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“Section 145(3)”

Section References (mined)Section 145Section 145(3)2,270 judgments

The decision most relied on for Section 145(3) is CIT v. Woodward Governor India Pvt. Ltd. (312 ITR 254), cited in 968 judgments on BharatTax.

Leading authorities on Section 145(3)

CIT v. Woodward Governor India Pvt. Ltd.
312 ITR 254 · 2009 · Supreme Court
968
citing judgments

Foreign exchange fluctuations, whether gains or losses, are inextricably linked to the underlying business transaction and must be accounted for under the mercantile system. The Supreme Court also affirmed the standard accounting principle of valuing stock at cost or net realisable value, whichever is lower.

CIT v. Jet Airways (I) Ltd.
331 ITR 236 · 2011 · High Court
694
citing judgments

The Assessing Officer loses jurisdiction and the entire reassessment becomes invalid if no addition is made in respect of the income that formed the basis of the reopening. Explanation 3 to Section 147 does not permit assessing other escaped income unless an addition is made for the original income forming the reason to believe.

Kedarnath Jute Mfg. Co. Ltd. v. CIT
82 ITR 363 · 1971 · Supreme Court
654
citing judgments

Tax liability for an item of income or expenditure is determined solely by the provisions of the Income-tax Act. Entries in an assessee's books of account are not conclusive and do not govern the taxability or deductibility of an item, as the legal rights and obligations under the Act prevail.

Lalchand Bhagat Ambica Ram v. CIT
37 ITR 288 · 1959 · Supreme Court
570
citing judgments

Where an assessee maintains regular books of account, and these books are not rejected or found defective by the Assessing Officer, any cash deposits or available cash shown in the cash book, if sufficient to cover the transaction, cannot be treated as unexplained income or an addition under sections 68 or 69A.

CIT v. President Industries
258 ITR 654 · 2002 · High Court
471
citing judgments

When books of account are rejected and unaccounted sales or receipts are discovered, the income addition is restricted to the net profit element embedded in these undisclosed transactions, not the entire sale proceeds or receipts, especially if corresponding purchases are not proven to be outside the books.

Vijay Proteins Ltd. v. Asst. CIT
58 ITD 428 · 1996 · ITAT
430
citing judgments

Where purchases are found to be non-genuine or fictitious, a reasonable disallowance of 25% of such purchases or the peak credit, whichever is higher, can be made. This is applied to address unexplained expenditure under Section 69C when actual goods are likely procured from the grey market.

CIT v. Nikunj Exim Enterprises Pvt. Ltd.
372 ITR 619 · 2015 · High Court
391
citing judgments

Transactions defying human probability cannot be applied to isolated purchases if sales are accepted as genuine, and purchases cannot be disallowed without considering the entire transaction and documentary evidence. Failure to produce parties in an assessment proceeding may not be fatal to the assessee.

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.

Judgments citing Section 145(3)

Deputy Commissioner of Income Tax, Bengaluru vs. Flipkart India Pvt Ltd, Bengaluru

In the result, both the appeals filed by the Revenue are dismissed

ITA 1395/BANG/2025[2021-22]Status: DisposedITAT Bangalore04 Dec 2025AY 2021-22

Bench: Shri Prashant Maharishi & Shri Keshav Dubey

For Appellant: Shri Shivanand Kalakeri, CIT(DR)(ITAT), BengaluruFor Respondent: Shri Ajay Vohra, Sr. Advocate
Section 143(3)Section 37

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI KESHAV DUBEY, JUDICIAL

Deputy Commissioner of Income Tax, Central Circle-1(4), Bengaluru vs. Flipkart India Pvt Ltd, Bengaluru

In the result, both the appeals filed by the Revenue are dismissed

ITA 1394/BANG/2025[2020-21]Status: DisposedITAT Bangalore04 Dec 2025AY 2020-21

Bench: Shri Prashant Maharishi & Shri Keshav Dubey

For Appellant: Shri Shivanand Kalakeri, CIT(DR)(ITAT), BengaluruFor Respondent: Shri Ajay Vohra, Sr. Advocate
Section 143(3)Section 37

