“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

DCIT, Circle-1, Noida vs. Induni-Era Joint Venture, Noida

In the result, the appeal of the Revenue in ITA No

ITA 3482/DEL/2018[2012-13]Status: DisposedITAT Delhi18 Jul 2022AY 2012-13

Bench: Shri N.K. Billaiya & Shri N.K. Choudhry

For Appellant: NoneFor Respondent: Shri Anuj Garg, Sr. DR

Noida. 16. With this factual background, the ld. CIT(A) was convinced that the Assessing Officer grossly erred in estimating the income of the assessee. 17. Further, as mentioned elsewhere, the Assessing Officer has not pointed out any error or infirmity in the books of account maintained by the assessee ... without rejecting the books of account, we do not find any merit in the estimation of income by the Assessing Officer. 18. Considering the totality of the facts, we decline to interfere with the findings of the ld. CIT(A). 19. In the result, the appeal of the Revenue

Principal Commissioner of Income Tax 9 Kolkata vs. Binod Kumar Tekriwal

In the result, the appeals filed by the revenue are allowed and the

ITAT/32/2022HC Calcutta15 Jul 2022

Bench: : The Hon’Ble Justice T.S. Sivagnanam & The Hon’Ble Justice Bivas Pattanayak Date : 15Th July, 2022. Appearance :- Mr. Soumen Bhattacharjee, Adv. ….For Appellant

Section 260ASection 263Section 69C

ignoring the fact that the Assessing Officer should have made further investigation to reach a logical conclusion rather than making a baseless estimation of income, which fundamentally satisfies the requirement of an order being erroneous in nature? Since the facts are identical, we take up the facts for consideration

Kasireddy Mariyya, Tadepalligudem vs. The Income Tax Officer, Ward-1, Tadepalligudem

In the result, appeal of the assessee is dismissed

ITA 107/VIZ/2020[2011-12]Status: DisposedITAT Visakhapatnam14 Jul 2022AY 2011-12

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकर अपील सं./I.T.A.No.107/Viz/2020 (ननधधारण वर्ा / Assessment Year : 2011-12) Sri Kasireddy Mariyya Vs. Income Tax Officer 6-11, Padamara Vipparru Ward -1 Tadepalligudem Mandal Tadepalligudem West Godavari [Pan : Bsfpk9308D] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent)

For Appellant: Shri G.V.N.Hari, ARFor Respondent: Shri S.P.G.Mudaliar, DR

notices were served on the assessee. The assessee failed to produce books of accounts, bills and vouchers. The Assessing Officer (AO) resorted to estimation of income @5% of purchases net off other deductions and estimated the income at Rs.4,98,868/-. An amount of Rs.2,29,903/- was offered ... confirmation of addition towards unsubstantiated capital and unsecured loans. The Ld. Counsel for the assessee has submitted that without any basis, the AO estimated the income @5% on purchases. The AO failed to appreciate the claim of the assessee about the capital investment of Rs.6,20,000/- as loans from

DCIT, Central Circle-3, Jaipur vs. M/S Gunesh India Pvt.Ltd.Jaipur, Jaipur

In the result, the appeal of the assessee is partly allowed and the appeal of the revenue is also partly allowed

ITA 38/JPR/2021[ 2012-13]Status: DisposedITAT Jaipur14 Jul 2022

For Appellant: Shri Manish Agarwal (C.A.)For Respondent: Shri Sanjay Dhariwal (CIT) a

Section 143(1)Section 145(3)Section 147Section 148

rate of 4% on entire turnover. Appellant prays that payment to masked sub-contractors is even less than 10% of declared turnover, therefore, estimation of income, if any, can be done with respect to the payment made to sub-contractor of Rs. 3,40,11,858/- and not on entire ... this case and reject the trading result declared by the appellant. After rejection of the books of accounts, a fair and honest estimation of income is required to be deduced. The Hon'ble Rajasthan High Court in the case of CIT Vs. Amrapali Jewels

M/S Ganesh (India)Pvt.Ltd, Jaipur vs. ACIT CC-3, Jaipur

In the result, the appeal of the assessee is partly allowed and the appeal of the revenue is also partly allowed

