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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

Ambica Ashish Trade Link LLP, Ahmedabad vs. The Dy.CIT, Central Circle-1(4), Ahmedabad

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

ITA 2350/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2020-21

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

above, in law and in the facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in estimating commission income on alleged agent-based facilitation transactions at an exorbitantly high rate of 2%, without any basis or justification for such a disproportionate estimation ... identify such transactions. On the agency-based transactions identified by the assessee itself, the AO had applied GP rate of 5% to estimate the income and on the balance unaccounted transactions, which represented the unaccounted sales of the assessee as principal, GP rate of 20% was applied

Deputy Commisioner of Income Tax Central Circle 1.4 Ahmedabad, Ahmedabad vs. Ambica Ashish Trade Link LLP, Ahmedabad

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

ITA 2285/AHD/2025[2023-24]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2023-24

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

above, in law and in the facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in estimating commission income on alleged agent-based facilitation transactions at an exorbitantly high rate of 2%, without any basis or justification for such a disproportionate estimation ... identify such transactions. On the agency-based transactions identified by the assessee itself, the AO had applied GP rate of 5% to estimate the income and on the balance unaccounted transactions, which represented the unaccounted sales of the assessee as principal, GP rate of 20% was applied

Deputy Commisioner of Income Tax Central Circle 1.4 Ahmedabad, Ahmedabad vs. Ambica Ashish Trade Link LLP, Ahmedabad

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

ITA 2284/AHD/2025[2022-23]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2022-23

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

above, in law and in the facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in estimating commission income on alleged agent-based facilitation transactions at an exorbitantly high rate of 2%, without any basis or justification for such a disproportionate estimation ... identify such transactions. On the agency-based transactions identified by the assessee itself, the AO had applied GP rate of 5% to estimate the income and on the balance unaccounted transactions, which represented the unaccounted sales of the assessee as principal, GP rate of 20% was applied

Deputy Commisioner of Income Tax Central Circle 1.4 Ahmedabad, Ahmedabad vs. Ambica Ashish Trade Link LLP, Ahmedabad

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

ITA 2248/AHD/2025[2021-22]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2021-22

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

above, in law and in the facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in estimating commission income on alleged agent-based facilitation transactions at an exorbitantly high rate of 2%, without any basis or justification for such a disproportionate estimation ... identify such transactions. On the agency-based transactions identified by the assessee itself, the AO had applied GP rate of 5% to estimate the income and on the balance unaccounted transactions, which represented the unaccounted sales of the assessee as principal, GP rate of 20% was applied

Deputy Commisioner of Income Tax Central Circle 1.4 Ahmedabad, Ahmedabad vs. Ambica Ashish Trade Link LLP, Ahmedabad

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

ITA 2247/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad27 Mar 2026AY 2020-21

Bench: Shri Tr Senthil Kumar & Shri Narendra Prasad Sinha

above, in law and in the facts and circumstances of the case of the appellant, the Ld. CIT(A) has grossly erred in estimating commission income on alleged agent-based facilitation transactions at an exorbitantly high rate of 2%, without any basis or justification for such a disproportionate estimation ... identify such transactions. On the agency-based transactions identified by the assessee itself, the AO had applied GP rate of 5% to estimate the income and on the balance unaccounted transactions, which represented the unaccounted sales of the assessee as principal, GP rate of 20% was applied

Kailash Properties, Mumbai vs. Asst. CIT, Mumbai

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

ITA 9270/MUM/2025[2017-18]Status: DisposedITAT Mumbai27 Mar 2026AY 2017-18

Bench: Shri Om Prakash Kantshri Sandeep Singh Karhail

For Appellant: Shri Mayur MakadiaFor Respondent: Shri Hemanshu Joshi, SR. DR
Section 250

erred in sustaining the additions of Rs. 1,42,15,016 made by the AO solely on the basis of estimation of income at time of survey as against the project completion method adopted by the appellant. 3. On the facts and circumstances of the case

Arham Anmol Projects Private Limited, Village Valshind, Bhiwandi vs. Circle 1 Kalyan, Kalyan, Thane

In the result, the legal grounds challenging the validity of the assessment are dismissed

ITA 5011/MUM/2025[2019-20]Status: DisposedITAT Mumbai26 Mar 2026AY 2019-20

Bench: Shri Amit Shukla & Shri Makarand Vasant Mahadeokararham Anmol Projects Dcit Circle 1, Private Limited 2Nd Floor, Rani H. No. 1113, Ground Vs. Mansion, Murbad Floor, Arham Logiparc, Road, Kalyan Nh-3, Nashik Highway, (West), Thane, Village Valshind, Maharashtra – 421 Bhiwandi, Maharashtra – 301 421 302. Pan/Gir No. Aagca9644P (Applicant) (Respondent) Assessee By Shri Subhash Bains, Ld. Ar Revenue By Shri Surendra Mohan, Ld. Dr Date Of Hearing 28.01.2026 Date Of Pronouncement 26.03.2026

