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“estimation of income”

Assessment ProceduresSection 145Section 1453,061 judgments

The decision most relied on for estimation of income is CIT v. Simit P. Sheth (356 ITR 451), cited in 1,465 judgments on BharatTax.

Leading authorities on estimation of income

CIT v. Simit P. Sheth
356 ITR 451 · 2013 · High Court
1,465
citing judgments

When purchases are unproved or presumed to be from the grey market, the entire amount of such purchases should not be disallowed; instead, income can be estimated by applying a reasonable gross profit rate to the unaccounted sales or turnover, especially in assessments arising from search proceedings involving seized documents.

Rotork Controls India Pvt. Ltd. v. CIT
314 ITR 62 · 2009 · Supreme Court
739
citing judgments

A provision for expenses, such as warranty, is a deductible liability for income tax purposes if it constitutes a present obligation arising from past events, and a reliable estimate of the amount of obligation is possible.

Sanjay Oilcake Industries v. CIT
316 ITR 274 · 2009 · High Court
460
citing judgments

In cases of alleged bogus or unverifiable purchases, rather than disallowing the entire purchase value, a reasonable profit element or a proportionate percentage of the purchases should be added back to the assessee's income.

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.

CIT v. Devi Prasad Vishwanath Prasad
72 ITR 194 · 1969 · Supreme Court
272
citing judgments

If there is an unexplained cash credit, the Assessing Officer can treat it as the assessee's income, even when the income is finalized on an estimation basis, without proving its specific source. The onus then shifts to the assessee to prove that the income represented by the cash credit has already been taxed.

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. Balchand Ajit Kumar
263 ITR 610 · 2003 · High Court
212
citing judgments

When making an addition for unaccounted receipts, on-money, or non-genuine purchases/sales, the addition should be restricted to the estimated profit element embedded in such transactions, rather than the entire gross amount, particularly when evidence of corresponding expenditure is incomplete. This estimation often involves applying a net profit rate.

Harigopal Singh v. CIT
258 ITR 85 · 2002 · High Court
203
citing judgments

Penalty under section 271(1)(c) cannot be levied when an addition to income is made on an estimated basis without concrete evidence of concealment or furnishing inaccurate particulars of income. The provisions of section 271(1)(c) are not attracted to cases where income is assessed on an estimate basis.

Judgments citing estimation of income

Prabhat Jhunjhunwala, Mumbai vs. ACIT 16(1), Mumbai

In the result, the assessee’s appeals are partly allowed

ITA 3108/MUM/2011[2007-08]Status: DisposedITAT Mumbai10 Jun 2016AY 2007-08

Bench: Shri Sanjay Arora, Am & Shri Amarjit Singh, Jm आयकर अपील सं./I.T.A. Nos.6355 & 3108/Mum/2011 ("नधा"रण वष" / Assessment Years: 2006-07 & 2007-08) Prabhat Jhunjhunwala Asst. Cit-16(1), बनाम/ 25, Sayaji Nagoji Building, Matru Mandir, Tardeo, Vs. 15, Balaram Street, Mumbai-400 007 Mumbai-400 034 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aacpj 3606 P (अपीलाथ" /Appellant) (""यथ" / Respondent) : अपीलाथ" क" ओर से / Appellant By : Shri Mitesh Mehta ""यथ" क" ओर से/Respondent By : Shri S. Pandian सुनवाई क" तार"ख / : 15.3.2016 Date Of Hearing घोषणा क" तार"ख / : 10.6.2016 Date Of Pronouncement आदेश / O R D E R Per Sanjay Arora, A. M.: This Is A Set Of Two Appeals By The Assessee Directed Against The Order By The Commissioner Of Income Tax (Appeals)-27/28, Mumbai (‘Cit(A)’ For Short), Disposing The Assessee’S Appeals Contesting Its Assessment U/S.143(3) R/W S. 147 & U/S. 143(3) Of The Income Tax Act, 1961 (‘The Act’ Hereinafter) For The Assessment Years (A.Y.) 2006-07 & 2007-08 Respectively.

