Evidence & Burden of Proof

Evidence & Burden of Proof — the law in short

Every authority in this library on evidence & burden of proof, with what each one decided.

• CIT (Exemption) v Batanagar Education and Research Trust Supreme CourtHelps department
  The Commissioner has cancelled my trust's registration because some corpus donations are said to be bogus — can he do that when the money was actually spent on the trust's objects?
  Yes. The Supreme Court held on 2 August 2021 that a trust which takes donations by cheque and returns the money in cash is misusing its section 12AA status and cannot keep it. The Managing Trustee had admitted in a survey that a major part of the corpus donations were accommodation entries, that part of each donation went back to the donors through named intermediaries by RTGS, and that those payments were booked as building capital expenditure. On that material the Commissioner and the Tribunal were right to cancel registration under section 12AA(3) and the consequent 80G approval, and the Calcutta High Court should not have interfered under section 260A.
• CIT v Odeon Builders Pvt Ltd Supreme CourtHelps taxpayer
  The whole disallowance rests on an Investigation Wing report. Is that enough?
  No. A disallowance cannot rest on third-party information alone that has not been independently verified, especially where cross-examination was denied and the assessee had already produced bills, transport records, bank payments and the sellers' registrations and returns.
• N.K. Proteins Ltd v DCIT Supreme CourtHelps departmentValidity unconfirmed
  Can the whole of a bogus purchase be added, rather than a percentage?
  On this line of authority, yes. The special leave petitions were dismissed, upholding the High Court, and the effect reported is that the 25% restriction was rejected and the entire fictitious purchase amount fell to be added.
• Common Cause v Union of India Supreme CourtHelps taxpayer
  The addition is based on loose sheets and a diary seized in a search. Is that admissible?
  Not on their own. Loose sheets and scraps are not 'books of account' under s.34 of the Evidence Act because they can be detached and replaced at will, and even entries in properly kept books are not by themselves sufficient to charge anyone with liability without independent evidence of the transaction.
• CIT v S. Khader Khan Son Supreme CourtHelps taxpayer
  They recorded your statement in a survey. Can the addition rest on that alone?
  No. Section 133A gives no power to examine anyone on oath, so a survey statement has no evidentiary value on its own and does not bind you — especially once it is retracted. Something more is needed.
• Ajmera Housing Corporation v CIT Supreme CourtHelps department
  We filed a settlement application and then, when the Commissioner's report came in, filed a revised annexure with a much higher figure. Does that revision sink the application?
  Yes, it can. The Supreme Court held that a full and true disclosure of undisclosed income and of the manner in which it was derived is a pre-requisite of a valid application under section 245C(1), and that Chapter XIX-A contains no provision for revising an application once filed. Where the applicant raised the disclosure from about Rs. 1.94 crore to Rs. 11.41 crore and then went on adding piecemeal and ad hoc amounts, that was itself proof that the original application was not a full and true disclosure. The appeals were dismissed.
• CIT v Bharti Cellular Ltd Supreme CourtCuts both waysValidity unconfirmed
  We pay interconnect and port charges to another telecom operator — is that fees for technical services on which we must deduct tax under section 194J?
  Unresolved, and the Supreme Court sent it back for evidence. On 12 August 2010 it held that the question turns on whether human intervention is involved in the technical operations by which one operator gives another interconnection, and that this cannot be decided without technical assistance on the record. Since 1979 the courts have read technical services narrowly, applying noscitur a sociis, because the words sit between managerial and consultancy services in Explanation 2 to section 9(1)(vii). The department had led no expert evidence. The matters were remitted to the Assessing Officer (TDS) to examine an expert, and no interest or penalty was to be levied for the past.
• ACIT v Dhariya Construction Co Supreme CourtHelps taxpayer
  The only thing behind my reopening notice is the Valuation Officer's report. Is that enough?
  No. The Supreme Court held that the opinion of the Valuation Officer is not by itself information on which an assessment can be reopened. The officer has to apply his mind to whatever material he has collected and form his own belief; adopting the valuer's figure is not that.
• Sargam Cinema v CIT Supreme CourtHelps taxpayerSuperseded by amendment
  The AO has sent my cost of construction to the Departmental Valuation Officer without saying a word about my books. Can he do that?
  Not under the section as it then stood. The Supreme Court held the assessing authority could not have referred the matter to the Departmental Valuation Officer without the books of account being rejected, and where the Tribunal had recorded that the books were never rejected, reliance on the DVO's report was misconceived. The appeal was allowed and the Tribunal's order restored. Read this with the caution below: s.142A was substituted with effect from 1 October 2014 and the substituted section says a reference may be made whether or not the officer is satisfied about the correctness of the accounts.