Section 144Section 144BSection 147Section 148Section 194CSection 194ISection 234FSection 250

treating the entire sale consideration of certain properties as income on the footing that cost of acquisition was not furnished; (ii) estimation of income at 12% on contract receipts amounting to Rs. 7,68,674/-; (iii) estimation of 50% of professional receipts amounting

Manoj Rajaram Sharma, Thane vs. Commissioner of Income-Tax, Mumbai

In the result, the appeal of the assessee is allowed

ITA 8313/MUM/2025[2020-2021]Status: DisposedITAT Mumbai20 Mar 2026AY 2020-2021

Bench: Shri Pawan Singh & Shri Makarand Vasant Mahadeokarmanoj Rajaram Ito - 42(3)(4), Sharma, Mumbai Office No. 615, 6Th Vs. Kautilya Bhawan, C- Floor, Centura Square 41-43, Avenue 3, Near It Park, Sg Barve Videsh Bhavan, G Road, Thane, Block, Bkc, Mumbai Maharashtra-400 604. – 400 051. Pan/Gir No. Bytps1944K (Applicant) (Respondent) Assessee By Shri Suryadev Yadav, Shri Karan Hariya & Shri Prashant Gupta, Ld. Ars Revenue By Shri Bhagirath Ramawat, Ld. Dr Date Of Hearing 17.03.2026 Date Of Pronouncement 20.03.2026

Section 133(6)Section 139(1)Section 142(1)Section 144Section 147Section 148Section 250Section 272A(1)(d)Section 4Section 44A

arbitrarily adopted the profit rate at 50% of the turnover, which is contrary to the provisions of the Act and settled principles governing estimation of income. It was thus contended that the action of the Assessing Officer in enhancing the profit rate is unjustified and liable to be deleted ... whether the Assessing Officer was justified in rejecting the income declared by the assessee under section 44AD of the Act and in estimating the income by applying a rate of 50% by invoking the logic akin to section 44ADA. 14. At the outset, it is an undisputed fact emerging from

Step Logistics Private Limited, Raipur vs. Dy. Commissioner of Income Tax, Circle 1(1), Raipur

In the result, appeal of the assessee in ITA

ITA 636/RPR/2025[2017-18]Status: DisposedITAT Raipur19 Mar 2026AY 2017-18

Bench: Shri Partha Sarathi Chaudhury & Shri Avdhesh Kumar Mishraआयकर अपील सं. / Ita No.636/Rpr/2025 "नधा"रण वष" / Assessment Year : 2017-18 Step Logistics Private Limited A-1, Mahavir Gaushala Complex, K.K Road, Raipur (C.G.)-492 001 Pan: Aancs0382F

For Appellant: S/shri Praveen Khandelwal &For Respondent: Dr. Priyanka Patel, Sr. DR
Section 127Section 143(2)Section 143(3)Section 68

plain reading of the aforementioned provisions would indicate that the AO wields an authority to make additions on the basis of estimation of income upon fulfillment of the 9 Step Logistics Private Limited Vs. DCIT, Circle-1(1), Raipur (C.G.) conditions mentioned in Section 145(3) of the Act. Once ... OnLine Kar 8512], has held that in cases where the Revenue had failed to reject the books of account and proceeded to an estimation of income without framing the assessment under Section 144 of the Act, such an action is unsustainable as per law. The relevant paragraph of the said

DCIT, Central Circle 1, Rajkot vs. Shri Deepak Mohanlal Purswani, Rajkot

ITA 665/RJT/2024[2022-23]Status: DisposedITAT Rajkot13 Mar 2026AY 2022-23
For Appellant: Shri Mehul Ranpura, Ld. ARFor Respondent: Shri Abhimanyu Singh Yadav, Ld. SR. DR
Section 143(3)Section 147Section 250

REALITY P. LTD. VERSUS\nACIT, CENT. CIR. 1 (2) AHMEDABAD AND DOIT, CENT. CIR. 1 (2) AHMEDABAD,\nVERSUS GREENFIELD REALITY P. LTD.\n“Estimation of Income on-money received by the assessee on booking of flats\nand shops in \"VesuProject\"Income offered by the assessee at 8% of the alleged ... reasonable level.\nHowever, learned DR for the revenue submitted that addition made by the assessing\nofficer may be confirmed. We note that the estimation of income is based on facts and\nwill vary from business to business and year to year, depending on the business\nconditions. We note that ld.CIT

