Facts

The assessee deals in precious and semi-precious stones. The AO noticed various defects in the books of account of the assessee. The AO therefore rejected the books of account and proceeded to make a best judgement assessment under section 144.

Issue

Whether there is necessarily some estimation involved in a best judgment assessment?

Views

The authorities concerned should try to make an honest and fair estimate of the income even in a best judgment assessment, and should not act totally arbitrarily, but there is necessarily some amount of guess work involved in a best judgment assessment, and it is the assessee himself who is to blame as he did not submit proper accounts.

Held

Even though there is always a certain degree of guess work in a best judgment assessment, the authority should try to  make  an  honest and  fair estimate  of  the  income and should not act totally arbitrarily. (CA  No. 5809 of  2006 dt. 14-12-2006)

Editorial : Earlier decision on the similar issue may be referred Joharmal Murlidar & Co v. Agri. ITO (1971) 79 ITR 6 (SC)

“If patience is worth anything, it must endure to  the end of time. And a living faith will last in the midst of the blackest storm.”

– Mahatma Gandhi