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI KESHAV DUBEY, JUDICIAL

Rakesh Jain, Mumbai vs. National Faceless Appeal Centre (NFAC), Delhi

In the result the appeal filed by the assessee stands allowed

ITA 546/MUM/2025[2017-18]Status: DisposedITAT Mumbai04 Dec 2025AY 2017-18

Bench: Shri Sandeep Gosain & Shri Prabhash Shankarι.Τ.Α. No.546/Mum/2025 A.Y: 2017-18 Rakesh Jain Vs Dcit - 26(1) Shop No. 29, 2Nd Floor, Kautilya Bhavan, 126-128, Sheikh Menon Bandra, Mumbai St., Trimurti Estate, Kalbadevi, Mumbai Pan – Aaιρj7359P (Appellant) (Respondent) Assessee By | Shri Vimal Punmiya Revenue By || Shri Annavaran Kosuri, Sr. Dr Date Of Hearing 17.09.2025 Date Of Pronouncement 04.12.2025 Order Per: Shri. Sandeep Gosain, J.M.: The Present Appeal Has Been Filed By The Assessee Challenging The Impugned Order Dt.28.11.2024 Passed Under Section 250 Of The Income Tax Act, 1961 (‘The Act'), By The National Faceless Appeal Centre (Nfac) / Cit(A) For The

Section 115Section 144Section 145Section 156Section 250Section 274Section 68

proceeds of cash sales Assessing Officer observed that assessee failed to explain source of such huge cash deposit He thereby invoked provision of section 145(3) and rejected book results Further, he did not consider sales to tune of Rs.37.96 lakhs out of cash deposited by assessee between ... already taxed as part of sales - Whether, on facts, Assessing Officer was justified in rejecting books of account by invoking provisions of section 145(3) and further impugned addition made by Assessing Officer was also liable to be deleted - Held, yes [Paras 13 and 14] [In favour of assessee

ACIT-15(1)(2), Mumbai vs. Nest Childcare Services Private Limited, Mumbai

In the result appeals of the a In the result appeals of the assessee for Assessment ssessee for Assessment

ITA 6215/MUM/2025[2014-2015]Status: DisposedITAT Mumbai03 Dec 2025AY 2014-2015

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Respondent: Assessee by Ms. Namrata R. Dedhia

profit The second issue is regarding estimation of the profit on the sales of the Assessee. on the sales of the Assessee. Section 145(3) mandates Section 145(3) mandates that profits can be estimated only after that profits can be estimated only after that profits can be estimated only ... submitted that the Assessing Officer neither invoked Section 145 that the Assessing Officer neither invoked Section 145 that the Assessing Officer neither invoked Section 145 (3) of the Act for the purpose of rejection of the books of (3) of the Act for the purpose of rejection of the books

Nest Childcare Services Private Limited, Mumbai vs. DCIT 15(1)(2), Mumbai

In the result appeals of the assessee for Assessment

ITA 6074/MUM/2025[2014-15]Status: DisposedITAT Mumbai03 Dec 2025AY 2014-15

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Appellant: Ms. Namrata R. DedhiaFor Respondent: Ms. Beena Santosh, CIT DR. & Shri
Section 143(2)

issue of disallowance of the business losses. 9. The second issue is regarding estimation of the profit on the sales of the Assessee. Section 145(3) mandates that profits can be estimated only after rejecting books of account on specific defects. 9.1 Before us, the Ld. Counsel for the Assessee ... submitted that the Assessing Officer neither invoked Section 145 (3) of the Act for the purpose of rejection of the books of accounts and nor estimated the profit rate on the basis of any comparable data and applied net profit rate of 20%. The learned CIT (A) has further reduced

