Past Accepted Profit Rate Must Guide Estimation; 10% Arbitrary Cut to 6% – ITAT Bangalore

Rajaghatta Papanna Revanna Vs ITO (ITAT Bangalore) The Bangalore Bench of the ITAT, in Shri Rajaghatta Papanna Revanna vs. ITO, Ward-1, Mandya (ITA No.447/Bang/2025, AY 2022-23, order dated 19-12-2025), held that once income from contract activity is required to be estimated, such estimation must be reasonable and consistent with past accepted results. In the present case, the AO wrongly assessed entire contract receipts as “income from other sources” and denied expenses. Though the CIT(A) rightly treated the receipts as business income, he arbitrarily estimated profit at 10%. The Tribunal...