – 152 107 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Ajrpg-8929-P (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/Appellant By : Sh. Sudhir Sehgal (Advocate) –Ld.Ar ""थ"कीओरसे/Respondent By : Sh. Abhishek Pal Garg (Cit) – Ld. Dr सुनवाईकीतारीख/Date Of Hearing : 17-07-2025 घोषणाकीतारीख /Date Of Pronouncement : 18-08-2025 आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Cross-Appeals For Assessment Year (Ay) 2021-22 Arises Out Of An Order Of Ld. Commissioner Of Income Tax (Appeals)-5, Ludhiana

For Appellant: Sh. Sudhir Sehgal (Advocate) –Ld.ARFor Respondent: Sh. Abhishek Pal Garg (CIT) – Ld. DR
Section 133(6)Section 143(3)Section 69C

other decisions as referred to by Ld. AR and placed on record similarly supports our aforesaid view. 8. So far as the rejection of books of accounts by Ld. CIT(A) and estimation of profit of 1% on sales is concerned, we find that there is no basis to reject