“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

Reena Engineers and Contractors Private Ltd, Panaji vs. ACIT, Central Circle-1, Calicut

In the result, the appeals filed by the assessee stand partly allowed statistical purposes

ITA 269/COCH/2021[2015-2016]Status: DisposedITAT Cochin31 Jul 2025AY 2015-2016

Bench: Shri Inturi Rama Rao, Am & Shri Sonjoy Sarma, Jm

For Appellant: Shri G. Surendranath Rao, CAFor Respondent: Shri Suresh Sivanandan, CIT-DR

Section 132Section 139(1)Section 143Section 143(3)Section 153Section 153ASection 80

Kerala High Court in the case of CIT v. Hotel Meriya [2011] 332 ITR 537 held Reena Engineers and Contractors Pvt. Ltd. that estimation of income even in the search assessment had upheld. This reasoning was upheld in the recent judgement of the Hon'ble Kerala High Court

Reena Engineers and Contractors Private Ltd, Panaji vs. ACIT, Central Circle-1, Calicut

In the result, the appeals filed by the assessee stand partly allowed statistical purposes

ITA 268/COCH/2021[2013-2014]Status: DisposedITAT Cochin31 Jul 2025AY 2013-2014

Bench: Shri Inturi Rama Rao, Am & Shri Sonjoy Sarma, Jm

For Appellant: Shri G. Surendranath Rao, CAFor Respondent: Shri Suresh Sivanandan, CIT-DR

Section 132Section 139(1)Section 143Section 143(3)Section 153Section 153ASection 80

Reena Engineers and Contractors Private Ltd, Panaji vs. ACIT, Central Circle-1, Calicut

In the result, the appeals filed by the assessee stand partly

ITA 267/COCH/2021[2012-2013]Status: DisposedITAT Cochin31 Jul 2025AY 2012-2013

Bench: Shri Inturi Rama Rao, Am & Shri Sonjoy Sarma, Jm

For Appellant: Shri G. Surendranath Rao, CAFor Respondent: Shri Suresh Sivanandan, CIT-DR

Section 132Section 139(1)Section 143Section 143(3)Section 153Section 153ASection 80

Kerala High Court in the case of CIT v. Hotel Meriya [2011] 332 ITR 537 held that estimation of income even in the search assessment had upheld. This reasoning was upheld in the recent judgement of the Hon'ble Kerala High Court in the case of Sunny Jacob Jewellers

Vensa Infrastructure Limited, Hyderabad vs. ACIT., Central Circle-2(4), Hyderabad

In the result, appeal filed by the assessee is allowed

ITA 819/HYD/2025[2019-20]Status: DisposedITAT Hyderabad31 Jul 2025AY 2019-20

Bench: Shri Vijay Pal Rao & Shri Manjunatha G.आ.अपी.सं /Ita No.819/Hyd/2025 (निर्धारण वर्ा/Assessment Year: 2019-20) Vensa Infrastructure Vs. Acit Limited Central Circle-2(4) Hyderabad Hyderabad [Pan :Aaecc7856K]

For Appellant: Shri Maheshwar Reddy, ARFor Respondent: Ms.U Mini Chandran,CIT-DR

Section 132Section 153C

have not executed any work. Thus, the AO opined that the assessee is involved in providing accommodation entries to the main contractor, therefore, estimated the income of the assessee towards commission for providing accommodation entries at 1% on the gross receipts of Rs.62,48,00,000/- and made addition ... assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee challenged the additions made by the AO towards estimation of income at 1% on the gross contract receipts, on the ground that the assessee is an entry provider without carrying out any actual contract. The assessee