ITA 21/JPR/2021[2012-13]Status: DisposedITAT Jaipur14 Jul 2022AY 2012-13

For Appellant: Shri Manish Agarwal (C.A.)For Respondent: Shri Sanjay Dhariwal (CIT) a

Section 143(1)Section 145(3)Section 147Section 148

Satya Prakash, New Delhi vs. ITO Ward - 55(1), New Delhi

In the result, all the four appeals of the assessee are allowed for statistical purposes

ITA 8116/DEL/2019[2009-10]Status: DisposedITAT Delhi14 Jul 2022AY 2009-10

Bench: Shri Challa Nagendra Prasad & Shri Pradip Kumar Kedia

For Appellant: Shri Dinesh Mohan, AdvFor Respondent: Shri Abhishek Kumar, Sr.D.R

Section 271(1)(b)Section 271F

made on estimated basis towards unexplained deposits in bank account. (ii) As per ITA No.8114/Del/2019 captioned above, the assessee has challenged estimation of income at 15% of the cash deposits of Rs.17,12,090/- instead of 8% thereon. (iii) As per ITA No.8115/Del/2019, the assessee has challenged imposition of penalty

Satya Prakash, New Delhi vs. ITO Ward - 55(1), New Delhi

In the result, all the four appeals of the assessee are allowed for statistical purposes

ITA 8115/DEL/2019[2009-10]Status: DisposedITAT Delhi14 Jul 2022AY 2009-10

Bench: Shri Challa Nagendra Prasad & Shri Pradip Kumar Kedia

For Appellant: Shri Dinesh Mohan, AdvFor Respondent: Shri Abhishek Kumar, Sr.D.R

Section 271(1)(b)Section 271F

Satya Prakash, Delhi vs. ITO Ward-57(5), New Delhi

In the result, all the four appeals of the assessee are allowed for statistical purposes

ITA 8114/DEL/2019[2009-10]Status: DisposedITAT Delhi14 Jul 2022AY 2009-10

Bench: Shri Challa Nagendra Prasad & Shri Pradip Kumar Kedia

For Appellant: Shri Dinesh Mohan, AdvFor Respondent: Shri Abhishek Kumar, Sr.D.R

Section 271(1)(b)Section 271F

Satya Prakash, New Delhi vs. ITO Ward - 55(1), New Delhi

In the result, all the four appeals of the assessee are allowed for statistical purposes

ITA 8113/DEL/2019[2009-10]Status: DisposedITAT Delhi14 Jul 2022AY 2009-10

Bench: Shri Challa Nagendra Prasad & Shri Pradip Kumar Kedia

For Appellant: Shri Dinesh Mohan, AdvFor Respondent: Shri Abhishek Kumar, Sr.D.R

Section 271(1)(b)Section 271F

Kalla Viswanadha Babu, Visakhapatnam vs. The Income Tax Officer, Ward-1(2), Visakhapatnam

In the result appeal of the assessee is partly allowed

ITA 249/VIZ/2020[2011-12]Status: DisposedITAT Visakhapatnam08 Jul 2022AY 2011-12

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकर अऩीऱ सं./ I.T.A. No.249/Viz/2020 (ननधधारण वषा / Assessment Year :2011-12) Kalla Viswanatha Babu, Vs. Income Tax Officer, Visakhapatnam. Ward-4(2), Pan: Akvpk 9287 A Visakhapatnam. (अऩीऱधथी/ Appellant) (प्रत्यथी/ Respondent) अऩीऱधथी की ओर से/ Appellant By : Sri Gvn Hari, Advocate प्रत्यधथी की ओर से / Respondent By : Sri Spg Mudaliar, Sr. Ar सुनवधई की तधरीख / Date Of Hearing : 13/06/2022 घोषणध की तधरीख/Date Of : 08/07/2022 Pronouncement O R D E R Per S. Balakrishnan:

For Appellant: Sri GVN Hari, AdvocateFor Respondent: Sri SPG Mudaliar, Sr. AR

Section 143(3)

assessee went on appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) on the issue of estimation of income, directed the Ld. AO to recomputed the income @ 10% of the purchase price of the stock put to sale, net of all the deduction. On the issue ... other grounds may be urged at the time of hearing.” 7. The Ld. AR argued that the Ld. CIT(A) has estimated the income @ 10% as against the net profit of 5%. The Ld. AR relied on the following case laws: 1. Judgment of the Hon’ble Supreme Court

Ravi Metallics Limited, Rourkela vs. Pr.CIT, Sambalpur

In the result, appeal of the assessee is allowed

ITA 34/CTK/2021[2014-15]Status: DisposedITAT Cuttack05 Jul 2022AY 2014-15

Bench: Shri George Mathan & Shri Arun Khodpiaravi Metallics Limited, I/10, Civil Township, Rourkela-769004 Pan No.Adqps 4031 G ………………Assessee Versus Pr.Cit, Sambalpur ………………..Revenue Shri P.R.Mohanty, Ar For The Assessee Shri M.K.Gautam, Cit-Dr For The Revenue Date Of Hearing : 30/05/2022 Date Of Pronouncement : 30/05/2022 आदेश / O R D E R Per Bench : This Is An Appeal Filed By The Assessee Against The Order Of The Ld. Pr.Cit, Sambalpur, Passed U/S.263 Of The Act In Case No.Pcit/Sbp/263/26/2018-19, Dated 29.03.2019 For The Assessment Year 2014-2015. Heard On The Question Of Condonation Of Delay 2. On Perusal Of The Record, We Found That The Appeal Of The Assessee Is Barred By 686 Days. In This Regard, Ld. Ar Filed An Application Along With Affidavit For Condonation Of Delay, Wherein It Has Been Submitted That The Delay Occurred In Filing The Present Appeal Is Neither Intentional Nor Deliberate But Due To Unfortunate & Unavoidable Circumstances Beyond

Section 253Section 263

discounting charges paid”. Though the AO had been directed to examine the genuineness of the expenses claimed by the assessee, however, the AO estimated the income from transportation business @5% of the total transportation receipt on account of failure for verification of all the vouchers and bills. 12. In respect ... further submitted that the addition itself leads to increase in the net profit rates. It was also 18 submitted that the estimation of income from transportation business @5% of the total transportation receipt done by the AO showed that there was doubt on the genuineness of the expenses claimed

Pritesh Jitendra Mehta, Mumbai vs. Income Tax Officer WD, 27(2) (5), Navi Mumbai

In the result, the appeal of the assessee is allowed

ITA 295/MUM/2022[2009-10`]Status: DisposedITAT Mumbai05 Jul 2022

For Appellant: Jitendra SinghFor Respondent: Shri Aditya Rai (Sr. AR)

Section 271(1)Section 271(1)(c)Section 69C

granted relief to the assessee to the extent of Rs.3,58,237/-. It is noted that the Ld. CIT(A) has resorted to estimating the income i.e. 12.5% being profit embedded from the bogus purchases of Rs.17,93,277/-. So the Ld. CIT(A) has partially sustained the addition made ... basis of estimation of income. We note that this Tribunal in such cases (wherein additions have been made on estimation basis) has held that the penalty u/s 271(1)(c) of the Act may not be imposed [(refer Chempure Vs. ITO (2010) 40 SOT 164) (Mum)], wherein a co-ordinate

Kandla Steel Private Ltd., Gandhidham-Kutch vs. Dy. Commr. of Income Tax, Circle, Gandhidham

In the result, the appeal of the assessee is dismissed

ITA 222/RJT/2017[2012-13]Status: HeardITAT Rajkot01 Jul 2022AY 2012-13

Bench: Arriving At Conclusion Against The Appellant, Hence, The Order Passed Is Against The Principles Of Natural Justice & Jurisprudence.

