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2019 (8) TMI 567 - HC - Income TaxEstimation of income - alleged commission income on accommodation entry - assessee stated that he had received commission of ₹ 0.30/0.45 on ₹ 100/- only - AO estimated commission @10% which was reduced by CIT(A)@ 2% which got approval of ITAT - existence of evidence or material on record for making such estimate - HELD THAT:- It must be noted that Section 145(3) gives discretion to the AO to make an assessment in the manner provided in Section 144, yet this discretion cannot be exercised arbitrarily. The question to determine in every such case is, whether there is any material for the basis adopted by the AO or the Tribunal, as the case may be, for computing the income of the assessee. The material which is irrelevant or which amounts to mere guesswork or conjecture is no material. The AO thought fit to estimate 10% commission for providing accommodation entries to the tune of ₹ 12,00,02,100/-. The CIT(A) took the view that the estimation of commission @ 10% by the AO is 1/3rd of the said benefit, which could be termed as excessive and not a reasonable estimate. The CIT(A), without there being anything on record, thought fit to take the view that the estimate by the appellant at 3% translates to 1% of the benefit derived, which could be termed as too low, and in such circumstances, estimated at 2%, which would translate to about 6.7% of the benefit alleged to have been derived by M/s.PACL India Limited. This is nothing but pure guesswork without there being any material or basis for arriving at the same. Ordinarily, we would not have entertained the appeal of the present nature having regard to the fact that the income has been assessed based on estimation. However, the way the authorities have proceeded with the guesswork, it cannot be approved. In view of the above, this Tax Appeal succeeds and is hereby allowed. The question of law is answered in favour of the assessee
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