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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

Deputy Commissioner of Income Tax, Circle-5(2)(1), Bangalore vs. M/S. Vijay Gems & Jewellers, Bangalore

In the result, both the appeals of assessee and revenue are treated as allowed for statistical purposes

ITA 1393/BANG/2017[2012-13]Status: DisposedITAT Bangalore28 Apr 2020AY 2012-13

Bench: Shri N.V. Vasudevan & Shri B R Baskaran

For Appellant: Shri Rohit G., CAFor Respondent: Shri Pradeep Kumar, CIT(DR)(ITAT), Bengaluru
Section 132Section 143(3)Section 153A

Gross profit level and allowed deduction of expenses. 6. In the appeal filed by the assessee, the rejection of books of accounts and estimation of income are being contested. In the appeal of the revenue, the relief granted by Ld CIT(A) is being contested. The first issue relates ... view, the AO was justified in rejecting the book results for AY 2012-13 also. 11. Next issue relates to the estimation of income of the assessee for both the years under consideration. We have noticed that the AO has estimated the net income of the assessee

M/S Vijay Gems & Jewllery, Bangalore vs. Assistant Commissioner of Income Tax 5(2)(1), Bangalore

In the result, both the appeals of assessee and revenue are treated as allowed for statistical purposes

ITA 1336/BANG/2017[2013-14]Status: DisposedITAT Bangalore28 Apr 2020AY 2013-14

Bench: Shri N.V. Vasudevan & Shri B R Baskaran

For Appellant: Shri Rohit G., CAFor Respondent: Shri Pradeep Kumar, CIT(DR)(ITAT), Bengaluru
Section 132Section 143(3)Section 153A

Gross profit level and allowed deduction of expenses. 6. In the appeal filed by the assessee, the rejection of books of accounts and estimation of income are being contested. In the appeal of the revenue, the relief granted by Ld CIT(A) is being contested. The first issue relates ... view, the AO was justified in rejecting the book results for AY 2012-13 also. 11. Next issue relates to the estimation of income of the assessee for both the years under consideration. We have noticed that the AO has estimated the net income of the assessee

Mukesh Mittal, Rourkela vs. ITO, Ward-2, Rourkela

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

ITA 57/CTK/2020[2013-14]Status: DisposedITAT Cuttack16 Mar 2020AY 2013-14

Bench: Shri Chandra Mohan Gargआयकर अऩीऱ सं./Ita No.57/Ctk/2020 (नििाारण वषा / Assessment Year :2013-2014) Mukesh Mittal, Vs. Ito Ward-2, Rourkela Prop: Sri Syam Corporation, Near Saraswati School, Bisra Dahar Road, Rourkela-769012 स्थायी ऱेखा सं./ जीआइआर सं./ Pan/Gir No. : Acmpm 7256 J (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) .. यनधागररती की ओर से /Assessee By : Shri P.R.Mohanty, Advocate राजस्व की ओर से /Revenue By : Shri Subhendu Dutta, Dr सुनवाई की तारीख / Date Of Hearing : 05/03/2020 घोषणा की तारीख/Date Of Pronouncement 16/03/2020 आदेश / O R D E R This Appeal Has Been Filed By The Assessee Against The Order Of Commissioner Of Income Tax (Appeals), Sambalpur, Dated 15.11.2019 For The Assessment Year 2013-2014 On The Following Grounds Of Appeal :- 1. For That, The Order Of The Forum Below Is Arbitrary, Illegal, Unjustified & Erroneous & Has Been Passed On Improper Application Of Mind, Being Devoid Of Merit As Such Deserves To Be Quashed In Limine. 2. For That, The Estimation Of Net Income From Wholesale Business Of Electronic Gadgets @ 2% Of The Gross Turnover Rejecting The Book Of Account & Invoking Section 145 Without Referring To Comparable Cases & Without Considering Past Records Of The Appellant Deserves To Be Set-Aside Being Devoid Of Merit As Illegal, Unjustified & Arbitrary. 3. For That, The Estimation Of Income @2% Of Gross Receipt Deserves To Be Rejected & The Returned Income Deserves To Be Accepted On The Ground That, There Cannot Be Any Estimation Of Income On The Basis Of Assumption, Presumption, Surmises Or Caprices In A Best Judgment Assessment.