Nisha Rani, C/O Sahay Enterprises vs. The Income Tax Officer, Ward -1(2), Aayakar Bhawan

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

ITA 434/GTY/2025[2020-2021]Status: DisposedITAT Guwahati13 Mar 2026AY 2020-2021

Bench: Shri Duvvuru Rl Reddy & Shri Rajesh Kumarnisha Rani, I.T.O., Bedi Market, At Road, Ward-1(2), Vs. Guwahati-781001 (Assam) Guwahati. (Appellant) (Respondent) Pan No. Afjpr 7852 P Assessee By : Shri Vishesh Surana, Fca. Revenue By : Shri Santosh Kumar Karnani, Addl. Cit Date Of Hearing: 09/03/2026 Date Of Pronouncement: 13/03/2026 O R D E R

For Appellant: Shri Vishesh Surana, FCAFor Respondent: Shri Santosh Kumar Karnani, Addl
Section 142(1)Section 145(3)Section 147Section 148Section 148ASection 69C

rate pertaining to the business of the assessee, therefore, we apply a rate of 3% on these purchases towards the estimation of income embedded in the said purchases which we consider to be reasonable and justified. Consequently, we set aside the order of the ld. CIT(A) and direct ... Assessing Officer to estimate the income at the rate of 3% on the bogus 4 Nisha Rani Vs ITO purchases over and above the profits already declared by the assessee in the books of account. 6. In the result, this appeal of the assessee is partly allowed. Order pronounced

Krish Packaging Pvt Ltd, New Delhi vs. DCIT Central Circle, Noida

ITA 3942/DEL/2019[2011-12]Status: DisposedITAT Delhi13 Mar 2026AY 2011-12

Bench: Shri Anubhav Sharma & Shri Naveen Chandrakrish Packaging Pvt. Ltd. Vs. Dcit, Central Circle F-11, Basement Green Sector -33, Noida Park, Extension , Uttar Pradesh – 201307 New Delhi – 110016 "थायीलेखासं./जीआइआरसं./Pan/Gir No: Aacck8980A Appellant .. Respondent

For Appellant: Sh. Salil Aggarwal, Sr. AdvFor Respondent: Sh. Dayainder Singh Sidhu, CIT
Section 143(3)Section 153CSection 69

those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search

Pal Mineral Industries (P) Limited, Haldwani vs. Dc/ACIT, Central Circle, Haldwani

ITA 106/DDN/2025[2013-2014]Status: DisposedITAT Dehradun12 Mar 2026AY 2013-2014

Bench: Shri Yogesh Kumar U.S. & Shri Manish Agarwal

Section 143(3)Section 153ASection 153CSection 250

undisclosed income being of vital importance. All the aforenoted judgments thus reinforce the requirement of incriminating material having an ineradicable link to the estimation of income fora particular AY. ITA No. 105 & 106/DDN/2024 57. It becomes pertinent to note that both Sections 153A and 153C require the assessee upon being ... those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search

Pal Mineral Industries (P) Limited, Haldwani vs. Dc/ACIT, Central Circle, Haldwani

ITA 105/DDN/2025[2014-2015]Status: DisposedITAT Dehradun12 Mar 2026AY 2014-2015

Bench: Shri Yogesh Kumar U.S. & Shri Manish Agarwal

Section 143(3)Section 153ASection 153CSection 250

undisclosed income being of vital importance. All the aforenoted judgments thus reinforce the requirement of incriminating material having an ineradicable link to the estimation of income fora particular AY. ITA No. 105 & 106/DDN/2024 57. It becomes pertinent to note that both Sections 153A and 153C require the assessee upon being ... those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search

Mohan Pal, Haldwani, Nainital vs. Assistant Commissioner of Income Tax, Central Circle, Haldwani, ACIT - DCIT

ITA 85/DDN/2024[2015-16]Status: DisposedITAT Dehradun12 Mar 2026AY 2015-16

Bench: Shri Yogesh Kumar U.S. & Shri Manish Agarwal

Section 132Section 143(3)Section 153ASection 153A(1)Section 153CSection 250

undisclosed income being of vital importance. All the aforenoted judgments thus reinforce the requirement of incriminating material having an ineradicable link to the estimation of income fora particular AY. 57. It becomes pertinent to note that both Sections 153A and 153C require the assessee upon being placed on notice ... those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search

Mohan Pal, Haldwani, Nainital vs. Assistant Commissioner of Income Tax, Central Circle, Haldwani, ACIT - DCIT