Santosh Laujari Gupta, Mumbai vs. Assessing Officer - 33(3)(3), Kautilya Bhavan

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

ITA 2971/MUM/2025[2011-2012]Status: DisposedITAT Mumbai30 Jul 2025AY 2011-2012

Bench: Shri Pawan Singh(Physical Hearing) Santosh Laujari Gupta Ito, Ward-33(3)(3), Mumbai A-801, Raj Heights, M G Road, Near Vs Vora Colony, Kandivali West, Mumbai-400067. [Pan No. Adupg8487C] Appellant / Assessee Respondent / Revenue

Section 143(1)Section 143(2)Section 143(3)Section 145(3)Section 147Section 148Section 234ASection 254(1)

three parties, the rejection of books result was not justified. Thus, considering the facts that in earlier year, the assessing officer made lower estimation of income, the assessing officer is directed to restrict the disallowance @ 10% of impugned purchased of Rs. 2.40 Crore and further allowed setoff of gross profit

Late Babulall Manmall Dugar Through His Legal Representative Amrav B. Dugar, Ahmedabad vs. The ITO, Ward-1(2)(1), Ahmedabad

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

ITA 381/AHD/2025[2011-12]Status: DisposedITAT Ahmedabad29 Jul 2025AY 2011-12

Bench: Dr. B.R.R. Kumar, Vice-Shri Siddhartha Nautiyallate Babulall Manmall Dugar Income Tax Officer, Vs. Through His Legal Representative Ward 1(2)(1), Amrav B. Dugar, Ahmedabad 1, Sanjay Society Part-Ii, Shahibaug Road, Ahmedabad-04 [Pan :Aeapd 5581 P] (Appellant) .. (Respondent) Appellant By : Ms. Preyashi Tated, Ar Respondent By: Shri B.P. Makwana, Sr Dr Date Of Hearing 15.07.2025 Date Of Pronouncement 29.07.2025 O R D E R Per Dr. B.R.R. Kumar, Vice-:-

For Appellant: Ms. Preyashi Tated, ARFor Respondent: Shri B.P. Makwana, Sr DR

Section 143(1)Section 145(3)Section 148Section 250

against the law, equity and principle of natural justice. 2. The Ld. CIT(A) has erred in law and on facts in upholding estimated commission income by Ld. AO of Rs. 4,07,580/- being 2% of purchase and sales ... Assessing Officer. 6. We have considered the rival submissions and perused the material available on record. The core issue is the estimation of income based on alleged bogus transactions without proper inquiry or opportunity of cross-examination. We find from the record that the reopening is solely based on third

Heena Irfan Bepari, Sangli vs. Income Tax Officer, Sangli

In the result, appeal of the assessee is partly allowed

ITA 1185/PUN/2025[2015-16]Status: DisposedITAT Pune29 Jul 2025AY 2015-16

Section 148Section 148ASection 149Section 250Section 44A

case and in law, the CIT(A) erred in confirming the addition made by the AO, representing the difference between AO's estimation of income at 8% of the turnover and the income declared by the appellant in her return of income, in spite of the fact that

Heena Irfan Bepati, Sangli vs. Income Tax Officer, Sangli

In the result, appeal of the assessee is partly allowed

ITA 1184/PUN/2025[2014-15]Status: DisposedITAT Pune29 Jul 2025AY 2014-15

Bench: Ms.Astha Chandra & Dr.Dipak P. Ripoteआयकर अपील सं. / Ita Nos.1183 & 1184 /Pun/2025 िनधा"रण वष" / Assessment Years: 2013-14 & 2014-15 Heena Irfan Bepari, V The Income Tax Officer, 661, Raviwar Peth, S Ward-5, Sangli. Madhavnagar, Sangli – 416416. Maharashtra. Pan: Bnepb9635A Appellant/ Assessee Respondent / Revenue Assessee By Shri Pramod S Shingte– Ar Revenue By Shri Sandeep P Sathe –Jcit(Dr) Date Of Hearing 16/07/2025 Date Of Pronouncement 29/07/2025 आदेश/ Order Per Dr. Dipak P. Ripote, Am: These Two Appeals Filed By Assessee Are Against The Separate Orders Of Ld.Commissioner Of Income Tax(Appeal)[[Nfac], Passed Under Section 250 Of The Income Tax Act, 1961 For The A.Y.2013-14 & 2014-15 Both Dated 24.03.2025 Respectively.For The Sake Of Convenience, These Two Appeals Were Heard Together & Are Being Disposed Of By This Common Order. We Treat Appeal In Ita

