“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

Indrajit Properties Private Limited (in Which Duli Trade & Commodities Pvt Ltd), Mumbai vs. Deputy Commmissioner of Income Tax Central Circle, Mumbai

In the result, all the appeals raised by the assessee are allowed and all the appeals filed by the revenue are dismissed

ITA 2142/MUM/2025[2016-17]Status: DisposedITAT Mumbai22 Aug 2025AY 2016-17

Bench: SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & PRABHASH SHANKAR (Accountant Member)

Section 143(3)Section 153CSection 250

have also earned some unaccounted income in the form of cash for rendering such services. Thus on this assumption, the AO estimated additional income by applying a rate of 5%. For the purpose of applying the G.P. rate, the AO has taken the higher of alleged circular purchase and alleged ... market practices, facts in other similar cases and overall facts & circumstances of the case, the income on such turnoveris estimated at 5%. This estimated 5% income includes commission on accommodation entries of purchases and sales made/passed on to further the entries obtained from searched entities; and other unaccounted incomes like

Indrajit Properties Private Limited (in Which Duli Trade & Commodities Pvt Ltd), Mumbai vs. Deputy Commissioner of Income Tax Central Circle -7(1), Mumbai

In the result, all the appeals raised by the assessee are allowed and all the appeals filed by the revenue are dismissed

ITA 2141/MUM/2025[2015-16]Status: DisposedITAT Mumbai22 Aug 2025AY 2015-16

Bench: SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & PRABHASH SHANKAR (Accountant Member)

Section 143(3)Section 153CSection 250

Indrajit Properties Private Limited (in Which Duli Trade & Commodities Pvt Ltd), Mumbai vs. Deputy Commissioner of Income Tax Central Circle -7(1), Mumbai

In the result, all the appeals raised by the assessee are allowed and all the appeals filed by the revenue are dismissed

ITA 2140/MUM/2025[2014-15]Status: DisposedITAT Mumbai22 Aug 2025AY 2014-15

Bench: SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & PRABHASH SHANKAR (Accountant Member)

Section 143(3)Section 153CSection 250

Indrajit Properties Private Limited (in Which Duli Trade & Commodities Pvt Ltd), Mumbai vs. Deputy Commissioner of Income Tax, Central Circle -7(1), Mumbai

In the result, all the appeals raised by the assessee are allowed and all the appeals filed by the revenue are dismissed

ITA 2139/MUM/2025[2013-14]Status: DisposedITAT Mumbai22 Aug 2025AY 2013-14

Bench: SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & PRABHASH SHANKAR (Accountant Member)

Section 143(3)Section 153CSection 250

Pravinbhai Mohanbhai Vadi, Jamnagar vs. Pr. Commissioner of Income Tax, Jamnagar

In the result, appeal filed by the assessee is allowed

ITA 102/RJT/2025[2021-22]Status: DisposedITAT Rajkot21 Aug 2025AY 2021-22

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinhaआयकर अपील सं/.Ita No.102/Rjt/2025 "नधा"रणवष"/ Assessment Year: 2021-22 Pravinbhai Mohanbhai Vadi The Pr. Commissioner Of बनाम Flat No.1, Prabhudeep Apartment Income Tax, Jamanagar. Air Force-2 Road Vs. Jamnagar. Pan : Agzpv6946P (अपीलाथ"/Assessee) : (""यथ"/Respondent) "नधा"रती क" ओर से/Assessee By : Shri Chetan Agarwal, Ld.Ar राज"व क" ओर से/Revenue By : Shri Sanjay Punglia, Ld.Cit-Dr

For Appellant: Shri Chetan Agarwal, ld.ARFor Respondent: Shri Sanjay Punglia, ld.CIT-DR

Section 115BSection 142(1)Section 143(3)Section 263Section 263oSection 69C

basis of previous history in case of an appellant was also submitted. Which is as under: 3. We request your honour to estimate the income @0.89%, i.e. the average rate of net profit earned by appellant firm. 4. Your honour may kindly appreciate that average net profit earned by assessee ... above. 6. We also draw specific attention towards the decisions of hon. Supreme Court with regards to best judgment and guiding principal for estimation of income."The limits of the power are implicit in the expression ' best of his judgment Judgment is a faculty to decide matters with wisdom, truly