• CIT v P. Mohanakala Supreme CourtHelps department
  You gave particulars, paid by cheque and got a confirmation. Has the burden shifted?
  Not by itself. Furnishing particulars, payment by account payee cheque, or a confirmatory letter from the creditor is not enough on its own to shift the onus onto the Revenue under s.68.
• P.R. Metrani v CIT Supreme CourtHelps taxpayerSuperseded by amendment
  Can papers seized in a search be presumed true against me in the regular assessment?
  That was not the law as this case decided it: the s.132(4A) presumption operated only within the search proceedings and not in a regular assessment under s.143. Parliament changed that by inserting s.292C in 2007. What survives from this judgment is that the presumption is rebuttable and that seized documents can still be used as ordinary evidence even without it.
• CIT v Vindhya Metal Corporation Supreme CourtHelps taxpayer
  The police seized cash from our employee and the Commissioner issued a section 132A warrant because he had no papers for it — is that authorisation valid?
  No. The Supreme Court declined to interfere with the Allahabad High Court's decision quashing an authorisation under section 132A. All the Commissioner had before him was that Rs 4,63,000 had been seized by the Railway Police from a person carrying it, that the person had no documents of ownership or possession, and that he was not on the General Index Register of assessees at Mirzapur. On that material no reasonable person could have entertained the belief that the money represented income that would not be disclosed. Mere unexplained possession, without anything more, is not enough. The Revenue's appeal was dismissed.
• Sumati Dayal v CIT Supreme CourtHelps department
  Your paperwork is in order. Can the officer still look behind it?
  Yes. Income-tax proceedings are civil proceedings judged on the preponderance of probabilities, and the apparent must be tested against the surrounding circumstances and human probabilities. Documentary form alone does not end the enquiry.
• Chuharmal v CIT Supreme CourtHelps department
  Valuables were found at my premises and I say they are not mine. Who has to prove ownership?
  You do. Title normally follows possession, and the principle in s.110 of the Evidence Act can be applied by taxing authorities even though the Act does not strictly govern them. Unexplained articles found in the assessee's possession were treated as his income under s.69A and the concealment penalty was confirmed.
• CIT v Mussadilal Ram Bharose Supreme CourtHelps taxpayerSuperseded by amendment
  My income was estimated at a higher profit rate after my books were rejected, so my return fell well short of the assessment. Does that by itself mean penalty for concealment?
  No. The Supreme Court held that the Explanation to section 271(1) raises a presumption, not a conclusion. Once the returned income falls below the stipulated proportion of the assessed income, the onus shifts to the assessee to show that the failure did not arise from fraud or gross or wilful neglect - but that onus is rebuttable. Where the fact-finding body, on relevant and cogent material, is satisfied that the assessee was not guilty and the Revenue leads no further evidence, no penalty follows. Whether the onus is discharged is a question of fact, and its answer raises no question of law.
• CIT v Orissa Corporation (P) Ltd Supreme CourtHelps taxpayer
  I gave the lenders' names, addresses and PAN and filed their confirmations, but I cannot produce them and the summonses came back unserved. Can the loans still be added under section 68?
  Not on these facts. The Supreme Court declined to disturb the Tribunal's finding that the assessee had discharged its burden. The assessee had given the names and addresses of the creditors, the Revenue knew they were income-tax assessees and had their index numbers on its own files, and beyond issuing summonses under section 131 at the assessee's request the Revenue did nothing - it never examined the creditors' sources to see whether they were creditworthy, and made no effort to pursue them. In those circumstances the assessee could do no more, and the Tribunal's conclusion was neither unreasonable, perverse nor without evidence.
• Kishinchand Chellaram v CIT Supreme CourtHelps taxpayer
  They have a letter from a bank that you have never seen. Can they use it against you?
  No. Material collected behind your back and relied on against you must be disclosed to you, with an opportunity to meet it. Because the bank's letter was never shown to the assessee, the addition could not stand.
• Pooran Mal v Director of Inspection Supreme CourtHelps department
  The search on me was illegal. Can I stop the department using what it took?
  No. Indian tax law has no exclusionary rule. The Supreme Court upheld s.132 and rule 112 and held that even if a search contravened the section, the material seized was liable to be used, subject to law, before the income-tax authorities against the person from whose custody it was taken. Illegality in the search goes to relief against the search, not to the admissibility of what it produced.