Nest Childcare Services Private Limited, Mumbai vs. DCIT 15(1)(2), Mumbai

In the result appeals of the assessee for Assessment

ITA 6073/MUM/2025[2013-14]Status: DisposedITAT Mumbai03 Dec 2025AY 2013-14

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Appellant: Ms. Namrata R. DedhiaFor Respondent: Ms. Beena Santosh, CIT DR. & Shri
Section 143(2)

issue of disallowance of the business losses. 9. The second issue is regarding estimation of the profit on the sales of the Assessee. Section 145(3) mandates that profits can be estimated only after rejecting books of account on specific defects. 9.1 Before us, the Ld. Counsel for the Assessee ... submitted that the Assessing Officer neither invoked Section 145 (3) of the Act for the purpose of rejection of the books of accounts and nor estimated the profit rate on the basis of any comparable data and applied net profit rate of 20%. The learned CIT (A) has further reduced

Nest Childcare Services Private Limited, Mumbai vs. DCIT 15(1)(2), Mumbai

In the result appeals of the assessee for Assessment

ITA 6072/MUM/2025[2012-13]Status: DisposedITAT Mumbai03 Dec 2025AY 2012-13

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Appellant: Ms. Namrata R. DedhiaFor Respondent: Ms. Beena Santosh, CIT DR. & Shri
Section 143(2)

issue of disallowance of the business losses. 9. The second issue is regarding estimation of the profit on the sales of the Assessee. Section 145(3) mandates that profits can be estimated only after rejecting books of account on specific defects. 9.1 Before us, the Ld. Counsel for the Assessee ... submitted that the Assessing Officer neither invoked Section 145 (3) of the Act for the purpose of rejection of the books of accounts and nor estimated the profit rate on the basis of any comparable data and applied net profit rate of 20%. The learned CIT (A) has further reduced

M S Infraengineers (P) Limited, Cuttack vs. ACIT, Circler-2(1), Cuttack

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

ITA 438/CTK/2024[2013-14]Status: DisposedITAT Cuttack02 Dec 2025AY 2013-14

Bench: Shri George Mathan & Shri Rajesh Kumarआयकर अपील सं/Ita No.438/Ctk/2024 ("नधा"रण वष" / Assessment Year : 2013-14)

For Appellant: Shri Purnendu Bhusan Mohanty, CAFor Respondent: Shri Vijaya Singh, ld Sr DR
Section 145(3)

आयकर अपील"य अ"धकरण, कटक "यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK (THROUGH VIRTUAL HEARING

Trig Detectives Pvt Ltd, Mumbai vs. DCIT-Central Circle 1(2), Mumbai

In the result, the appeals filed by the assessee bearing ITA Nos

ITA 1906/MUM/2025[2020-21]Status: DisposedITAT Mumbai02 Dec 2025AY 2020-21

Bench: Shri Anikesh Banerjee & Shri Prabhash Shankar

For Appellant: Shri Rakesh JoshiFor Respondent: Shri Ritesh Misra, CIT DR
Section 139(1)Section 153ASection 250Section 270ASection 271(1)(c)Section 271ASection 274Section 37(1)Section 40

case of the assessee, the Assessing Officer has made disallowance out of cash expenses and no books of accounts have been rejected invoking section 145(3) of the Act. As regards the penalty levied for interest and excess depreciation suomotu offered by the assessee in the return of income filed ... held in Swaran Nadhan Salaria (supra), estimated additions arising from non-production of vouchers, where books of account have not been rejected under section 145(3), fall outside the ambit of “under-reported income” in view of section 270A(6)(b). Furthermore, the suo- moto disallowances made by the assessee