For Appellant: Shri P.R.Mohanty, AdvocateFor Respondent: Shri Subhendu Dutta, DR
Section 145Section 145(3)

considering past records of the appellant deserves to be set-aside being devoid of merit as illegal, unjustified & arbitrary. 3. For that, the estimation of income @2% of gross receipt deserves to be rejected and the returned income deserves to be accepted on the ground that, there cannot ... estimation of income on the basis of assumption, presumption, surmises or caprices in a best judgment assessment. 2 4. For the addition of Rs.2,99,675/- to the total income towards activation charges deserves to be deleted on the ground that, not only it is unjustified on the facts

Shri Shantilal C Shah, Mumbai vs. Income Tax Officer, 19(3) (3), Mumbai

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

ITA 6038/MUM/2019[2009-10]Status: DisposedITAT Mumbai13 Mar 2020AY 2009-10

Bench: Shri Saktijit Dey & Shri G. Manjunathashantilal C. Shah Vs. Ito-19(3)(3) Shop No.17, Mistry Building Matru Mandir 2Nd Floor, 159 Tardeo Road 2Nd Khumbharwada Lane Mumbai-400 007 Mumbai-400 004 Pan/Gir No.Bdeps5540M (Appellant) .. Respondent)

Section 143Section 143(1)Section 143(3)Section 145(3)Section 147Section 234ASection 274Section 3Section 68Section 69C

Ld.CIT(A) has enhanced addition to 100% on alleged bogus purchases. Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. On the other hand

Anil Dadarao Garad, Ambernath vs. DCIT, Circle-2, Kalyan

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

ITA 7214/MUM/2018[2011-12]Status: DisposedITAT Mumbai13 Mar 2020AY 2011-12

Bench: Shri Saktijit Dey & Shri G. Manjunathaito, Ward-2(1) Vs. Anil Dadarao Garad 2Nd Floor, Mohan Plaza Bldg Prop. Of M/S Shivjeet Wayle Nagar Chemicals Khadakpada W-34, Morivali, Midc Kalyan (W)-421 301 Ambernath Thane-421 501 Pan/Gir No.Aazpg8732G (Appellant) .. Respondent) & Anil Dadarao Garad Vs. Dcit, Circle-2 Prop. Of M/S Shivjeet Mohan Plaza, Chemicals Khadakpada W-34, Morivali, Midc Kalyan (W)-421 301 Ambernath Thane-421 501

total alleged bogus purchase, except in the case of M/s AMI Traders. Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. However, the rate

ITO 26(1)(5), Mumbai vs. Shri Israr Ahmed J B Choudhary, Mumbai

In the result, appeal filed by the revenue is dismissed

ITA 7118/MUM/2018[2011-12]Status: DisposedITAT Mumbai13 Mar 2020AY 2011-12

Bench: Shri Vikas Awasthy & Shri G. Manjunathaito-26(1)(5) Vs. Israr Ahmed J B Choudhary Room No.708, 7Th Floor 23, Vallibhai Haiderbhai Pratyakshakar Bhavan Compound, Lbs Marg Bkc, Bandra Kurla(W), Mumbai-400 070 Mumbai-400 051 Pan/Gir No.Aaapi5555Q (Appellant) .. Respondent)

Section 143(1)Section 143(3)Section 147Section 440A(3)

scaled down addition to 9.96% gross profit on total alleged bogus purchase. Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. Therefore, considering facts

ITO 6(1)(3), Mumbai vs. Auto Sales Pvt. Ltd., Mumbai

In the result, appeal filed by the revenue is dismissed

ITA 7107/MUM/2018[2011-12]Status: DisposedITAT Mumbai13 Mar 2020AY 2011-12

Bench: Shri Vikas Awasthy & Shri G. Manjunathaita No.7107 & 7108/Mum/2018 (Assessment Years: 2010-11 & 2011-12) Ito-6(1)(3) Vs. Auto Sales Pvt.Ltd. Room No.508, 5Th Floor 63/69, 3Rd Floor Aaykar Bhawan Nagdevi Cross Road M.K.Road Mumbai-400 003 Mumbai-400 020 Pan/Gir No.Aacca0108J (Appellant) .. Respondent)

