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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

ITO 2(3)(2), Mumbai vs. Shree Bal Construction P. Ltd, Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 4787/MUM/2014[2007-08]Status: DisposedITAT Mumbai30 Jan 2023AY 2007-08

Bench: Shri Aby T. Varkey, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blem/S. Shree Bal Constructions Pvt. Ltd., V. Acit – Osd – 2(3) Office No. 4, Buona Casa Mumbai 2Nd Floor, Opp. Kashmir Art Emporium Fort, Mumbai - 400001 Pan: Aabcs1781J (Appellant) (Respondent) Acit – Osd – 2(3) V. M/S. Shree Bal Constructions Pvt. Ltd., Room No. 556, 5Th Floor Office No. 4, Buona Casa Aayakar Bhavan, M.K. Road 2Nd Floor, Opp. Kashmir Art Emporium Fort, Mumbai - 400001 Mumbai - 400020 Pan: Aabcs1781J (Appellant) (Respondent)

Section 143(1)Section 143(2)Section 154Section 271(1)(c)

grounds as not pressed at this stage. 7. Ld. AR submitted that assessee is pressing only Ground No. 2 wherein Ld.CIT(A) has estimated the income from the project at the rate of 10% of the work-in-progress and he further submitted that the appeal filed by the revenue ... submitted that assessee has not submitted clear evidences in support of its claim before the Assessing Officer and he objected to the estimation of income adopted by the Ld.CIT(A). He also submitted that the grounds raised by the revenue are similar to the Ground No. 2 raised

Shree Bal Constructions P. Ltd, Mumbai vs. ACIT OSD 2(3), Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 656/MUM/2013[2007-08]Status: DisposedITAT Mumbai30 Jan 2023AY 2007-08

Bench: Shri Aby T. Varkey, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blem/S. Shree Bal Constructions Pvt. Ltd., V. Acit – Osd – 2(3) Office No. 4, Buona Casa Mumbai 2Nd Floor, Opp. Kashmir Art Emporium Fort, Mumbai - 400001 Pan: Aabcs1781J (Appellant) (Respondent) Acit – Osd – 2(3) V. M/S. Shree Bal Constructions Pvt. Ltd., Room No. 556, 5Th Floor Office No. 4, Buona Casa Aayakar Bhavan, M.K. Road 2Nd Floor, Opp. Kashmir Art Emporium Fort, Mumbai - 400001 Mumbai - 400020 Pan: Aabcs1781J (Appellant) (Respondent)

Section 143(1)Section 143(2)Section 154Section 271(1)(c)

grounds as not pressed at this stage. 7. Ld. AR submitted that assessee is pressing only Ground No. 2 wherein Ld.CIT(A) has estimated the income from the project at the rate of 10% of the work-in-progress and he further submitted that the appeal filed by the revenue ... submitted that assessee has not submitted clear evidences in support of its claim before the Assessing Officer and he objected to the estimation of income adopted by the Ld.CIT(A). He also submitted that the grounds raised by the revenue are similar to the Ground No. 2 raised

Deep Holdings Pvt. Ltd., Kolkata vs. PCIT(Central)-2, Kolkata

In the result appeal of the assessee stands allowed

ITA 315/KOL/2022[2017-18]Status: DisposedITAT Kolkata09 Jan 2023AY 2017-18

Bench: Shri Sanjay Garg, Hon’Ble & Shri Girish Agrawal, Hon’Blei.T.A. No. 315/Kol/2022 Assessment Year: 2017-18 Deep Holdings Pvt. Ltd. Pcit, (Central) Kolkata -2 105/1A, Bidhan Nagar Road Vs Kolkata - 700067 Pan : Aabcd0183D अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri S.M. Surana, Advocate Revenue By : Shri Biswanath Das, Cit, D/R सुनवाई क" तारीख/Date Of Hearing : 24/11/2022 घोषणा क" तारीख/Date Of Pronouncement : 09/01/2023 आदेश/O R D E R Per Sanjay Garg: The Present Appeal Is Directed At The Instance Of The Assessee Against The Order Of The Learned Principal Commissioner Of Income Tax, Kolkata– 2, Kolkata (Hereinafter The “Ld. Pr. Cit”) Dated 29/03/2022, Passed U/S 263 Of The Income Tax Act, 1961 (“The Act’), For Assessment Year 2017-18, Whereby The Ld. Pr. Cit Has Set Aside The Assessment Order Passed By The Assessing Officer & Directed The Assessing Officer To Pass A Fresh Assessment Order. 2. The Ld. Pr. Cit Held That The Assessment Order Passed By The Assessing Officer Was Erroneous & Prejudicial To The Interest Of The Revenue As He Had A Difference Of Opinion With The Assessing Officer Regarding The Calculation Of Profit On Sale Of Flats By The Assessee, On Estimate Basis. 3. Brief Facts Of The Case Are That A Survey Action Was Carried Out At The Premises Of The Assessee & Certain Incriminating Documents Were Found During The Survey Action From Which Certain Undisclosed Cash Receipts Were Detected. Thereafter, The Assessing Officer Showcaused The Assessee As To Why The Undisclosed Cash Receipts As Found During The Survey Action Be Not