For Appellant: NoneFor Respondent: Shri Sanjeev Jain, CIT-D.R

Section 143(3)Section 145(3)Section 234BSection 234DSection 244ASection 271(1)(c)

crores which is around 6.4% of the total gross turnover 851.92 crores. It is apparent that gross distortion has crept in estimation of income due to unreasonable adoption of GP ratio of 7% over the trading turnover of 704.61crores. In A.Y. 2010-11 have taken the NP profit rate

Unnam Mallikharjuna Rao, Hyderabad vs. ITO Ward-9(4), Hyderabad

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

ITA 187/HYD/2022[2015-16]Status: DisposedITAT Hyderabad30 Jun 2022AY 2015-16

Bench: Shri R. K. Pandaassessment Year: 2015-16

For Appellant: Sri M. Chandramouleswara RaoFor Respondent: Sri R.S.Arvindhakshan,DR

Section 143(3)

Assessment 2015-16 which was processed under section 143(3) of the Income tax Act and the assessment was completed by estimating the income at 8% of the gross amount of deposits into bank accounts by the Income Tax Officer, Ward-9(4), Hyderabad ... facts and in the circumstances of the case and in law, the learned CIT (A) has erred in sustaining the estimation of income and the assessment order even in the absence of such mandate provided in “Limited Scrutiny” and as such the assessment base on estimation of income is without

M/S. Alag Securities Pvt Ltd, Mumbai vs. The CIT (A) -22, Mumbai

In the result ground number 5 and 6 of the appeal are dismissed

ITA 68/MUM/2022[2004-05]Status: DisposedITAT Mumbai30 Jun 2022AY 2004-05

Bench: Shri Prashant Maharishi, Am & Ms. Kavitha Rajagopal, Jm The Cit(A)-22 Room No. 513, M/S Alag Securities Pvt. Ltd. 5T Floor, Earnest House, Block H, Shri Sadashiv Chs Ltd., 6Th Road, Santacruz (East), Nariman Point, Vs. Mumbai 400 055 Mumbai-400 021

For Appellant: Shri Mukesh Choksi, ARFor Respondent: Shri Himanshu Sharma, DR

Section 143Section 153A

Officer and 6. the learned CIT (A) has erred in law and in facts in M/s Alag Securities Pvt. Ltd; A.Y. 04-05 estimating the income on gross receipts without reducing the transfer entries amount in bank account on which no income is earned. It is a transfer ... which beneficiary and how much cash is received against that and what is the comparative commission being charged, it is matter of an estimation of income in the hands of the assessee which is best left to the learned assessing officer. 025. There are no similar transactions available/produced before

Ghanshyam Vashishta, Surat vs. ACIT CC-1(3), Mumbai

In the result, all the appeals filed by the different assessees are allowed in terms as indicated above

ITA 341/MUM/2022[2015-16]Status: DisposedITAT Mumbai24 Jun 2022AY 2015-16

Bench: Shri Amit Shukla, Jm & Shri Amarjit Singh, Am

Section 143(3)

entities under consideration were being managed and controlled by the assessee group and therefore lower authorities were quite justified in estimating commission income earned by the assessee group from all these benami concerns, 12. Accordingly, Ground Nos. 1,2,5,6,7 & 8 of the assessee's appeal stands dismissed ... favour Revenue. The ten grounds of appeal were dismissed as the Ld. CIT(A) was convinced with the comparables taken prior to estimation of Income on the accommodation entries availed by the assessee. The Id. CIT(A) also dwelled into the evidences detected as a result of the action

Shri Kailash Sukhlal Mandal, Ahmedabad vs. The Income Tax Officer, Ward-4(2)(2), Ahmedabad

Appeal of the assessee is allowed in above terms

ITA 854/AHD/2019[2010-11]Status: DisposedITAT Ahmedabad22 Jun 2022AY 2010-11

For Appellant: Shri S. N. Divatia, A.RFor Respondent: Shri Alpesh Parmar, Sr. D.R

Section 139(1)Section 147Section 250Section 250(6)Section 44A

Shri Kailash Sukhlal Mandal vs. ITO 4. None appeared on behalf of the assessee despite repeated notices sent. The A.O. accordingly estimated the income from the contractual receipt of the assessee @ 20%, resulting in addition of Rs. 10,93,099/- to the income of the assessee under the head Income ... however was not convinced with the explanation of the assessee and upheld the estimation of income from the contractual receipts @20%, holding at page 6 of his order as under: “It is seen that the turn over for A.Y. 2008-09 is less than Rs.40 lacs. However, returns