Jewels Emporium A Legacy, Jaipur vs. ACIT, CC-1, Jaipur

In the result, the appeal of the assessee stands allowed

ITA 1215/JPR/2024[2009-10]Status: DisposedITAT Jaipur21 Aug 2025AY 2009-10

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

For Appellant: Shri Tarun Mittal, C.AFor Respondent: Mrs. Anita Rinesh, JCIT,Sr.-DR a

Section 143(3)Section 145(3)

established preposition of law, based also on jurisdictional pronouncements that, once the provisions of sec 145(3) of the Act are invoked, the estimation of income has to be made on best judgement, and past history is the best guide to estimate such income, as has been held ... case of CIT Vs. Inani Marbles Pvt. Ltd. [316 ITR 125] held that past history of the assessee is the best guide to estimate the income. The relevant findings reads as under:- “For the assessment year 2000-01, the Assessing Officer rejected the asses-see's books of account

M/S Shree Shyam Impex, Kaithal vs. Income Tax Officer, Ward Kaithal, Kaithal

In the result, the AO is directed to consider gross profit rate of 5

ITA 549/CHANDI/2025[2022-23]Status: DisposedITAT Chandigarh20 Aug 2025AY 2022-23

Bench: SHRI. LALIET KUMAR (Judicial Member), SHRI. VIKRAM SINGH YADAV (Accountant Member)

For Appellant: Shri Avneet Singh, Advocate and Shri Pranav Jain, AdvocateFor Respondent: Dr. Ranjit Kaur, Addl. CIT, Sr. DR (Virtual Mode)

Section 145(3)

challenge before us. Once the books of accounts are rejected, the AO has to proceed with best judgement assessment and is required to estimate the income. It 3 is well settled position that in a best judgment assessment, the AO should try to make an honest and fair estimate ... income and should not act arbitrarily, but there is necessarily some amount of guess work involved in a best judgment assessment. For estimation of income, the past results declared by the assessee or comparative third party comparables act as a good benchmark. In the instant case, the AO has estimated

Shilpaa Electrical Infra Tech India Limited, Hyderabad vs. ACIT, Central Circle - 3(2), Hyderabad

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

ITA 934/HYD/2025[2018-19]Status: DisposedITAT Hyderabad20 Aug 2025AY 2018-19

Bench: Shri Vijay Pal Rao, Vice-A N D Shri Manjunatha, G.आ.अपी.सं /Ita No.934/Hyd/2025 (िनधा"रण वष"/Assessment Year: 2018-19) M/S Shilpa Electrical Infra Vs. Acit Tech India Limited Central Circle 3(2) Hyderabad Hyderabad Pan:Aalcs7808Q (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri P. Vinod, Advocate राज" व "ारा/Revenue By:: Shri Sv Siva Prasad, Sr. Ar सुनवाई की तारीख/Date Of Hearing: 13/08/2025 घोषणा की तारीख/Pronouncement: 20/08/2025 आदेश/Order Per Vijay Pal Raothis Appeal By The Assessee Is Directed Against The Order Dated 10/03/2025 Of The Learned Cit (A)-Hyderabad-11, For The A.Y.2018-19. 2. The Assessee Has Raised The Following Grounds Of Appeal:

For Appellant: Shri P. Vinod, AdvocateFor Respondent: : Shri SV Siva Prasad, Sr. AR

Section 133ASection 143(2)

details of TDS etc., as required for completing the assessment. Since there was no response from the assessee, the Assessing Officer proceeded to estimate the income of the assessee at 8% of contract receipts which was worked out to Rs.3,06,50,792/- after reducing the income declared ... dismissed the appeal of the assessee for non- prosecution. 5. Before the Tribunal, the learned Counsel for the assessee submitted that the estimation of income of the assessee at 8% of the turnover in the present case is erroneous and unsustainable in law, as the assessee is a sub-contractor