For Appellant: Shri S.M. Surana, AdvocateFor Respondent: Shri Biswanath Das, CIT, D/R
Section 145(3)Section 263

however, the entire income was not disclosed and there was still certain unaccounted income of the assessee. Therefore, the Assessing Officer proceeded to estimate the income of the assessee for the year under consideration. 3.1. The Assessing Officer took into consideration the impounded documents and the hard disk ... however, in exercise of his revisionary jurisdiction u/s 263 of the Act, made his own calculations of estimation of income and held that the income estimated by the Assessing Officer was less. He further noted that the Assessing Officer by estimating the income @ 5% of the receipts has given benefit

The Dy. Commr. of Income Tax, Cir.-1(1), Rajkot-Gujarat vs. M/S Backbone Projects Limited., Ahmedabad

In the result, the appeal filed by the Revenue is hereby dismissed

ITA 404/RJT/2017[2013-14]Status: DisposedITAT Rajkot06 Jan 2023AY 2013-14

Bench: Ms. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 142(1)Section 143(3)

Commissioner of Income Tax (Appeals)-11, Ahmedabad. The Ld. CIT(A) after calling for a Remand Report from the Assessing Officer, deleted the estimation of income @ 8% made by the Assessing Officer as follows: “…. 8. Facts of the case, findings of the AO and submissions of the appellant have been

Sajjan Bajaj vs. Pr. C. I. T

In the result, the appeal of the assessee is allowed

ITA 53/PAT/2016[2011-12]Status: HeardITAT Patna05 Jan 2023AY 2011-12

Bench: Shri Rajpal Yadav, Vice-(Kz) & Dr. Manish Borad

Section 133ASection 143(3)Section 263Section 40A(3)

contended that in the assessment order, the ld. Assessing Officer failed to examine all the connected issues. He has simply estimated the income of the assessee by making an addition of closing stock. He should have gone through all other aspects discovered during course of survey. Therefore, his action ... relied upon, are available. As far as action of the ld. Assessing Officer qua rejection of books of account is concerned, once estimation of income on account of rejection of book was challenged before the ld. CIT(Appeals), then the ld. 1st Appellate Authority could have exercised co-terminus powers

Anupama Chathankandath, Palakkad vs. The ACIT Circle-1, Palakkad

In the result, appeals are allowed

ITA 27/COCH/2022[2013-14]Status: DisposedITAT Cochin02 Jan 2023AY 2013-14

Bench: Shri N. V. Vasudevan & Ms. Padmavathy S

For Appellant: Shri. Padmanathan, CAFor Respondent: Smt. J M Jamuna Devi, SR AR

disbelieve the income estimated by the assessee in the absence of any adverse findings by the Assessing Officer. 3. The assessee has estimated the income from rubber based on the yield for different geographical locations as per Rubber Board data and the yield is not the highest yield ... Officer and sustained by the CIT(A). 7. Having rejected the income estimated by the assessee, the Assessing Officer has again proceeded to estimate the income at 80% of the income returned by the assessee. For this also, there is no justification or basis. The disallowance was an adhoc disallowance

Anupamachathankandath, Palakkad vs. The ACIT Circle-1, Palakkad

In the result, appeals are allowed

ITA 26/COCH/2022[2012-13]Status: DisposedITAT Cochin02 Jan 2023AY 2012-13

Bench: Shri N. V. Vasudevan & Ms. Padmavathy S

For Appellant: Shri. Padmanathan, CAFor Respondent: Smt. J M Jamuna Devi, SR AR

disbelieve the income estimated by the assessee in the absence of any adverse findings by the Assessing Officer. 3. The assessee has estimated the income from rubber based on the yield for different geographical locations as per Rubber Board data and the yield is not the highest yield ... Officer and sustained by the CIT(A). 7. Having rejected the income estimated by the assessee, the Assessing Officer has again proceeded to estimate the income at 80% of the income returned by the assessee. For this also, there is no justification or basis. The disallowance was an adhoc disallowance

Ravindranth J. Mishra, Vapi vs. Income Tax Officer, Ward -7, Vapi

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

ITA 271/SRT/2022[2010-11]Status: DisposedITAT Surat29 Dec 2022AY 2010-11
Section 144Section 148Section 234ASection 234BSection 254(1)Section 44A

treated as income and only income component on presuming net profit @ 8% as prescribed in under section 44AD would be taken as an estimation of income. To support her submission, Ld. AR of the assessee relied upon following case law:  Nishikant T Patne vs. Assistant Commissioner of Income-tax, Circle ... absence of material to show net profit rate, presumptive net profit rate of 8% as stipulated in section 44AD could be taken for estimation of income. Hence, considering the facts and circumstances of the present case, I direct the Assessing Officer to restrict the addition to the extent