Section 143(2)Section 148Section 148ASection 250

Heena Irfan Bepari, Sangli vs. Income Tax Officer, Sangli

In the result, appeal of the assessee is partly allowed

ITA 1183/PUN/2025[2013-14]Status: DisposedITAT Pune29 Jul 2025AY 2013-14

Section 143(2)Section 148Section 148ASection 250

Haranahalli Lakshmana Setty Nagaraja, Rajajinagar vs. Income Tax Officer-Ward-2(2)(2), Bangalore

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

ITA 335/BANG/2025[2018-19]Status: DisposedITAT Bangalore25 Jul 2025AY 2018-19

Bench: Shri Prashant Maharishi, Vice – & Shri Soundararajan K.Assessment Year : 2018-19

For Respondent: Smt. Sheetal Borkar

Section 37

being difference between profit disclosed in Profit & Loss Account and Tax Audit report. 3. Without prejudice to the above ground, reasonable estimation of income to be made at the net profit declared by appellant in past Assessment Years as this basis of past history of appellant is best basis

Professional Automotives Private Limited, Jammu vs. Assistant Commissioner of Income Tax, Central Circle-1, Jaipur

ITA 813/JPR/2025[2017-18]Status: DisposedITAT Jaipur23 Jul 2025AY 2017-18

For Appellant: Shri Tarun Mittal, CAFor Respondent: Shri Ajey Malik, CIT (Th. V.C)

Section 143(3)Section 37(1)

discussion in\nthe order of the ld. AO about this objection and even that of the ld. CIT(A)\nabout the estimation of income which was based on surmises and\nconjecture. The assessee within 43 days retracted that surrender given by\nhim that too on mere estimation and thereby ... during the course of search which is the foundation of proceedings and the AO is not\nconferred with power to make estimation of income dehors the material in his\npossession.”\nAs is evident from the above discussion that the issue in this appeal\nis that can the statement be recorded

Professional Automotives Private Limited, Jammu vs. Assistant Commissioner of Income Tax, Central Circle-1, Jaipur

In the result the appeal of the assessee in ITA no

ITA 812/JPR/2025[2016-17]Status: DisposedITAT Jaipur23 Jul 2025AY 2016-17

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI, आयकर अपील /ITA Nos.809 to 815/JP/2025 निर्धारण वर्ष /Assessment Years :2013-14 to 2019-20 Professional Automotives Pvt. बनाम ACIT, Ltd. Bahu Plaza, Bahu Plaza, Jammu Vs. Central Circle- 1, and Kashmir Jaipur स्थायी लेखा सं./जी.आई.आर. सं./PAN/GIR No.:AAACP9608E अपीलार्थी/Appellant प्र]त्यर्थी/Respondent निर्धारिती की ओर से / Assessee by :Shri Tarun Mittal, CA राजस्व की ओर से /Revenue by: Shri Ajey Malik, CIT (Th. V.C)

For Appellant: Shri Tarun Mittal, CAFor Respondent: Shri Ajey Malik, CIT (Th. V.C)

Section 143(3)Section 37(1)