Suresh Kumar Reddy Krishnapuram, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 539/HYD/2025[2022-23]Status: DisposedITAT Hyderabad20 Aug 2025AY 2022-23

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

disclosed turnover? 3. Whether in the facts and circumstances of the case and in law, the Id. CIT(A) erred in not upholding estimation of income @ 14% on the disclosed receipts of the assessee when the books were rejected by the assessing officer ? ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos ... books regularly maintained by the assessee. If those books are not correct or complete, the Assessing Officer may reject those books and estimate the income to the best of his Judgment. Since, the Assessing Officer has estimated 18% profit on undisclosed turnover, which is not on the basis of regular

Suresh Kumar Reddy Krishnapuram, Kurnool vs. ACIT., Central Circle - 2(3), Hyderabad

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

ITA 538/HYD/2025[2021-22]Status: DisposedITAT Hyderabad20 Aug 2025AY 2021-22

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

disclosed turnover? 3. Whether in the facts and circumstances of the case and in law, the Id. CIT(A) erred in not upholding estimation of income @ 14% on the disclosed receipts of the assessee when the books were rejected by the assessing officer ? 6 ITA.Nos.514 to 539/Hyd./2025 ... ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos.308 to 311/Hyd./2025. not correct or complete, the Assessing Officer may reject those books and estimate the income to the best of his Judgment. Since, the Assessing Officer has estimated 18% profit on undisclosed turnover, which is not on the basis

Suresh Kumar Reddy Krishnapuram, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

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

ITA 537/HYD/2025[2020-21]Status: DisposedITAT Hyderabad20 Aug 2025AY 2020-21

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

disclosed turnover? 3. Whether in the facts and circumstances of the case and in law, the Id. CIT(A) erred in not upholding estimation of income @ 14% on the disclosed receipts of the assessee when the books were rejected by the assessing officer ? 6 ITA.Nos.514 to 539/Hyd./2025 ... ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos.308 to 311/Hyd./2025. not correct or complete, the Assessing Officer may reject those books and estimate the income to the best of his Judgment. Since, the Assessing Officer has estimated 18% profit on undisclosed turnover, which is not on the basis

Suresh Kumar Reddy Krishnapuram, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 536/HYD/2025[2019-20]Status: DisposedITAT Hyderabad20 Aug 2025AY 2019-20

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

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

ITA 535/HYD/2025[2020-21]Status: DisposedITAT Hyderabad20 Aug 2025AY 2020-21

disclosed\nturnover?\n3.\nWhether in the facts and circumstances of the case and in law,\nthe Id. CIT(A) erred in not upholding estimation of income @ 14%\non the disclosed receipts of the assessee when the books were\nrejected by the assessing officer ?\n\n6\nITA.Nos.514 to 539/Hyd./2025 ... nITA.Nos.514 to 539/Hyd./2025,\nAnd ITA.Nos.308 to 311/Hyd./2025.\nnot correct or complete, the Assessing Officer may reject those\nbooks and estimate the income to the best of his Judgment.\nSince, the Assessing Officer has estimated 18% profit on\nundisclosed turnover, which is not on the basis

Skandhanshi 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 534/HYD/2025[2019-20]Status: DisposedITAT Hyderabad20 Aug 2025AY 2019-20

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

disclosed turnover? 3. Whether in the facts and circumstances of the case and in law, the Id. CIT(A) erred in not upholding estimation of income @ 14% on the disclosed receipts of the assessee when the books were rejected by the assessing officer ? 6 ITA.Nos.514 to 539/Hyd./2025 ... ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos.308 to 311/Hyd./2025. not correct or complete, the Assessing Officer may reject those books and estimate the income to the best of his Judgment. Since, the Assessing Officer has estimated 18% profit on undisclosed turnover, which is not on the basis

Skanda Developers & Builders, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

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

ITA 533/HYD/2025[2019-20]Status: DisposedITAT Hyderabad20 Aug 2025AY 2019-20

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

disclosed turnover? 3. Whether in the facts and circumstances of the case and in law, the Id. CIT(A) erred in not upholding estimation of income @ 14% on the disclosed receipts of the assessee when the books were rejected by the assessing officer ? 6 ITA.Nos.514 to 539/Hyd./2025 ... ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos.308 to 311/Hyd./2025. not correct or complete, the Assessing Officer may reject those books and estimate the income to the best of his Judgment. Since, the Assessing Officer has estimated 18% profit on undisclosed turnover, which is not on the basis