Trig Detectives Pvt Ltd, Mumbai vs. DCIT -Central Circle -1(2), Mumbai

In the result, the appeals filed by the assessee bearing ITA Nos

ITA 1905/MUM/2025[2019-20]Status: DisposedITAT Mumbai02 Dec 2025AY 2019-20

Bench: Shri Anikesh Banerjee & Shri Prabhash Shankar

For Appellant: Shri Rakesh JoshiFor Respondent: Shri Ritesh Misra, CIT DR
Section 139(1)Section 153ASection 250Section 270ASection 271(1)(c)Section 271ASection 274Section 37(1)Section 40

case of the assessee, the Assessing Officer has made disallowance out of cash expenses and no books of accounts have been rejected invoking section 145(3) of the Act. As regards the penalty levied for interest and excess depreciation suomotu offered by the assessee in the return of income filed ... held in Swaran Nadhan Salaria (supra), estimated additions arising from non-production of vouchers, where books of account have not been rejected under section 145(3), fall outside the ambit of “under-reported income” in view of section 270A(6)(b). Furthermore, the suo- moto disallowances made by the assessee

Trig Detectives Pvt Ltd, Mumbai vs. DCIT-Central Circle 1(2), Mumbai

In the result, the appeals filed by the assessee bearing ITA Nos

ITA 1904/MUM/2025[2018-19]Status: DisposedITAT Mumbai02 Dec 2025AY 2018-19

Bench: Shri Anikesh Banerjee & Shri Prabhash Shankar

For Appellant: Shri Rakesh JoshiFor Respondent: Shri Ritesh Misra, CIT DR
Section 139(1)Section 153ASection 250Section 270ASection 271(1)(c)Section 271ASection 274Section 37(1)Section 40

case of the assessee, the Assessing Officer has made disallowance out of cash expenses and no books of accounts have been rejected invoking section 145(3) of the Act. As regards the penalty levied for interest and excess depreciation suomotu offered by the assessee in the return of income filed ... held in Swaran Nadhan Salaria (supra), estimated additions arising from non-production of vouchers, where books of account have not been rejected under section 145(3), fall outside the ambit of “under-reported income” in view of section 270A(6)(b). Furthermore, the suo- moto disallowances made by the assessee

Trig Detectives Pvt Ltd, Mumbai vs. DCIT-Central Circle 1(2), Mumbai

In the result, the appeals filed by the assessee bearing ITA Nos

ITA 1903/MUM/2025[2017-18]Status: DisposedITAT Mumbai02 Dec 2025AY 2017-18

Bench: Shri Anikesh Banerjee & Shri Prabhash Shankar

For Appellant: Shri Rakesh JoshiFor Respondent: Shri Ritesh Misra, CIT DR
Section 139(1)Section 153ASection 250Section 270ASection 271(1)(c)Section 271ASection 274Section 37(1)Section 40

case of the assessee, the Assessing Officer has made disallowance out of cash expenses and no books of accounts have been rejected invoking section 145(3) of the Act. As regards the penalty levied for interest and excess depreciation suomotu offered by the assessee in the return of income filed ... held in Swaran Nadhan Salaria (supra), estimated additions arising from non-production of vouchers, where books of account have not been rejected under section 145(3), fall outside the ambit of “under-reported income” in view of section 270A(6)(b). Furthermore, the suo- moto disallowances made by the assessee

Trig Detectives Pvt Ltd, Mumbai vs. DCIT-Central Circle 1(2), Mumbai

In the result, the appeals filed by the assessee bearing ITA Nos

ITA 1902/MUM/2025[2016-17]Status: DisposedITAT Mumbai02 Dec 2025AY 2016-17

Bench: Shri Anikesh Banerjee & Shri Prabhash Shankar

For Appellant: Shri Rakesh JoshiFor Respondent: Shri Ritesh Misra, CIT DR
Section 139(1)Section 153ASection 250Section 270ASection 271(1)(c)Section 271ASection 274Section 37(1)Section 40

case of the assessee, the Assessing Officer has made disallowance out of cash expenses and no books of accounts have been rejected invoking section 145(3) of the Act. As regards the penalty levied for interest and excess depreciation suomotu offered by the assessee in the return of income filed ... held in Swaran Nadhan Salaria (supra), estimated additions arising from non-production of vouchers, where books of account have not been rejected under section 145(3), fall outside the ambit of “under-reported income” in view of section 270A(6)(b). Furthermore, the suo- moto disallowances made by the assessee