Avinash Narayan Sutar, Navi Mumbai vs. ITO 28(1)(2), Mumbai

In the result, the appeal filed by the revenue is dismissed and the three appeals filed by the asssessee are allowed

ITA 1029/MUM/2020[2011-12]Status: DisposedITAT Mumbai27 Dec 2022AY 2011-12

Bench: Shri Baskaran Br & Shri Pavan Kumar Gadaleita Nos. 1029, 1030 & 1031/Mum/2020 (A.Ys: 2011-12, 2012-13 & 2010-11) Avinash Narayan Sutar Vs. Ito – 28(1)(2) Plot No. 582, Laxmi Tower No.6, Vashi Niwas, Sector -1, Station, Navi Mumbai- Shiravana, Nerul, Navi 400703. Mumbai – 400706. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Arsps9036R Appellant .. Respondent Ito – 28(1)(2) Vs. Avinash Narayan Sutar Tower No.6, Vashi Plot No. 582, Laxmi Station, Navi Mumbai- Niwas, Sector -1, 400703. Shiravana, Nerul, Navi Mumbai – 400706. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Arsps9036R Appellant .. Respondent

For Appellant: Shri Hariom Tulsiyan.ARFor Respondent: Shri Manoj Sinha.DR
Section 143(2)Section 147Section 148Section 250

explained that the assessee has filed the return of income disclosing the total income of Rs. 2,58,670/-, whereas the AO has estimated the income @ 35% of the cash deposits which worked out to Rs. 52,67,580/-, the assessee in the course of hearing proceedings has submitted ... granted the partial relief. Whereas, the asssessee has maintained the books of accounts and filed the return of income. The Asssessing officer has estimated the income based on the cash deposits and has not rejected the Audited books of accounts and the asssessee has complied with the directions

DCIT Cen Cir 2(2), Mumbai vs. Infinity Industries P. Ltd, Mumbai

In the result, appeal of the assessee for A

ITA 2933/MUM/2015[2010-11]Status: DisposedITAT Mumbai23 Dec 2022AY 2010-11
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales

DCIT Cen Cir 2(2), Mumbai vs. Infinity Industries P. Ltd, Mumbai

In the result, appeal of the assessee for A

ITA 2932/MUM/2015[2009-10]Status: DisposedITAT Mumbai23 Dec 2022AY 2009-10
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales

DCIT Cen Cir 2(2), Mumbai vs. Infinity Industries P. Ltd, Mumbai

In the result, appeal of the assessee for A

ITA 2931/MUM/2015[2008-09]Status: DisposedITAT Mumbai23 Dec 2022AY 2008-09
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales

DCIT Cen Cir 2(2), Mumbai vs. Infinity Industries P. Ltd, Mumbai

In the result, appeal of the assessee for A

ITA 2930/MUM/2015[2007-08]Status: DisposedITAT Mumbai23 Dec 2022AY 2007-08
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales

DCIT Cen Cir 2(2), Mumbai vs. Infinity Industries Ltd, Mumbai

In the result, appeal of the assessee for A

ITA 2929/MUM/2015[2006-07]Status: DisposedITAT Mumbai23 Dec 2022AY 2006-07
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales

DCIT Cen Cir 2(2), Mumbai vs. Infinity Industries Ltd, Mumbai

In the result, appeal of the assessee for A

ITA 2928/MUM/2015[2005-06]Status: DisposedITAT Mumbai23 Dec 2022AY 2005-06
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales

DCIT Cen Cir 2(2), Mumbai vs. Infinity Industries Ltd, Mumbai

In the result, appeal of the assessee for A

ITA 2927/MUM/2015[2004-05]Status: DisposedITAT Mumbai23 Dec 2022AY 2004-05
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales

Infinity Industries P.Ltd, Mumbai vs. DCIT CC 2(2), Mumbai

In the result, appeal of the assessee for A

ITA 2399/MUM/2015[2009-10]Status: DisposedITAT Mumbai23 Dec 2022AY 2009-10
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales

Infinity Industries P.Ltd, Mumbai vs. DCIT CC 2(2), Mumbai

In the result, appeal of the assessee for A

ITA 2398/MUM/2015[2008-09]Status: DisposedITAT Mumbai23 Dec 2022AY 2008-09
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales

Infinity Industries P.Ltd, Mumbai vs. DCIT CC 2(2), Mumbai

In the result, appeal of the assessee for A

ITA 2397/MUM/2015[2007-08]Status: DisposedITAT Mumbai23 Dec 2022AY 2007-08
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales

Infinity Industries P.Ltd, Mumbai vs. DCIT CC 2(2), Mumbai

In the result, appeal of the assessee for A

ITA 2396/MUM/2015[2011-12]Status: DisposedITAT Mumbai23 Dec 2022AY 2011-12
Section 144Section 145(3)

assessee and in the absence of adequate details and information and non production of the required books of accounts the inference of estimation of income is drawn on the following reasons: i) No books of accounts produced ii) No stock records of inward and outward movement produced. iii) No sales