Section 143(1)Section 143(3)Section 147Section 40

scaled down addition to 12.50% gross profit on total alleged bogus purchase. Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. Therefore, considering facts

Kittens Shoes and Allied Products Pvt. Ltd., Mumbai vs. ITO 1(2)(2), Mumbai

In the result, appeal filed by the assessee is dismissed

ITA 7092/MUM/2018[2011-12]Status: DisposedITAT Mumbai13 Mar 2020AY 2011-12

Bench: Shri Vikas Awasthy & Shri G. Manjunathakittens Shoes & Allied Vs. Ito-1(2)(2) Products Pvt.Ltd. Aaykar Bhawan, M.K.Road 9, Dhanshree Building Mumbai-400 020 P.G.Solanki Path Lamington Road Mumbai-400 007

Section 143(1)Section 143(3)Section 147Section 234A

scaled down addition to 12.50% gross profit on alleged bogus purchases. Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. However, the profit rate adopted

ITO 26 (2)(3), Mumbai vs. Mohammed Ali Azimullah Shaikh, Mumbai

In the result, appeal filed by the revenue is dismissed

ITA 7056/MUM/2018[2011-12]Status: DisposedITAT Mumbai13 Mar 2020AY 2011-12

Bench: Shri Vikas Awasthy & Shri G. Manjunathaito-26(2)(3) Vs. Mohammed Ali Azimullah Building No.C-11 Shaikh 7Th Floor Prop.Of M/S. M.M.Steel Pratyakshakar Bhavan Corporation Bkc, Bandra (E) Room No.20, Sunita Niwas Mumbai-400 051 Chawl, Star Glass Marg K .A. Road, Jarimari Mumbai-400 072 Pan/Gir No.Anups0748N (Appellant) .. Respondent)

Section 143(1)Section 143(3)Section 147Section 440A(3)

scaled down addition to 12.50% gross profit on total alleged bogus purchase. Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. Therefore, considering facts

Income Tax Officer Ward 2(1), Kalyan vs. Anil Dadarao Garad, Ambernath

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

ITA 7019/MUM/2018[2011-12]Status: DisposedITAT Mumbai13 Mar 2020AY 2011-12

Bench: Shri Saktijit Dey & Shri G. Manjunathaito, Ward-2(1) Vs. Anil Dadarao Garad 2Nd Floor, Mohan Plaza Bldg Prop. Of M/S Shivjeet Wayle Nagar Chemicals Khadakpada W-34, Morivali, Midc Kalyan (W)-421 301 Ambernath Thane-421 501 Pan/Gir No.Aazpg8732G (Appellant) .. Respondent) & Anil Dadarao Garad Vs. Dcit, Circle-2 Prop. Of M/S Shivjeet Mohan Plaza, Chemicals Khadakpada W-34, Morivali, Midc Kalyan (W)-421 301 Ambernath Thane-421 501

total alleged bogus purchase, except in the case of M/s AMI Traders. Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. However, the rate

Mahesh Vasant Raut, Mumbai vs. CIT (A)- 38, Mumbai

In the result, appeal filed by the Revenue is dismissd and appeal filed by the assessee is partly allowed

ITA 6514/MUM/2018[2011-12]Status: DisposedITAT Mumbai13 Mar 2020AY 2011-12

Bench: Shri Vikas Awasthy & Shri G. Manjunathamahesh Vasant Raut Vs. Acit-26(2) Room No.510, 5Th Floor 6B/104, Chandivali Sun View Chs Ltd., Mhada Colony C-10, Pratyakshkar Chandivali Bhawan Andheri(East) Bkc, Bandr(E) Mumbai-400 072 Mumbai-400 051

Section 143(1)Section 147Section 40A(3)

scaled down addition to 25% profit on alleged bogus purchases. Although, both authorities have taken different rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. Therefore, considering facts and circumstances

