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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

The ACIT, Central Circle-1(1), Ahmedabad vs. Uma Shakti Corporation Residency Project, Ahmedabad

In the result, the appeal IT(SS)A 197/Ahd/2013 & 198/Ahd/2013

ITA 1371/AHD/2013[2010-11]Status: DisposedITAT Ahmedabad08 Nov 2021AY 2010-11
For Appellant: Shri Mahesh S. Chhajed, A.RFor Respondent: Shri O.P. Sharma, CIT-D.R
Section 132Section 143(3)

money receipts in respect of the case was found and, therefore, there was no requirement of any extrapolation as well as estimation of income unlike other cases, is concerned, it makes no difference at all as to whether the entire unaccounted receipts is determined by way of extrapolation based

Deputy Commissioner of Income Tax, Circle- 2(1)(1), Bangalore vs. M/S. Creation Shelters Private Limited, Bangalore

In the result, the appeal filed by revenue is dismissed

ITA 2212/BANG/2019[2015-16]Status: DisposedITAT Bangalore03 Nov 2021AY 2015-16

Bench: Shri Chandra Poojari & Smt Beena Pillai

For Appellant: Shri Deepesh Wagle, CAFor Respondent: Shri Sankarganesh, JCIT (DR)
Section 143(2)Section 143(3)Section 144Section 145(3)Section 37(1)Section 40A(2)(b)

been rejected by the income-tax authorities and the assessment had not been framed U/s 144, AO could not resort to an estimation of income. Further submitted that the books of account of the appellant is duly audited by a chartered accountant and does not contain any qualification regarding ... assessing officer is silent on these aspects. such circumstances, we are of the view that the primary condition for resorting to an estimation of income by the AO is not sustainable.” Nothing has been brought before us to establish the expenses to be bogus. Further, the expenses forms part

Smt P Vani Murthy, Hyderabad vs. Dy CIT-CC-4(1), Mumbai

In the result, this appeal by the assessee is allowed for statistical purpose

ITA 1545/MUM/2020[2008-09]Status: DisposedITAT Mumbai02 Nov 2021AY 2008-09

Bench: Shri Shamim Yahya

Section 139Section 143(3)

facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming the AO's action of estimating total income of appellant at Rs. 1,76,400/- despite the fact that appellant has declared returned income at Rs. 1,37,300/- in return of income filed ... Upon assessee’s appeal Ld.CIT(A) affirmed the action of the AO, he has held as under:- “All the Grounds relate to the estimation of income for the relevant year to be of Rs, 1,76,400/- on the basis of the income returned by the assessee in the immediate

DCIT, Circler-2, Noida vs. Kmb-Era Joint Ventrue, Noida

In the result, appeal of the Revenue is dismissed

ITA 2970/DEL/2018[2012-13]Status: DisposedITAT Delhi02 Nov 2021AY 2012-13

Bench: Sh. Anil Chaturvedi & Ms Suchitra Kamble(Through Video Conferencing) Dcit Vs. Kmb-Era Joint Venture Circle – 2 C-56/41, Sector – 62, Noida Noida Pan : Aaaak 7362 C (Appellant) (Respondent) Assessee By Ms. Sunita Singh, Cit-D.R. Revenue By Ms. Chinu Bhasin, C.A. Date Of Hearing: 12.10.2021 Date Of Pronouncement: 02.11.2021 Order Per Anil Chaturvedi, Am:

Section 143(3)Section 144

opportunity to defend its position and without following the procedures prescribed in law the Ld. A.O. rejected the books of accounts and estimated the income of the appellant in a unjustified manner. 7. Per cotra, the Ld. A.O. has admitted that thebooks of accounts were audited and the audit reports ... circumstances of the case the Ld. A.O. proceeded to reject the books of accounts and the audited accounts of the appellant and to estimate the income of the appellants at 1/5th of the gross receipts of the appellant. 8. The rival submissions are considered. 9. The Ld. A.O. has failed

General Reinsurance Ag, Mumbai vs. Asstt. CIT (International Taxation)-Range-2(3)(2), Mumbai