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

ITA 532/HYD/2025[2021-22]Status: DisposedITAT Hyderabad20 Aug 2025AY 2021-22

made key\nadmissions acknowledging discrepancies in income reporting. These\nadmissions pertained to unrecorded cash transactions, suppressed\nturnover, and undisclosed income. Importantly, these admissions\nwere not conditional but were direct acknowledgements of income\nirregularities.\nii) Subsequently, the appellant filed revised returns reflecting the\nadditional income disclosed during the search. This corroborates ... made key\nadmissions acknowledging discrepancies in income reporting. These\nadmissions pertained to unrecorded cash transactions, suppressed\nturnover, and undisclosed income. Importantly, these admissions\nwere not conditional but were direct acknowledgements of income\nirregularities.\nii) Subsequently, the appellant filed revised returns reflecting the\nadditional income disclosed during the search. This corroborates

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

ITA 531/HYD/2025[2020-21]Status: DisposedITAT Hyderabad20 Aug 2025AY 2020-21

disclosed \nturnover? \n3. Whether in the facts and circumstances of the case and in law, \nthe Id. CIT(A) erred in not upholding estimation of income @ 14% \non the disclosed receipts of the assessee when the books were \nrejected by the assessing officer ? \n5 \nITA.Nos.514 to 539/Hyd./2025, \nAnd ... disclosed \nturnover? \n3. Whether in the facts and circumstances of the case and in law, \nthe Id. CIT(A) erred in not upholding estimation of income @ 14% \non the disclosed receipts of the assessee when the books were \nrejected by the assessing officer ? \n4. The appellant craves to amend, alter

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

ITA 530/HYD/2025[2019-20]Status: DisposedITAT Hyderabad20 Aug 2025AY 2019-20

Bench: Shri Vijay Pal Rao & Shri Manjunatha G

disclosed turnover? 3. Whether in the facts and circumstances of the case and in law, the Id. CIT(A) erred in not upholding estimation of income @ 14% on the disclosed receipts of the assessee when the books were rejected by the assessing officer ? ITA.Nos.514 to 539/Hyd./2025, And ITA.Nos ... higher percentage. Having regard to facts andcircumstances of the case, profit on suppressed receipts is estimated @ 18% which includes the warranty of estimation of income @ 18% of Rs.13,83,12,000/ ).Penalty u/s.270A of the Act is initiated separately for mis-reporting of income. ITA.Nos.514 to 539/Hyd./2025

Skandhanshi Developers, Kurnool vs. ACIT., Central Circle - 2(3), Hyderabad

ITA 529/HYD/2025[2022-23]Status: DisposedITAT Hyderabad20 Aug 2025AY 2022-23

disclosed\nturnover?\n3. Whether in the facts and circumstances of the case and in law,\nthe Id. CIT(A) erred in not upholding estimation of income @ 14%\non the disclosed receipts of the assessee when the books were\nrejected by the assessing officer ?\nITA.Nos.514 to 539/Hyd./2025,\nAnd ITA.Nos ... 539/Hyd./2025,\nAnd ITA.Nos.308 to 311/Hyd./2025.\n29\nnot correct or complete, the Assessing Officer may reject those\nbooks and estimate the income to the best of his Judgment.\nSince, the Assessing Officer has estimated 18% profit on\nundisclosed turnover, which is not on the basis of regular\nbooks

Skandhanshi Developers, Kurnool vs. ACIT., Central Circle-2(3), Hyderabad

ITA 528/HYD/2025[2021-22]Status: DisposedITAT Hyderabad20 Aug 2025AY 2021-22

disclosed turnover?\n3. Whether in the facts and circumstances of the case and in law, the Id. CIT(A) erred in not upholding estimation of income @ 14% on the disclosed receipts of the assessee when the books were rejected by the assessing officer ?\n\n4. The appellant craves to amend