For Appellant: Shri Mitesh MehtaFor Respondent: Shri S. Pandian
Section 131Section 133ASection 143(2)Section 143(3)Section 148

only to meet such expenditure, which, as would be apparent, approximates the accounted receipts, and accordingly pleads its case with reference to the estimation of income on global basis, taking into account the results for the immediately preceding as well as the succeeding year, and converting thereby the disallowance/s ... expenditure u/s. 37(1), on its’ mandate being grossly not met, into one of (broad) estimation of income. While such an attempt, i.e., as by the assessee should not normally succeed, we consider the same as liable to in the present case. This is as there is reference

Haresh Shantilal Avlani, Mumbai vs. ACIT Cen Cir-39, Navi Mumbai

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

ITA 589/MUM/2009[1995-1996]Status: DisposedITAT Mumbai27 May 2016AY 1995-1996

Bench: S/Shri B.R. Baskaran (Am) & Ramlal Negi (Jm)

Section 68

passed by Ld CIT(A) on this issue and direct the AO to delete this addition. 8. The next issue relates to the estimation of income from Dhalali business. The facts relating thereto are that the deposits found in the bank account of the assessee was considered as his turnover ... commission income at 10% is on the higher side in the case of textile business. We notice that the assessing officer has estimated the income on net basis, i.e., he has not given any deduction towards expenses. Further the assessee has also contended that the commission given in textile business

Haresh Shantilal Avlani, Mumbai vs. DCIT RG 22(1), Navi Mumbai

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

ITA 588/MUM/2009[1993-1994]Status: DisposedITAT Mumbai27 May 2016AY 1993-1994

Bench: S/Shri B.R. Baskaran (Am) & Ramlal Negi (Jm)

Section 68

passed by Ld CIT(A) on this issue and direct the AO to delete this addition. 8. The next issue relates to the estimation of income from Dhalali business. The facts relating thereto are that the deposits found in the bank account of the assessee was considered as his turnover ... commission income at 10% is on the higher side in the case of textile business. We notice that the assessing officer has estimated the income on net basis, i.e., he has not given any deduction towards expenses. Further the assessee has also contended that the commission given in textile business

Smt Subhrashree Maiti, Purba Medinipur vs. The ITO, WD-1, Haldia, Purba Medinipur

In the result, the appeal of the assessee for A

ITA 1064/KOL/2015[2005-2006]Status: DisposedITAT Kolkata24 May 2016AY 2005-2006

Bench: Shri P.M. Jagtap

Section 143(1)Section 143(3)Section 147Section 148Section 44A

I.T.A. Nos. 1064 & 1065/KOL./2015 Assessment years: 2005-2006 & 2006-2007 Page 3 of 7 “(1) The only dispute in this year is estimation of income from plying of a truck u/s 44AE at Rs.42,000/-. (2) However, application of section 44AE depends on two major factors, viz. The assessee

Elenji Kamalil V. Thomas, Navi Mumbai vs. Jt.C.I.T. 22(3), Mumbai

In the result, the appeal filed by the assessee in ITA N0

ITA 199/MUM/2013[2009-10]Status: DisposedITAT Mumbai18 May 2016AY 2009-10

Bench: Shri Saktijit Dey & Shri Ramit Kocharआयकर अपील सं./I.T.A. No. 199/Mum/2013 ("नधा"रण वष" / Assessment Year : 2009-10) Elenji Kamalil V. Thomas, Jcit – 22(2), बनाम/ 212, Vardhaman Chambers, Navi Mumbai. V. Sector 17, Vashi, Navi Mumbai – 400 703. "थायी लेखा सं./Pan : Aacpe 7339 L (अपीलाथ" /Appellant) .. (""यथ" / Respondent)

For Respondent: Shri Sunil Kumar Agarwal
Section 143(2)Section 143(3)Section 43(6)(c)

आयकर अपील"य अ"धकरण “E” "यायपीठ मुंबई म"। IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI

ITO, Ward - 3(2), Kolkata vs. M/S. Vikash Iron & Steel Pvt. Ltd., Kolkata

In the result, the appeal of revenue is dismissed

ITA 475/KOL/2011[2007-08]Status: DisposedITAT Kolkata13 May 2016AY 2007-08

Bench: Shri N. V. Vasudevan, Jm & Shri M. Balaganesh, Am]