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

ITA 1164/MUM/2021[2017-18]Status: DisposedITAT Mumbai29 Oct 2021AY 2017-18

Bench: Shri Shamim Yahya, Am & Shri Amarjit Singh, Jm (Hearing Through Video Conferencing Mode) आयकर अपील सं/ I.T.A. No.1164/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2017-18) General Reinsurance Ag बिधम/ Acit(International Taxation)- C/O General Reinsurance Range 2(3)(2) Vs. Room No.1711, 17Th Floor, Air Ag India Branch, Unit 107, 108, 109, Meadows Sahara India Building, Nariman Point, Plaza Complex, Mathuradas Mumbai-400021. Vasanji Road, Jb Nagar, Andheri East, Mumbai- 400028. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaecg5195K (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Assessee By: Shri P. J. Pardiwala/ Madhur Aggarwal Revenue By: Shri S. S. Iyengar (Sr. Dr) सुनवाई की तारीख / Date Of Hearing: 09/08/2021 घोषणा की तारीख /Date Of Pronouncement: 29/10/2021 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 21.04.2021 Passed By Cit(Drp-1), Mumbai On The Basis Of Direction Issued By Dispute Resolution Panel U/S 144C (13) Dated 17.03.2021. The Assessee Has Raised The Following Grounds: - 2. “1. The Learned Ao & The Learned Dri', Grossly Erred In Not Following The Decision Of The Honourable Income-Tax Appellate A.Y.2017-18 Tribunal, Mumbai In Appellants Own Case For Ay 2015-16 (Ita No. 7433/Mum/2018) Which Was Decided On Identical Facts.

For Appellant: Shri P. J. Pardiwala/ MadhurFor Respondent: Shri S. S. Iyengar (Sr. DR)
Section 115BSection 144CSection 9(1)(i)

India-Germany Tax Treaty. After having held such receipts to be taxable in India, the Assessing Officer proceeded to estimate the income attributable to such receipts, which could be brought to tax in India. For this purpose, the Assessing Officer observed that the assessee did not furnish any India specific ... decision of the income-tax authorities in treating the impugned re-insurance premiums as taxable in India, but it has also challenged the estimation of income attributable to the operations in India as well as the rate of tax applied to compute the final tax liability. 6. Before

Clonto Lobo, Mumbai vs. ITO Range 30 (1)(2), Mumbai

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

ITA 6738/MUM/2019[2010-11]Status: DisposedITAT Mumbai26 Oct 2021AY 2010-11

Bench: Shri S. Rifaur Rahman () & Shri Ravish Sood () Assessment Year: 2010-11 Clonto Lobo, Income Tax Officer, Range 21, Shreepal Services Industrial Vs. 30(1)(2), Estate, Pavanbaug, Chincoli, Malad, R. No. 505, C-13, 5Th Floor, West, Mumbai-400064. Pratyakshkar Bhavan, Bandra Kurla Complex, Bhandra East, Mumbai-400051. Pan No. Aabpl 6175 E Appellant Respondent Assessee By : Mr. Sandesh Desai, Ar Revenue By : Ms. Shreekala Pardeshi, Dr Date Of Hearing : 24/08/2021 Date Of Pronouncement : 26/10/2021

For Appellant: Mr. Sandesh Desai, ARFor Respondent: Ms. Shreekala Pardeshi, DR
Section 143(3)Section 271(1)(c)Section 274

Assessing Officer @ 18.86% of the alleged bogus purchases. Therefore, in essence, the addition made by the Assessing Officer is based on estimation of income and the Courts have upheld that the penalty cannot be levied on the estimated income. Therefore, the penalty levied by the AO is accordingly quashed

Deputy Commissioner of Income Tax, Circle-2(1), Raipur vs. Mahamaya Steel Industries Ltd, Raipur

In the result, appeal of the Revenue is dismissed

ITA 5/RPR/2020[2016-17]Status: DisposedITAT Raipur22 Oct 2021AY 2016-17

Bench: Shri Pradip Kumar Kedia & Shri N. K. Choudhryआयकर अपील सं./I.T.A. No. 5/Rpr/2020) ("नधा"रण वष" / Assessment Year : 2016-17)

For Appellant: Shri Veekaas S Sharma, A.R
Section 145(3)Section 14A

cases and in law, the CIT(A) is justified in deleting the addition of Rs.15,94,08,394/- made on the basis of estimation of income based on average yield across the business @ 89%?" 4. "Whether on the facts of the cases and in law, the CIT(A) is justified