Smt. Seema Jain, Koppal vs. Income Tax Officer, Ward- 1, Koppal

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

ITA 1736/BANG/2019[2015-16]Status: DisposedITAT Bangalore13 Mar 2020AY 2015-16

Bench: Shri Chandra Poojari

For Appellant: Smt.Suman Lunkar, CAFor Respondent: Sri.GaneshR.Ghale, Standing Council for DR
Section 144Section 271(1)(b)Section 41Section 41(1)

provisions of section 41 (1) of the Act and brought to tax.” 4. In first appeal, the CIT(A) sustained the addition on estimation of income and deleted the addition made u/s 41(1) of the I.T.Act. 5. Against this, the assessee is in appeal before the Tribunal

Aryavart Transport Pvt Ltd, New Delhi vs. ITO Ward -3(2), New Delhi

In the result, the appeal of assessee is allowed

ITA 2304/DEL/2019[2015-16]Status: DisposedITAT Delhi11 Mar 2020AY 2015-16

Bench: Sh. H.S. Sidhuassessment Year: 2015-16

Section 143(3)

rejection of books of account by the AO. 2. The Ld. CIT(A) erred in law and on facts in upholding the estimation f income @8% by the AO. 3. The Ld. CIT(A) erred in law and on facts in upholding the addition ... total income of Rs. 18,76,676/- against the returned income of Rs. 1,02,130/-. AO in his assessment order, estimated the income of the assessee at 8% of gross receipts of Rs. 2,34,58,450/- and made an addition of Rs. 17,74,544/- after adjusting

The DCIT(Intl. Taxn), Ahmedabad vs. M/S. Shandong Tiejun Electric Power Engg. Company Ltd., Kutch

In the result, all three appeals of the Revenue are dismissed

ITA 80/AHD/2018[2011-12]Status: DisposedITAT Ahmedabad04 Mar 2020AY 2011-12

Bench: Shri Rajpal Yadav & Shri T. S. Kapoor

For Appellant: Shri Vinod Tanwani, Sr.D.RFor Respondent: Shah, A.R
Section 44B

reliable. 2. The Ld. CIT(A) erred in law and on facts in holding that the action of the AO in resorting to estimation of income on presumptive basis of 10% U/s.44BBB(1) or alternately @10.98% under normal provisions of the Act was not correct ... learned CIT(A) whereby the learned CIT(A) has allowed relief to the assessee by holding that action of the AO resorting to estimation of income on presumptive basis @ 10% was not correct. Both these issues have been dealt by learned CIT(A) from para 3 to 13 wherein relying

Sri Panati Vittalanath Reddy, Bangalore vs. Deputy Commissioner of Income Tax, Central Circle-2(4), Bangalore

In the result, the appeal of the assessee is partly allowed for the assessment year 2015-16

ITA 1770/BANG/2017[2015-16]Status: DisposedITAT Bangalore26 Feb 2020AY 2015-16

Bench: Smt. Beena Pillai & Shri O.P.Meena

For Appellant: Shri V. Srinivasan, AdvocateFor Respondent: Sri. S.T Seshadri, Sr. D.R
Section 143Section 143(3)Section 153ASection 153CSection 234

before the ld. CIT(A). The ld.CIT(A) observed that the AO has given the reasoning for rejection of books of accounts and estimation of income at 12% of the gross receipts that the assessee has not maintained any books of accounts for any of the year. Further

DCIT, New Delhi vs. M/S. Pearl Drinksltd., New Delhi

In the result, the ITA No

ITA 5307/DEL/2015[2012-13]Status: DisposedITAT Delhi25 Feb 2020AY 2012-13

Bench: Sh. R. K. Panda & Ms. Suchitra Kambleassessment Year: 2012-13

Section 132Section 142Section 145(2)Section 40A(3)

surrender of income. 4.1.10 In the above background it has to be concluded that no ground survives for rejection of books and estimation of income. The result of remand proceedings support the stand of the appellant. The appellant group have also honoured there declaration of surrender of income made during ... sustained. In view of the above, we agree with the finding of the Ld. CIT(A) that no ground survives books and estimation of income. The result of remand proceedings support the stand of the assessee. The assessee group have also honoured there declaration of surrender of income made during