For Appellant: Md. Ghayasuddin Ansari, CIT, DRFor Respondent: Shri R. P. Agarwal, Sr. Counsel &
Section 131Section 143(3)

parties with whom assessee had transactions) and without bringing any material on record. We hold that the Ld. AO cannot resort to any estimation of income at 0.60% on turnover for determining the net profit from business which is contrary to recording of reasons for reopening the assessment ... straightway come to estimate the earnings. In my opinion, the net income is estimated at 10 paisa of the turnover. While estimating net income, I am considering the same to be net of all expenditure. Thus I estimate earnings at Rs.27,13,018/- as against Rs. 40,69,527/- being

Star Agency, Kolkata vs. ITO, WD-27(2), Haldia

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

ITA 337/KOL/2016[2006-07]Status: DisposedITAT Kolkata06 May 2016AY 2006-07

Bench: Shri P.M. Jagtap

Section 145(3)Section 234A

addition on account of such difference. Having rejected the books of account, the Assessing Officer, in my opinion, should have resorted to the estimation of income independent of books of account by following the generally accepted method by applying gross profit or net profit rate on the estimated turnover

ITO 22(3)(4), Navi Mumbai vs. Sonia Daswani, Navi Mumbai

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

ITA 1588/MUM/2010[2006-07]Status: DisposedITAT Mumbai04 May 2016AY 2006-07

Bench: S/Shri Amit Shukla () & Ramit Kochar ()

Section 133(6)Section 143(2)Section 143(3)

facts and circumstances of the case and in law, the Ld. CIT(A) has erred in changing single stage of estimation of income @5% to double stage of estimation. 6. The appellant prays that the order of the CIT(A) on the above grounds be reversed and that ... prepared and maintained by the earlier tax consultant and the assesssee requested that books of accounts be rejected by the Revenue and to estimate her income by applying the provisions of section 145 of the Act keeping in view that the assessee is an C & F agent and gets commission

Ascendas (India) Private Limited, Chennai vs. ACIT, Chennai

In the result, the appeal of the assessee in ITA

ITA 1255/CHNY/2015[2005-06]Status: DisposedITAT Chennai28 Apr 2016AY 2005-06

Bench: Shri Chandra Poojari & Shri G. Pavan Kumarआयकर अपील सं./I.T.A. No.1255/Mds/2015 "नधा"रण वष" /Assessment Year : 2005-2006. M/S. Ascendas (India) Private Ltd, Vs. The Assistant Commissioner Of Ist Floor, International Techpark, Income Tax, Pinnacle Building, Corporate Circle I(1) Taramani Road, Taramani, Chennai 600 034. Chennai 600 113. [Pan Aaacj 9055H] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Shri. Raghunathan Sampath, AdvFor Respondent: Shri. A.V.Sreekanth, IRS, JCIT
Section 143(1)Section 143(2)Section 143(3)

order. The assessee having a long standing relationship with the sister companies on financial aspects and charging of service fees is based on estimation of income being first year. The Assessing Officer erred in mark up the cost without any rationality and decisive factors and supported the arguments with ... para 6 as under:- ‘’6. The next question arises regarding the estimation of the income of the assessee. The Assessing Officer proceeded to estimate the income of the assessee by taking into consideration the profit of the entities chosen by the Assessing Officer. Therefore instead of determining

Anil Mehra, Mumbai vs. ITO 20(1)(1), Mumbai

The appeals of the assessee stands allowed

ITA 1119/MUM/2012[2001-02]Status: DisposedITAT Mumbai25 Apr 2016AY 2001-02

Bench: Shri R C Sharma & Shri Amit Shukla

Section 144Section 148Section 263Section 271(1)(c)Section 44A

held that, since no return of income was filed and no books of accounts were maintained, therefore, there was no option but to estimate the income on some reasonable basis and accordingly, he levied the penalty of Rs.5,98,661/- for the assessment year 2001-02 and Rs.2 ... penalty proceedings are separate and distinct from assessment proceedings. Here, in this case now the entire assessment and consequent addition rests upon pure estimation of income, therefore, neither the case of concealment of income nor for furnishing of inaccurate particulars. Thus, penalty levied by the AO and confirmed