State Bank of India - Corporate Centre, Mumbai vs. DCIT (TDS)-2(2), Mumbai

In the result, appeals are allowed as indicated above

ITA 1526/MUM/2019[2010-11]Status: DisposedITAT Mumbai12 Oct 2021AY 2010-11

Bench: Shri Saktijit Dey & Shri M. Balaganeshassessment Year: 2010-11 & Assessment Year: 2011-12 State Bank Of India Deputy Commissioner Of Corporate Centre, Income Tax (Tds)-2(2), 2Nd Floor, Office Administration K.G. Mittal Ayurvedic Hospital Department, State Bank Bhawan, Vs. Bldg, Charni Road (W), Madam Cama Road, Mumbai - 400002 Nariman Point, Mumbai - 400021 Pan: Aaacs8577K (Appellant) (Respondent) Assessee By : Shri Nitesh Joshi (Ar) Revenue By : Shri T.S. Khalsa (Dr) Date Of Hearing : 30/09/2021 Date Of Pronouncement: 12/10/2021

For Appellant: Shri Nitesh Joshi (AR)For Respondent: Shri T.S. Khalsa (DR)
Section 10(5)Section 200(3)Section 201(1)Section 201(3)

employer has properly discharged his duties under section 192, all that is to be seen is whether the employer has reasonably, or bonafide, estimated the income of the employees and deducted tax in respect of such estimated income. As long as the conduct of the employer in this exercise ... These decisions, therefore, do not come in the way of our present decision. Once we hold, as we do in this case, that estimation of income, in the hands of the employees under the head‟ income from salaries', by the employer was bonafide and reasonable, the very foundation of impugned

Sri. N N Chandrashekar, Madikeri vs. ITO, Madikeri

In the result, the appeals of the assessee are partly allowed

ITA 844/BANG/2016[2008-09]Status: DisposedITAT Bangalore12 Oct 2021AY 2008-09

Bench: Shri N.V. Vasudevan

For Appellant: Shri. Ravishankar S. V, AdvocateFor Respondent: Shri. Ganesh R. Ghale, Standing Counsel
Section 69

circumstances of the case and keeping in mind the business mode as explained by the assessee, I am of the view that the estimation of income @ 0.55% as income from the coffee commission business would meet the ends of justice in the facts and circumstances of the present case

Pattabi Reddy Barankabavi, Secunderabad vs. Income Tax Officer, Ward-15(1), Hyderabad

Appeal is dismissed

ITA 393/HYD/2020[2013-14]Status: DisposedITAT Hyderabad08 Oct 2021AY 2013-14

Bench: Shri S.S.Godara & Shri Laxmi Prasad Sahu

For Appellant: NoneFor Respondent: Shri Swaroop Mannava, DR
Section 143(3)Section 2

both the lower authorities’ action estimating income of Rs.17,82,947 @ 5% from wine business. The assessee’s grounds plead that such an estimation of income in retail sale on liquor does not exceed 2 to 4% in normal course as per various judicial pronouncements. The same is found

Unnikrishnan Balan, Secunderabad vs. Income Tax Officer, Ward-10(2), Hyderabad

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

ITA 1586/HYD/2019[2013-14]Status: DisposedITAT Hyderabad07 Oct 2021AY 2013-14

Bench: Smt. P. Madhavi Devi & Shri A. Mohan Alankamonya.Y.: 2013-14 Unnikrishnan Balan, Vs. Income Tax Officer, Secunderabad. Ward-10(2), Pan: Ahhpb 5166 E Hyderabad-500 004. (Appellant) (Respondent) Assessee By Shri P. Prasad Revenue By Shri Rohit Mujumdar, Dr Date Of Hearing: 18/08/2021 Date Of Pronouncement: 07/10/2021 Order

Section 143(1)Section 144Section 194CSection 244A

raised five grounds in his appeal and they are extracted herein below for reference: “1. The Ld. CIT(A) erred in confirming the estimation of income, on professional receipts @ 20% of the receipts. 2. The Ld. CIT(A) erred in confirming the duties and taxes payable as per balance sheet