M/S. Pearl Drinks Ltd., New Delhi vs. ACIT, New Delhi

In the result, the ITA No

ITA 5061/DEL/2015[2012-13]Status: DisposedITAT Delhi25 Feb 2020AY 2012-13

Bench: Sh. R. K. Panda & Ms. Suchitra Kambleassessment Year: 2012-13

Section 132Section 142Section 145(2)Section 40A(3)

surrender of income. 4.1.10 In the above background it has to be concluded that no ground survives for rejection of books and estimation of income. The result of remand proceedings support the stand of the appellant. The appellant group have also honoured there declaration of surrender of income made during ... sustained. In view of the above, we agree with the finding of the Ld. CIT(A) that no ground survives books and estimation of income. The result of remand proceedings support the stand of the assessee. The assessee group have also honoured there declaration of surrender of income made during

ITO, New Delhi vs. Sh. Sunil Nayyar, Delhi

In the result, the appeal of the revenue is dismissed and Cross

ITA 6168/DEL/2016[2012-13]Status: DisposedITAT Delhi24 Feb 2020AY 2012-13

Bench: Sh. Kuldip Singhdr. B. R. R. Kumarita No. 6168/Del/2016 : Asstt. Year : 2012-13 Income Tax Officer, Vs Sh. Sunil Nayyar, Ward-49(3), R/O 81-A, Vikrant Enclave, New Delhi Mayapuri, New Delhi-110064 (Appellant) (Respondent) Pan No. Abvpn3963B

For Appellant: Sh. Jagdish Ajmani, CAFor Respondent: Sh. Saras Kumar, Sr. DR
Section 68

defects" in the books of accounts and without bringing any cogent or credible material on record which has any nexus to the estimation of Income. AO has mention the following objections in the assessment order: 1. Soft copy of Books was not filled: Rebuttal: First objection of A.O. is that ... ignored. The AO is entitled to find facts in the books of accounts reject them under section 145(3) and can proceed to estimate the income as per procedure laid down in the Act. But the statute do not empower the AO to simply ignore the books of accounts

Sant Electr4Icals, New Delhi vs. ACIT, Circle-62(1), New Delhi

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

ITA 7600/DEL/2018[2010-11]Status: DisposedITAT Delhi21 Feb 2020AY 2010-11

Bench: Ms. Sushma Chowla

For Appellant: Ms. Rano Jain, AdvocateFor Respondent: Shri Prdeep Singh Gautuam, Sr. DR
Section 143(3)Section 147Section 148Section 251(2)

assessee, hence the same is dismissed as not pressed. 5. The issue raised vide grounds of appeal nos.3 to 6 is against the estimation of income in the hands of the assessee by applying GP rate of 10%. 6. Briefly in the facts of the case, the assessee

DCIT, New Delhi vs. M/S. Honda Trading Corporation India Pvt. Ltd., Gurgaon

In the result, the appeal of the revenue is dismissed and Cross Objection of the assessee is treated as infructuous owing to the adjudication on merits of the case

ITA 747/DEL/2017[2007-08]Status: DisposedITAT Delhi20 Feb 2020AY 2007-08

Bench: Sh. Amit Shukladr. B. R. R. Kumarita No. 747/Del/2017 : Asstt. Year : 2007-08 Dcit, Vs M/S Honda Trading Corporation Circle-11(1), India Pvt. Ltd., Sigma Centre, A- New Delhi 27, Infocity, Sector-34, Gurgaon-122001 (Appellant) (Respondent) Pan No. Aabch5556J

For Appellant: NoneFor Respondent: Sh. Rajesh Kumar Kedia, CIT DR
Section 271(1)(c)

since ITA No. 747/Del/2017 & 8 CO No. 101/Del/2017 Honda Trading Corporation India Pvt. Ltd. the Transfer Pricing adjustment is much more than the estimation of income the penalty levied is ought to have been confirmed. He argued that even when addition is based on estimate, concealment penalty can be levied