Anil Mehra, Mumbai vs. ITO 20(1)(1), Mumbai

The appeals of the assessee stands allowed

ITA 1118/MUM/2012[2002-03]Status: DisposedITAT Mumbai25 Apr 2016AY 2002-03

Bench: Shri R C Sharma & Shri Amit Shukla

Section 144Section 148Section 263Section 271(1)(c)Section 44A

held that, since no return of income was filed and no books of accounts were maintained, therefore, there was no option but to estimate the income on some reasonable basis and accordingly, he levied the penalty of Rs.5,98,661/- for the assessment year 2001-02 and Rs.2 ... penalty proceedings are separate and distinct from assessment proceedings. Here, in this case now the entire assessment and consequent addition rests upon pure estimation of income, therefore, neither the case of concealment of income nor for furnishing of inaccurate particulars. Thus, penalty levied by the AO and confirmed

Anil Mehra, Mumbai vs. ITO 20(1)(1), Mumbai

The appeals of the assessee stands allowed

ITA 1117/MUM/2012[2003-04]Status: DisposedITAT Mumbai25 Apr 2016AY 2003-04

Bench: Shri R C Sharma & Shri Amit Shukla

Section 144Section 148Section 263Section 271(1)(c)Section 44A

held that, since no return of income was filed and no books of accounts were maintained, therefore, there was no option but to estimate the income on some reasonable basis and accordingly, he levied the penalty of Rs.5,98,661/- for the assessment year 2001-02 and Rs.2 ... penalty proceedings are separate and distinct from assessment proceedings. Here, in this case now the entire assessment and consequent addition rests upon pure estimation of income, therefore, neither the case of concealment of income nor for furnishing of inaccurate particulars. Thus, penalty levied by the AO and confirmed

DCIT, Bangalore vs. M/S Jsr Constructions Private Limited, Bangalore

ITA 875/BANG/2014[2008-09]Status: DisposedITAT Bangalore13 Apr 2016AY 2008-09

Bench: Shri Abraham P. Geoerge & Shri George George K.Assessment Year : 2008-09

For Appellant: Shri V. Chandrashekar, AdvocateFor Respondent: Shri Sunil Kumar Agarwala, Jt. CIT(DR)
Section 144

could not produce books of account and evidence in support of claim of expenditure, had held that the only option available was to estimate the income. As per AO, assessee who was a civil contractor building roads and bridges, had claimed many expenditure which could not be verified ... allowed telescoping of interest disallowance against the 8% net profit estimated. 24. In its appeal before CIT(Appeals), argument of assessee was that estimation of income was done at an excessive rate. As per assessee, books of account were audited and audit reports were filed along with return of income

Jsr Constrctions Pvt. Ltd., Bangalore vs. Addl..C.I.T., Bangalore

ITA 741/BANG/2014[2008-09]Status: DisposedITAT Bangalore13 Apr 2016AY 2008-09

Bench: Shri Abraham P. Geoerge & Shri George George K.Assessment Year : 2008-09

For Appellant: Shri V. Chandrashekar, AdvocateFor Respondent: Shri Sunil Kumar Agarwala, Jt. CIT(DR)
Section 144

could not produce books of account and evidence in support of claim of expenditure, had held that the only option available was to estimate the income. As per AO, assessee who was a civil contractor building roads and bridges, had claimed many expenditure which could not be verified ... allowed telescoping of interest disallowance against the 8% net profit estimated. 24. In its appeal before CIT(Appeals), argument of assessee was that estimation of income was done at an excessive rate. As per assessee, books of account were audited and audit reports were filed along with return of income

Vinod Harbanslal Kheterpal, Thane vs. Asst CIT Cen Cir 46, Mumbai

In the result, the assessee’s appeal is treated as partly allowed for statistical purposes

ITA 2739/MUM/2014[2008-09]Status: DisposedITAT Mumbai30 Mar 2016AY 2008-09

Bench: Shri Jason P. Boaz (Am) & Shri Sandeep Gosain (Jm) Assessment Year: 2008-09