V Seetharaman, Villupuram vs. ACIT, Villupuram Circle, Villupuram

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

ITA 229/CHNY/2019[2015-16]Status: DisposedITAT Chennai06 Oct 2021AY 2015-16

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकर अपील सं./Ita No.229/Chny/2019 िनधा"रण वष" /Assessment Year: 2015-16

For Appellant: Mr. S. Sridhar, AdvocateFor Respondent: Mr. AR.V. Sreenivasan, Addl. CIT
Section 143(3)Section 271Section 271BSection 273BSection 44Section 44A

Civil Contractor executed various projects and offered his income for taxation at 4% on estimate basis. The A.O has accepted the estimation of income made by the assessee. In the assessment order, the A.O only disallowed 5% of the expenses on the ground that non submission of bills and vouchers

Excel Reality N Infra Ltd., Mumbai vs. ACIT 9 (2)92), Mumbai

In the result, the assessee appeal is partly allowed and the revenue appeal is dismissed

ITA 8017/MUM/2019[2012-13]Status: DisposedITAT Mumbai30 Sept 2021AY 2012-13

Bench: Shri S Rifaur Rahman & Shri Pavan Kumar Gadale

For Appellant: Shri N.R. Agarwal. ARFor Respondent: Shri Vijay Kumar Menon. DR
Section 133(6)Section 143(1)Section 143(2)Section 143(3)Section 147Section 148Section 69C

filed an appeal before the Honble Tribunal. 4. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in estimation of income @12.5% on the genuine transactions of purchases which are wrongly treated as accommodation entries by the A.O. Further the income/profit estimated on the purchases

Pr Commissioner of Income vs. M/S Janson Investments

Appeal stands dismissed

ITA/471/2017HC Karnataka27 Sept 2021

Bench: S.SUJATHA,RAVI V HOSMANI

Section 143Section 158BSection 260Section 69C

reduced. 9. Therefore, in the entire scheme of arriving at the undisclosed income for the block period there is no scope for estimating the income. It should be on actuals. In other words, the assessing officer cannot estimate the undisclosed income. He has to compute the undisclosed income as provided ... under Section 158BB(1). If it is a case of estimation of income it falls outside the said provision. In Section 158BB the Parliament has consciously used - 11 - two words, one ‘computing’ and the other ‘assessment’. The word “computation” has not been defined in the Act. The meaning

Rameshwar Prasad Shringi, Gumanpura vs. Pr.CIT, Udaipur

In the result, the appeal of the assessee is allowed

ITA 10/JPR/2021[2016-17]Status: DisposedITAT Jaipur23 Sept 2021AY 2016-17
For Appellant: Sh. Mahendra Gargieya (Adv.) &For Respondent: Sh. B. K. Gupta (Pr. CIT)
Section 143(2)Section 143(3)Section 263

fallacious. ITA No. 10-JP-2021 Rameshwar Prasad Shringi vs. Pr. CIT, Udaipur Secondly, such argument may hold good in the matters of estimation of income particular from trading etc. in the cases where S.145(3) has been invoked where because of change in the facts, AO of the current

Asst. Commissioner of Income Tax, Central Circle-1(3), Hyderabad vs. Syed Zain Bilgram, Hyderabad

In the result, appeal of the Revenue is partly allowed for statistical purposes as indicated herein above

ITA 1905/HYD/2018[2009-10]Status: DisposedITAT Hyderabad17 Sept 2021AY 2009-10

Bench: Shri A. Mohan Alankamony & Shri S.S. Godaraa.Y. 2009-10 Asst. Commissioner Of Vs. Sri Syed Zain Bilgrami, Income Tax, 8-2-316/A/7, Plot Central Circle-1(3), No.137, Road No.4, Hyderabad. Banjara Hills, Hyderabad. Pan: Aacpz 6368 A (Appellant) (Respondent) Revenue By Smt. V. Rajitha, Dr Assessee By Sri Mohd. Afzal, Ar Date Of Hearing: 30/08/2021 Date Of Pronouncement: 17/09/2021 Order