Jeni Ahay Shah, Mumbai vs. ITO 27(1) (C), Vashi

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

ITA 1930/MUM/2021[2011-12]Status: DisposedITAT Mumbai16 Jun 2022AY 2011-12

Bench: Shri M Balaganesh & Shri Pavan Kumar Gadalejeni Abhay Shah Vs. Ito – 27(1)(5) 902, A Wing, Bldg Vashi Rly Station No.88, R.S. Money, Navi Mumabi – Supermarket, Vrushali 400701. Apartments, Tilak Nagar, Mumbai – 400089. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Axvps3431M Appellant .. Respondent Appellant By : None Respondent By : Shri S.N.Kabra.Sr.Dr Date Of Hearing 01.06.2022 Date Of Pronouncement 06.06.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Assessee Has Filed The Appeal Against The Order Of Cit(A)- National Faceless Appeal Centre (Nfac) Delhi Passed U/S 271(1)(C) & 250 Of The Income Tax Act, 1961. The Assessee Has Raised The Following Grounds Of Appeal. Jeni Abhay Shah, Mumbai 1. The Ld. Ao Erred On Facts & In Law In Levying Penalty U/S 271(1)(C) On Adhoc & On Unverified Presumptive Addition Of Alleged Bogus Purchases.

For Appellant: NoneFor Respondent: Shri S.N.kabra.Sr.DR

Section 133(6)Section 143Section 143(3)Section 148Section 271(1)(c)

assessment order under section 143 r.w.s 147 of the Act. We find the A.O has made adhoc disallowance of bogus purchases on estimation of income@12.5% and has accepted the sales in the books of accounts. Whereas the CIT(A) has restricted the disallowance@6%. We are of the opinion

M/S Goodwil Traders, Srinagar vs. Income Tax Officer, Srinagar

In the result, these three appeals filed by the assessee are allowed

ITA 30/ASR/2017[2013-14]Status: DisposedITAT Amritsar13 Jun 2022AY 2013-14

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

For Appellant: Sh. P. N. Arora, AdvFor Respondent: Sh. S. M. Surendranath, Sr. DR &

Section 145(3)

Appeals)-1, Ludhiana, in respect of the Assessment Years 2013-14, 2014-15 and 2015-16, Wherein the assessee has challenged the estimation of income by applying gross profit by invoking provisions of section 145(3) of the Income Tax Act. ITA Nos.326&327/ASR/2019 Goodwill Traders v. ITO 2. Since

The Jt.CIT, (OSD) Central Circle-1, Vadodara vs. M/S. Narayan Land Estate, Bharuch

ITA 704/AHD/2019[2015-16]Status: DisposedITAT Ahmedabad10 Jun 2022AY 2015-16

Bench: Shri Dr. Arjun Lal Saini & Ms. Madhumita Royi.T(Ss).A. Nos. 182,184,185&187/Ahd/2019 (Assessment Years: 2009-10, 2011-12, 2012-13 & 2014-15) Jcit(Osd) Vs. M/S. Narayan Land Estate Central Circle-1, “Narayan Chambers” 607, 6Th Floor, Aaykar Bhavan, B/H Indian Petrol Pump, Race Course Circle, Station Road-Bharuch, Vadodara-390007 Gujarat-392001 [Pan No. Aacfn0406B] (Appellant) .. (Respondent)

For Appellant: Shri A.P. Singh, CIT DR & Shri V. KFor Respondent: Shri Mukund Bakshi, C.A

Section 132Section 133ASection 139(1)Section 142(1)Section 143(2)Section 143(3)Section 147Section 153C

construction projects. The Ld. Principal CIT Central, Surat also objected to the estimation of income @ 15% of the undisclosed on-money receipts and further reported understatement of income for the different construction projects/land. Considering the report under Section 245D(2B) of the Ld. PCIT Central Surat dated 08.03.2017, seized/impounded documents