Trig Detectives Pvt Ltd, Mumbai vs. DCIT Central Circle 1(2), Mumbai

In the result, the appeals filed by the assessee bearing ITA Nos

ITA 1901/MUM/2025[2015-16]Status: DisposedITAT Mumbai02 Dec 2025AY 2015-16

Bench: Shri Anikesh Banerjee & Shri Prabhash Shankar

For Appellant: Shri Rakesh JoshiFor Respondent: Shri Ritesh Misra, CIT DR
Section 139(1)Section 153ASection 250Section 270ASection 271(1)(c)Section 271ASection 274Section 37(1)Section 40

case of the assessee, the Assessing Officer has made disallowance out of cash expenses and no books of accounts have been rejected invoking section 145(3) of the Act. As regards the penalty levied for interest and excess depreciation suomotu offered by the assessee in the return of income filed ... held in Swaran Nadhan Salaria (supra), estimated additions arising from non-production of vouchers, where books of account have not been rejected under section 145(3), fall outside the ambit of “under-reported income” in view of section 270A(6)(b). Furthermore, the suo- moto disallowances made by the assessee

Trig Detectives Pvt Ltd, Mumbai vs. DCIT Central Circle 1(2), Mumbai

In the result, the appeals filed by the assessee bearing ITA Nos

ITA 1900/MUM/2025[2014-15]Status: DisposedITAT Mumbai02 Dec 2025AY 2014-15

Bench: Shri Anikesh Banerjee & Shri Prabhash Shankar

For Appellant: Shri Rakesh JoshiFor Respondent: Shri Ritesh Misra, CIT DR
Section 139(1)Section 153ASection 250Section 270ASection 271(1)(c)Section 271ASection 274Section 37(1)Section 40

case of the assessee, the Assessing Officer has made disallowance out of cash expenses and no books of accounts have been rejected invoking section 145(3) of the Act. As regards the penalty levied for interest and excess depreciation suomotu offered by the assessee in the return of income filed ... held in Swaran Nadhan Salaria (supra), estimated additions arising from non-production of vouchers, where books of account have not been rejected under section 145(3), fall outside the ambit of “under-reported income” in view of section 270A(6)(b). Furthermore, the suo- moto disallowances made by the assessee

ACIT-19(1), Mumbai vs. Parul Diamond, Mumbai

In the result, appeal and cross-objection filed by the revenue as well as the assessee respectively, stands dismissed

ITA 6992/MUM/2024[2007-08]Status: DisposedITAT Mumbai02 Dec 2025AY 2007-08

Bench: Smt. Beena Pillai () & Shri Omkareshwar Chidara ()

Section 37Section 68

circumstances of the case and in law, Ld CIT(A) has erred in not considering that after invocation of provisions of section 145(3) of the Act, the Assessing Officer acquired the mandate even to add the whale amount of purchases found as bogus to the total income

Deputy Commissioner of Income Tax, Central Circle 2(2), Chennai vs. Southern Agrifurane Industries Pvt Ltd, Chennai

ITA 1615/CHNY/2025[2019-20]Status: DisposedITAT Chennai01 Dec 2025AY 2019-20

Bench: Shri Aby T. Varkey & Shri Amitabh Shuklaआयकरअपीलसं./Ita Nos. 1613 To 1615/Chny/2025 िनधा"रणवष"/Assessment Years: 2018-19 & 2019-20