Section 132Section 143(3)

raised seven grounds in its appeal however the cruxes of the issues are as follows: (i) The ld. CIT (A) has erred in estimating the income of the assessee at 8% of his gross turnover when the Ld. AO had estimated the same at 44.5% based on the return filed ... appeal, the Ld. CIT (A) after deliberating the issue at length and also after obtaining certain remand report came to a conclusion that estimation of income at 8% would suffice in the case of the assessee. 5. Before us, the Ld. AR vehemently argued stating that the entire addition

Jt. CIT (OSD), Circle-3(1)(1), Ahmedabad vs. M/S. Pradip Overseas Ltd., Ahmedabad

In the result, the appeal of the revenue is dismissed

ITA 790/AHD/2018[2013-14]Status: DisposedITAT Ahmedabad16 Sept 2021AY 2013-14
For Appellant: Shri Sakar Sharma, A.RFor Respondent: Shri O.P. Sharma, Sr. D.R
Section 143(2)Section 143(3)

income for giving accommodation entries or purchases / sales..................... 14. Considering the facts of the case and the decisions relied upon by appellant, the estimation of income in this case may be between what is shown in the return of income to 1.5% of turnover depending upon whether

Dy. Commissioner of Income Tax, Circle-3(1), Hyderabad vs. Saket Engineers Private Limited, Hyderabad

Appeal is allowed in above terms

ITA 2101/HYD/2018[2014-15]Status: DisposedITAT Hyderabad15 Sept 2021AY 2014-15

Bench: Shri S.S. Godara & Shri L.P. Sahuthe Dy. Commissioner Of Income Tax, Circle – 3(1), Hyderabad. ....Appellant.

For Appellant: Smt. Amisha S. Gupt - DRFor Respondent: Shri P. Jitendra Kumar, AR
Section 143(3)Section 154Section 192

deleting the order based on another issue which itself is infructuous. 4. The Ld.CIT(A) ought to have appreciated the fact that the estimation of income by rejection of book by the AO is reasonable under the circumstances especially when the assessee failed to produce bills and vouchers before ... civil contracts. Assessment in this case was completed u/s. 143(3) on 27.12.2016 on an income of Rs.20,62,35,630j- (by estimating the income @15% of gross sales) as against the returned income of Rs.l,27,46,020/-. A demand of Rs.9,50, 19,600j- was raised, which

Income Tax Officer 5 (1), Indore vs. M/S Satyamitra Infrastructure Pvt. Ltd, Indore

In the result, the departmental appeal i

ITA 451/IND/2017[2012-13]Status: DisposedITAT Indore07 Sept 2021AY 2012-13

Bench: Shri Rajpal Yadav, Vice- & Shri Manish Boradvirtual Hearing Assessment Year:2012-13

Section 143(3)Section 145Section 68

account of unexplained cash credits, Rs.2,84,555/- on account of disallowance of loss as claimed and Rs.61,84,343/- on account of estimation of income under section 145 of the Act. Grounds of appeal raised by the Revenue read as under: 1.Whether on the facts and in the circumstances ... controvert the findings of the ld. CIT(A) by bringing any contrary material on record. Therefore, the Assessing Officer was not justified in estimating the income of Rs. 61,84,343/- at 8% on the amount of total cost of project of Rs. 7,73,04,298/- even when

The Deputy Commissioner of Income Tax, Central Circle- 1, Mangaluru vs. Smt. Shabana Sharief, Mangalore

In the result, the appeal of the revenue is dismissed

ITA 2458/BANG/2019[2013-14]Status: DisposedITAT Bangalore03 Sept 2021AY 2013-14

Bench: Shri N.V. Vasudevan & Shri Chandra Poojariassessment Year : 2013-14

For Appellant: Shri Elamurugu, G., Jt. CIT(DR)(ITAT), BengaluruFor Respondent: Shri Srinivas Kamath, CA
Section 132Section 133ASection 139(1)Section 143(1)Section 153ASection 292CSection 44ASection 69B

from sales of arecanut which could be termed as turnover of the assessee, therefore he Page 3 of 6 directed the AO to estimate the income @ 5% of Rs.2,14,90,104 being sales turnover of the assessee. Against this, revenue is in appeal before us. 5. We have heard ... rebut the presumption. In the present case, since the assessee has not rebutted the presumption, the CIT(A) has given a direction to estimate the income on the turnover @ 5% as income of the assessee. In our opinion, in view of the inadequate material to suggest that the entire turnover