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh

Krishna Fashion World, Chembur, Mumbai vs. ITO, Mumbai

In the result, all the four appeals are hereby dismissed

ITA 3273/MUM/2024[2010-11]Status: DisposedITAT Mumbai22 Jul 2025AY 2010-11

Bench: Shri Anikesh Banerjee & Smt. Renu Jauhriआयकर अपील सुं./Ita No. 3270 To 3273/Mum/2024 (नििाारण वर्ा / Assessment Year: 2010-11 To 2013-14) M/S. Krishna Fashion V/S. Income Tax Officer World बिाम Income Tax Officer, Ward 803/804, T-6, Godrej 22(2)(1), Room No. 312, Prime Colony, Sahakar Piramal Chambers, Lalbaug Nagar No.2, Shell Colony, 400012 Chembur, Mumbai 400071 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aajfk2799R Appellant/अपीलार्थी .. Respondent/प्रनिवादी निर्ााररती की ओर से /Assessee By: None राजस्व की ओर से /Revenue By: Shri Ritesh Misra, Cit Dr A/W Shri Hemanshu Joshi, Sr Dr स िवाई की िारीख / Date Of Hearing 10.07.2025 घोर्णा की िारीख/Date Of Pronouncement 22.07.2025

For Appellant: NoneFor Respondent: Shri Ritesh Misra, CIT DR a/w

Section 143(2)Section 148Section 151Section 250

real income. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in estimating total income of Rs.22,63,48,010/- when the same is not the real income of the Appellant. Ground no 5: Addition of rs.2,11,24,992/- as net profit assessed ... turnover are disallowed. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming estimation of income of Rs.2,11,24.992/- being 8% of the gross sales shown in VAT Returns. Ground no.6: Addition of rs. 5,733/- as 8% of contract receipts

Krishna Fashion World, Chembur, Mumbai vs. ITO, Mumbai

In the result, all the four appeals are hereby dismissed

ITA 3272/MUM/2024[2011-12]Status: DisposedITAT Mumbai22 Jul 2025AY 2011-12

For Appellant: NoneFor Respondent: Shri Ritesh Misra, CIT DR a/w

Section 143(2)Section 148Section 151Section 250

Ms. Krishna Fashion World, Chembur vs. Income Tax Officer, Mumbai

In the result, all the four appeals are hereby dismissed

ITA 3271/MUM/2024[2012-13]Status: DisposedITAT Mumbai22 Jul 2025AY 2012-13

For Appellant: \nNoneFor Respondent: \nShri Ritesh Misra, CIT DR a/w

Section 143(2)Section 148Section 151Section 250

real\nincome.\n(a) In the facts and circumstances of the case, National Faceless Appeal Centre\n(NFAC) erred in estimating total income of Rs.22,63,48,010/- when the same is not\nthe real income of the Appellant.\nGround no 5: Addition of rs.2 ... turnover\nare disallowed.\n(a) In the facts and circumstances of the case, National Faceless Appeal Centre\n(NFAC) erred in confirming estimation of income of Rs.2,11,24.992/- being 8% of the\ngross sales shown in VAT Returns.\nGround no.6: Addition of rs.5,733/- as 8% of contract receipts

Ms. Krishna Fashion World, Chembur vs. Income Tax Officer, Mumbai

In the result, all the four appeals are hereby dismissed

ITA 3270/MUM/2024[2013-14]Status: DisposedITAT Mumbai22 Jul 2025AY 2013-14

For Appellant: NoneFor Respondent: Shri Ritesh Misra, CIT DR a/w

Section 143(2)Section 148Section 151Section 250

Kvc Infrastructures, Visakhapatnam vs. Assistant Commissioner of Income Tax, Visakhapatnam

The appeal of the assessee is allowed for statistical purposes, in terms of our aforesaid observations

ITA 266/VIZ/2025[2017-18]Status: DisposedITAT Visakhapatnam18 Jul 2025AY 2017-18

Bench: Us:

Section 124(3)Section 142(1)Section 143(2)Section 143(3)Section 145(3)Section 249(3)Section 282Section 44A

dated 27.12.2019 for A.Y. 2017-18. The assessee firm has assailed the impugned order on the following grounds of appeal before us: “1.Arbitrary Estimation of Income at 8% of Gross Receipts: The AO erred in applying an 8% profit rate to the appellant's gross receipts without legal basis. This ... Invalid Invocation of Section 145(3): The AO invoked Section 145(3) without pointing out any defects in the audited books. 6. Arbitrary Estimation of Income Without Evidence: The AO estimated income at 8% of gross receipts without providing any industry benchmarks or supporting evidence. 7. Additional Ground (General Prayer

