Section 145(3) Upheld, but Arbitrary Estimation Curbed; Cold Storage Profit Recomputed Rationally

Shri Kaila Devi Ice & Cold Storage Vs ITO (ITAT Chandigarh) The ITAT, Agra Bench upheld rejection of books u/s 145(3) in the case of a cold storage business, noting serious defects in accounting of loading, unloading & grading expenses, doubtful vouchers and suppression concerns. However, the Tribunal firmly held that estimation must be rational and evidence-based, not arbitrary. The AO had artificially inflated both quantity (bags stored) and hire charges (₹56 to ₹70 per bag) and then applied a 25% NP rate, leading to an excessive addition. The Tribunal rejected this approach, hol...