• CIT v Daulat Ram Rawatmull Supreme CourtHelps taxpayer
  A fixed deposit stands in the name of a partner's son and my firm used it as security for its overdraft. The Assessing Officer says the money is really the firm's concealed income. Who has to prove what?
  The Department. The Supreme Court dismissed the Revenue's appeals and upheld the Calcutta High Court. The onus to prove that the apparent is not the real lies on the party who says so, and it was the Department that claimed the deposit standing in Biswanath's name belonged to the firm. Nothing showed the money came from the firm's coffers or went back into them; Biswanath himself drew the deposit. That his own explanation of where the money came from was false did not make it the firm's, and offering the receipt as security for the firm's overdraft did not make him anything but a surety.
• Pullangode Rubber Produce Co Ltd v State of Kerala Supreme CourtHelps taxpayer
  You admitted something and now want to retract it. Does the admission end the matter?
  No. An admission is extremely important evidence, but it is not conclusive. It is open to the person who made it to show that it is incorrect — though the burden of doing so is on him.
• CIT v Khoday Eswarsa & Sons Supreme CourtHelps taxpayer
  Additions were made to my income and confirmed on appeal. The penalty order simply relies on the reasons in the assessment. Is that enough to sustain a concealment penalty?
  No. The Supreme Court held that penalty proceedings are penal in character, so the Department must establish that the disputed receipt is the assessee's income, and must have before it, apart from the falsity of the assessee's explanation, cogent material or evidence from which it can be inferred that he consciously concealed particulars or deliberately furnished inaccurate ones. The original assessment order may be good evidence in the penalty proceedings, but penalty cannot be levied solely on the reasons given in it. Where the Tribunal cancels a penalty on findings of fact, no question of law arises and no reference can be directed.
• CIT v Durga Prasad More Supreme CourtHelps department
  You have a document that says so. Does that settle it?
  Only until there is reason to believe the apparent is not the real. Where you rely on self-serving recitals, it is for you to establish their truth — and the authorities are entitled to look at the surrounding circumstances.
• CIT v Padamchand Ramgopal Supreme CourtHelps taxpayer
  The officer rejected my books without giving reasons and added half my interest receipts as concealed income for five years. Can he do that?
  No. The Supreme Court upheld the Calcutta High Court and held the additions bad. The officer gave no reason for rejecting the accounts. On appeal only two small errors were found, both in the first year, and nothing at all was found wrong with the accounts of the other four years. Adding half the gross interest receipts of each year as escaped income was, in the Court's words, arbitrary and the method highly capricious. Two insignificant mistakes in one year gave no basis for rejecting the books of the remaining years, and the Tribunal had simply adopted the first appellate authority's findings without examining the facts.
• Kale Khan Mohammad Hanif v CIT Supreme CourtHelps department
  My business income was estimated on a percentage of turnover because my books were rejected. Can unexplained credits in those same books still be added separately as income from undisclosed sources?
  Yes, on the way the question was framed. The Supreme Court held that the onus of proving the source of a sum received is on the assessee: if he disputes liability he must show either that the receipt was not income or that it was exempt, and failing that the officer may treat it as taxable income. And the fact that the income of a disclosed business was computed on an estimate does not preclude treating a credit entry in that business's books as income from another, undisclosed source. If it is income of an undisclosed source, it is not income of the disclosed source already taxed, so there is no double taxation.
• C. Vasantlal and Co v CIT Supreme CourtHelps department
  The Income-tax Officer examined witnesses behind my back and used their statements against me. Is that material evidence at all?
  It can be, provided it is disclosed to you. The Supreme Court held that the Income-tax Officer is not bound by the technical rules of the law of evidence and may collect material to facilitate assessment even by private enquiry, but if he wishes to use it he must inform the assessee of the material and give an adequate opportunity to explain it. Here nothing showed the material had been withheld, and in any event the Appellate Assistant Commissioner had summoned the two witnesses and allowed cross-examination. The Tribunal was therefore free to rely on their earlier statements and to disbelieve the later ones.
• Omar Salay Mohamed Sait v CIT Supreme CourtCuts both ways
  The order against me reads like a hunch dressed up as a finding. Is there an old authority that says the appellate authority has to decide on the evidence?