ITA 84/DDN/2024[2014-15]Status: DisposedITAT Dehradun12 Mar 2026AY 2014-15

Bench: Shri Yogesh Kumar U.S. & Shri Manish Agarwal

Section 132Section 143(3)Section 153ASection 153A(1)Section 153CSection 250

undisclosed income being of vital importance. All the aforenoted judgments thus reinforce the requirement of incriminating material having an ineradicable link to the estimation of income fora particular AY. 57. It becomes pertinent to note that both Sections 153A and 153C require the assessee upon being placed on notice ... those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search

Mohan Pal, Haldwani, Nainital vs. Assistant Commissioner of Income Tax, Central Circle, Haldwani, ACIT-DCIT

ITA 83/DDN/2024[2013-14]Status: DisposedITAT Dehradun12 Mar 2026AY 2013-14

Bench: Shri Yogesh Kumar U.S. & Shri Manish Agarwal

Section 132Section 143(3)Section 153ASection 153A(1)Section 153CSection 250

undisclosed income being of vital importance. All the aforenoted judgments thus reinforce the requirement of incriminating material having an ineradicable link to the estimation of income fora particular AY. 57. It becomes pertinent to note that both Sections 153A and 153C require the assessee upon being placed on notice ... those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search

DCIT, Central Circle 1, Rajkot vs. Yagnik Road Highstreet LLP, Rajkot

Appeal of the revenue is dismissed:\n(i)Ground no

ITA 684/RJT/2024[2021-22]Status: DisposedITAT Rajkot12 Mar 2026AY 2021-22
For Appellant: Shri D.M. Rindani, Ld.ARFor Respondent: Shri Sanjay Punglia, Ld. CIT(DR)
Section 143(3)Section 147

REALITY P. LTD. VERSUS\nACIT, CENT. CIR. 1 (2) AHMEDABAD AND DOIT, CENT. CIR. 1 (2) AHMEDABAD,\nVERSUS GREENFIELD REALITY P. LTD.\n\"Estimation of Income on-money received by the assessee on booking of flats and shops\nin \"VesuProject\"Income offered by the assessee at 8% of the alleged ... dated 07.07.2022 M/S. JAY KESAR BHAVANI\nDEVELOPERS PVT. LTD.( Guj-HC)\n\"Rejection of books of accounts u/s 145(3) On money receipt estimation of income\naddition on account of entire construction receipts as alleged unrecorded receipts\nHELD THAT: CIT (A) was not justified in confirming the addition of entire

Yagnik Road Highstreet LLP, Rajkot vs. The Deputy Commissioner of Income Tax, Central -1, Rajkot

Appeal of the revenue is dismissed:\n(i)Ground no

ITA 512/RJT/2024[2021-22]Status: DisposedITAT Rajkot12 Mar 2026AY 2021-22
For Appellant: Shri D.M. Rindani, Ld.ARFor Respondent: Shri Sanjay Punglia, Ld. CIT(DR)
Section 143(3)Section 147

REALITY P. LTD. VERSUS\nACIT, CENT. CIR. 1 (2) AHMEDABAD AND DOIT, CENT. CIR. 1 (2) AHMEDABAD,\nVERSUS GREENFIELD REALITY P. LTD.\n“Estimation of Income on-money received by the assessee on booking of flats and shops\nin \"Vesu Project\"Income offered by the assessee ... dated 07.07.2022 M/S. JAY KESAR BHAVANI\nDEVELOPERS PVT. LTD.( Guj-HC)\n\"Rejection of books of accounts u/s 145(3) On money receipt estimation of income\naddition on account of entire construction receipts as alleged unrecorded receipts\nHELD THAT: CIT (A) was not justified in confirming the addition of entire

Yagnik Road Highstreet LLP, Rajkot vs. Deputy Commissioner of Income Tax, Central -1, Rajkot

Appeal of the revenue is dismissed:\n(i)Ground no

ITA 511/RJT/2024[2020-21]Status: DisposedITAT Rajkot12 Mar 2026AY 2020-21
For Appellant: Shri D.M. Rindani, Ld.ARFor Respondent: Shri Sanjay Punglia, Ld. CIT(DR)
Section 143(3)Section 147

REALITY P. LTD. VERSUS\nACIT, CENT. CIR. 1 (2) AHMEDABAD AND DOIT, CENT. CIR. 1 (2) AHMEDABAD,\nVERSUS GREENFIELD REALITY P. LTD.\n“Estimation of Income on-money received by the assessee on booking of flats and shops\nin \"VesuProject\"Income offered by the assessee at 8% of the alleged ... dated 07.07.2022 M/S. JAY KESAR BHAVANI\nDEVELOPERS PVT. LTD.( Guj-HC)\n\"Rejection of books of accounts u/s 145(3) On money receipt estimation of income\naddition on account of entire construction receipts as alleged unrecorded receipts\nHELD THAT: CIT (A) was not justified in confirming the addition of entire