For Appellant: Ms. Usha GopalanFor Respondent: Shri. Vivek Batra
Section 143(3)Section 23(4)(b)Section 24(1)Section 68

income from the aforesaid two properties at Rs. 3,40,000/-. 4.3.2 On appeal the Ld. CIT(A) while upholding the AO’s estimation of income from the above two properties at Rs. 3,40,000/- he directed the AO to allow the assessee deduction ... total investment as the annual value. 7.2. Therefore, in view of the provisions of section 23(4)(b) of the Act, the estimation of income from the house properties other than the self occupied property at Rs. 3,40,000/- made by the AO is considered reasonable and particularly

Commissioner of Income Tax Delhi-XI vs. Indian National Congress/All India Congress Committee

ITA/145/2001HC Delhi23 Mar 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

Section 139Section 13A

entitled to an exemption on or any part of the aforesaid amount? 2. Whether ITAT was justified in law in restricting the estimate of income to the figure disclosed by the Assessee in the books of accounts produced before the AO and CIT (A) despite its finding that Assessee failed ... expenditure incurred by such state units in the absence of any vouchers. To recapitulate, what the AO has done is to estimate the income by way of voluntary contributions received by the state units of the INC as Rs. 15 crores in the absence of any reliable document or voucher

Indian National Cong. (I) Aicc vs. C.I.T.- XI

ITA/180/2001HC Delhi23 Mar 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

Section 139Section 13A

entitled to an exemption on or any part of the aforesaid amount? 2. Whether ITAT was justified in law in restricting the estimate of income to the figure disclosed by the Assessee in the books of accounts produced before the AO and CIT (A) despite its finding that Assessee failed ... expenditure incurred by such state units in the absence of any vouchers. To recapitulate, what the AO has done is to estimate the income by way of voluntary contributions received by the state units of the INC as Rs. 15 crores in the absence of any reliable document or voucher

Indian National Cong. (I) Aicc vs. C.I.T.- XI

ITA - 180 / 2001HC Delhi23 Mar 2016
Section 139Section 13A

entitled to an exemption on or any part of the aforesaid amount? 2. Whether ITAT was justified in law in restricting the estimate of income to the figure disclosed by the Assessee in the books of accounts produced before the AO and CIT (A) despite its finding that Assessee failed ... expenditure incurred by such state units in the absence of any vouchers. To recapitulate, what the AO has done is to estimate the income by way of voluntary contributions received by the state units of the INC as Rs. 15 crores in the absence of any reliable document or voucher

Smt Alpana Saha ( L/H of Late P.K.Saha), Burdwan vs. A.C.I.T Cir - 2, Burdwan

In the result, appeal of assessee is allowed

ITA 1744/KOL/2013[2005-06]Status: DisposedITAT Kolkata18 Mar 2016AY 2005-06

Bench: Shri Mahavir Singh, Jm & Shri M. Balaganesh, Am]

For Appellant: Shri Soumitra Chaudhury, AdvocateFor Respondent: Shri Sallong Yaden, Addl. CIT, Sr. DR
Section 133ASection 143(3)Section 271(1)(c)

heard rival submissions and gone through facts and circumstances of the case. We find that first of all the penalty is levied on estimation of income and that was also confirmed by CIT(A) without any basis. Secondly, neither the AO nor the CIT(A) is sure about the charge

Vimal M. Lodha, Mumbai vs. ITO WD 25(2)(4), Mumbai

In the result, the assessee’s appeal for A

ITA 1409/MUM/2013[2006-07]Status: DisposedITAT Mumbai16 Mar 2016AY 2006-07

Bench: Shri Jason P. Boaz & Shri Sandeep Gosainshri Vimal M. Lodha Income Tax Officer- 25(2)(4) C/O. Saraf & Chandra, Ca C-11, Pratyaksha Kar Bhawan Bharat Ins. Bldg., 3Rd Floor Vs. Bandra Kurala Complex 15A, Horniman Circle Bandra (East), Mumbai Fort, Mumbai 400001 Pan - Aaapl6131F Appellant Respondent

For Appellant: Shri M. SubramanianFor Respondent: Shri Vikram Batra
Section 133(6)Section 143(1)Section 143(3)Section 145Section 148

independent inquiry by AO and which is beyond the control of our client and this can't be the reason for estimation of income, as the Appellant received material, sold to customers, received the payment in bank and gave the payment to these parties through bank and which were verified