AO's Estimation Approach Invalid When Books Accepted: ITAT Deletes Ad Hoc Income Tax Additions on Purchases and Expenses

The ITAT has "deleted ad-hoc income tax additions on purchases and expenses," ruling that the "AO's estimation approach is invalid when books are accepted." The case involved an Assessing Officer who, despite accepting the assessee's books of accounts, made arbitrary additions to the income based on a presumptive estimation. The ITAT held that once the books of accounts are deemed reliable and are not rejected, any further additions must be supported by cogent evidence and not by mere guesswork or estimation. This judgment reinforces the principle that an Assessing Officer cannot resort to estimation methods when the records are in order.