Sat Inder Constructions Private Limited, Cuttack vs. DCIT Asmnt, Circle 2(1), Cuttack

In the result, the appeal of the assessee is allowed

ITA 511/CTK/2024[2017-2018]Status: DisposedITAT Cuttack17 Jul 2025AY 2017-2018

Bench: Shri George Mathan, Jm & Shri Rajesh Kumar, Am Sat Inder Constructions Private Limitd Dcit Asmnt, Circle 2(1) Inder Bhawan, Tv Station Road, Aaykar Bhavan, Cuttack, Odisha- Vs. Tulasipur, Cuttack, 753002 Odisha-753008 (Appellant) (Respondent) Pan No. Aascs8658P Assessee By : Shri P.K. Mishra & B.N. Behera, Ars Revenue By : Shri Nishanth Rao B, Dr Date Of Hearing: 17.07.2025 Date Of Pronouncement: 17.07.2025

For Appellant: Shri P.K. Mishra & B.N. BeheraFor Respondent: Shri Nishanth Rao B, DR

Section 145Section 80G

total receipts of ₹30,03,06,603/-. It was the submission that the ld. AO has estimated the income of the assessee at 8%. It was further submission that the said 8% was estimated after depreciation. It was the submission by the SAT Inder Constructions Private Limited ... that the ld. AO has not rejected the assessee’s books of account but estimated the income. It was the submission that the estimation of income was not permissible without the rejection of the books. 04. In reply, the ld. Sr. DR submitted that the ld. AO has mentioned

Vishal Vasudevbhai Modi, Ahmedabad vs. The PCIT, Ahmedabad-1, Ahmedabad

In the result, the appeal of the assessee is allowed

ITA 986/AHD/2025[2018-19]Status: DisposedITAT Ahmedabad17 Jul 2025AY 2018-19

Bench: Dr. Brr Kumar & Ms. Suchitra Kambleassessment Year 2018-19

For Appellant: Shri P.F. Jain, A.RFor Respondent: Shri R P Rastogi, CIT-D.R

Section 144Section 144BSection 147Section 148Section 263Section 69A

commission has been estimated at Rs. 99,140/-. Against the assessment order, the assessee filed appeal before the CIT(A) and the estimation of income on the said cash deposit of Rs. 16,53,074/- in the bank account. The ld. A.R. submitted that the assessment order cannot be treated ... Assessing Officer has observed that there is no change in the business structures and correctly treated the bank receipt as business receipt and estimated the income on the same at Rs. 1,32,29,932/-. The Pr. CIT observed that the Assessing Officer in the present assessment year i.e. assessment

Ahammedkakandavide Puthiyapandika Abdulkader, Calicut vs. The ITO Ward 1(1), Calicut

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

ITA 420/COCH/2023[2017-18]Status: DisposedITAT Cochin15 Jul 2025AY 2017-18

Bench: Shri Inturi Rama Rao & Shri Soundararajan K.Assessment Year : 2017-18

For Appellant: NoneFor Respondent: Shri Omanakuttan, Snr. AR

Section 142(1)Section 144Section 68

took a lenient view and reduced the estimation of the income from 2.56% to 2% and thereby partly granted relief insofar as the estimation of income made by the AO. The Ld.CIT(A) had correctly considered the facts and gave the relief which in our view is a reasonable ... therefore confirm the order of the Ld.CIT(A) insofar as the estimation of income made by the AO and reduced by the Ld.CIT(A). 11. Insofar as the addition made u/s. 68 of the Act, the AO had made the addition based on the cash deposits made during the demonetisation