For Appellant: Mr. N. Arjun Raj, AdvocateFor Respondent: Mrs. C. Yamuna, CIT &
Section 132Section 153CSection 250

noted to have rejected the books of accounts by o have rejected the books of accounts by invoking provisions of Section 145(3) of the Act and estimated the overall invoking provisions of Section 145(3) of the Act and estimated the overall invoking provisions of Section 145(3 ... accounts in this case should indeed be Therefore, the books of accounts in this case should indeed be rejected under rejected under Section 145(3) for the following reasons: for the following reasons:  Inconsistent accounting treatments nconsistent accounting treatments, such as the use of incorrect offset , such

Deputy Commissioner of Income Tax, Central Circle 2(2), Chennai vs. Southern Agrifurane Industries Pvt Ltd, Chennai

ITA 1614/CHNY/2025[2019-20]Status: DisposedITAT Chennai01 Dec 2025AY 2019-20

Bench: Shri Aby T. Varkey & Shri Amitabh Shuklaआयकरअपीलसं./Ita Nos. 1613 To 1615/Chny/2025 िनधा"रणवष"/Assessment Years: 2018-19 & 2019-20

For Appellant: Mr. N. Arjun Raj, AdvocateFor Respondent: Mrs. C. Yamuna, CIT &
Section 132Section 153CSection 250

noted to have rejected the books of accounts by o have rejected the books of accounts by invoking provisions of Section 145(3) of the Act and estimated the overall invoking provisions of Section 145(3) of the Act and estimated the overall invoking provisions of Section 145(3 ... accounts in this case should indeed be Therefore, the books of accounts in this case should indeed be rejected under rejected under Section 145(3) for the following reasons: for the following reasons:  Inconsistent accounting treatments nconsistent accounting treatments, such as the use of incorrect offset , such

Deputy Commissioner of Income Tax, Central Circle 2(2), Chennai vs. Southern Agrifurane Industries Pvt Ltd, Chennai

ITA 1613/CHNY/2025[2018-19]Status: DisposedITAT Chennai01 Dec 2025AY 2018-19

Bench: Shri Aby T. Varkey & Shri Amitabh Shuklaआयकरअपीलसं./Ita Nos. 1613 To 1615/Chny/2025 िनधा"रणवष"/Assessment Years: 2018-19 & 2019-20

For Appellant: Mr. N. Arjun Raj, AdvocateFor Respondent: Mrs. C. Yamuna, CIT &
Section 132Section 153CSection 250

noted to have rejected the books of accounts by o have rejected the books of accounts by invoking provisions of Section 145(3) of the Act and estimated the overall invoking provisions of Section 145(3) of the Act and estimated the overall invoking provisions of Section 145(3 ... accounts in this case should indeed be Therefore, the books of accounts in this case should indeed be rejected under rejected under Section 145(3) for the following reasons: for the following reasons:  Inconsistent accounting treatments nconsistent accounting treatments, such as the use of incorrect offset , such

Southern Agrifurane Industries Pvt. Ltd., Chennai vs. ACIT, Central Circle-2(2), Chennai

ITA 1548/CHNY/2025[2019-20]Status: DisposedITAT Chennai01 Dec 2025AY 2019-20

Bench: Shri Aby T. Varkey & Shri Amitabh Shuklaआयकरअपीलसं./Ita Nos. 1613 To 1615/Chny/2025 िनधा"रणवष"/Assessment Years: 2018-19 & 2019-20

For Appellant: Mr. N. Arjun Raj, AdvocateFor Respondent: Mrs. C. Yamuna, CIT &
Section 132Section 153CSection 250

noted to have rejected the books of accounts by o have rejected the books of accounts by invoking provisions of Section 145(3) of the Act and estimated the overall invoking provisions of Section 145(3) of the Act and estimated the overall invoking provisions of Section 145(3 ... accounts in this case should indeed be Therefore, the books of accounts in this case should indeed be rejected under rejected under Section 145(3) for the following reasons: for the following reasons:  Inconsistent accounting treatments nconsistent accounting treatments, such as the use of incorrect offset , such