Bangalore ITAT Slashes Estimated Profit from 15% to 7% – Best Judgment Assessment Cannot Be a “Blind Guess”

Kempaiah Kemparaju Vs DCIT (ITAT Bangalore) In a significant ruling, the Bangalore ITAT held that best judgment assessment u/s 144 cannot be based on mere suspicion, arbitrary assumptions or “wild guesswork.” The Tribunal reduced the AO’s estimated profit rate from 15% to 7% in the case of a civil contractor whose receipts were entirely from Government/PWD contracts through banking channels with TDS deductions. The assessee had not filed returns for AYs 2013-14 and 2017-18 despite contract receipts exceeding ₹17 crore. The AO completed reassessment ex parte u/s 147 r.w.s. 144 and esti...