  Yes. This 1959 Supreme Court decision is the authority for the proposition that conclusions reached by the revenue authorities must be based on evidence, and that no addition can be made on the basis of suspicion, conjecture or surmise. It is cited to this day by the Tribunal for exactly that, and it is the counterweight to the line of cases that lets the authorities act on the probabilities of a case.
• A Govindarajulu Mudaliar v CIT Supreme CourtHelps department
  The Assessing Officer rejected my explanation for cash credits. Must he then prove where the money actually came from before taxing it?
  No. The Supreme Court held that where an assessee fails to prove satisfactorily the source and nature of an amount of cash received during the accounting year, the Income Tax Officer is entitled to draw the inference that the receipt is of an assessable nature. The department need not adduce evidence of the source. Whether a receipt is to be treated as income depends largely on the facts of each case; here the sums stood credited to the assessee in a firm's books, his two explanations were rejected on the evidence, and it was open to the officer to treat them as concealed income.
• Mehta Parikh & Co v CIT Supreme CourtHelps taxpayer
  The officer accepted my books but still says I could not have held that much cash in high denomination notes, and has added part of it as undisclosed income. Can he do that?
  No. The Supreme Court held the addition was based on no evidence and set it aside. The cash book entries had been accepted as correct and the three affidavits explaining the receipt of notes were never challenged by cross-examination, so the Revenue could not question either. On that material it was within the range of possibility that the firm held the 61 notes, and an imaginary calculation could not displace the explanation. The Tribunal, having accepted the explanation for 31 notes, had no reason to reject it for the other 30; that was a rule of thumb and pure surmise. The High Court was wrong to treat the finding as an unassailable finding of fact.
• Mehta Parikh and Co v CIT Supreme CourtHelps taxpayerValidity unconfirmed
  The officer says my cash balance could not possibly have held so many high-denomination notes — can he add them as income from undisclosed sources?
  Not on that reasoning. The Supreme Court held that where the assessee's cash book had been accepted and the affidavits filed in support were never challenged by cross-examination, the revenue could not question either, and the state of affairs had to be appreciated on those materials taken at face value. A calculation showing that it was improbable that every large receipt came in thousand-rupee notes was not enough to displace the explanation. The Tribunal's course of accepting the explanation for 31 of the 61 notes and rejecting it for the rest was a rule of thumb resting on no evidence. The High Court should have answered the question in the negative; the appeal was allowed.
• V.VR.N.M. Subbayya Chettiar v CIT Supreme CourtHelps department
  The karta of our HUF lives abroad but comes to India a few times a year to attend to family litigation and tax matters — is the family resident in India?
  It depends, and the onus is on the assessee. The Supreme Court held that an HUF is presumed resident in India unless it shows that the control and management of its affairs is situated wholly outside India. 'Control and management' means the controlling and directive power, the head and brain, functioning at a place with some degree of permanence; mere activity is not residence. Here the karta lived and was domiciled in Ceylon, but he produced no correspondence or other evidence that the Indian affairs were normally directed from Colombo, so the presumption stood and the family was held resident.
• Dhakeswari Cotton Mills v CIT Supreme CourtCuts both ways
  Can the Assessing Officer estimate income on departmental material the assessee has never been shown?
  The officer estimated gross profit by comparing the assessee with other mills, without disclosing the comparative data or letting the assessee lead rebuttal evidence. The Supreme Court set the assessment aside, holding that an estimate cannot rest on pure guess and that the material relied on must be disclosed to the assessee. It is the foundational Indian authority on natural justice at the assessment stage.
• Manohar Ramabtar Jhunjhunwala v PCIT High CourtHelps taxpayerValidity unconfirmed
  My employer deducted tax but never deposited it, so the credit was denied on processing, a demand now sits on the portal and my later years' refunds are being eaten by it. Do I get the credit and the refund, or only a promise that nobody will recover from me?
  You get the credit and the refund, not merely a bar on recovery. A Division Bench of the Bombay High Court, hearing a batch of such petitions with the assistance of an amicus, held that where an assessee establishes that tax was in fact deducted at source, the Department must grant appropriate TDS credit and cannot recover the corresponding amount from the deductee directly or indirectly, that the consequential relief including refund must follow, and that pending disposal of a credit application the demand must be marked in the system as stayed or not recoverable so that no coercive recovery or refund adjustment takes place.
• Alishan Complex P Ltd v Initiating Officer High CourtHelps taxpayerValidity unconfirmed
  The benami attachment rests on a retracted statement and they refused cross-examination. Is that evidence?
  No. An untested and retracted statement, standing alone, is no evidence at all on which a benami finding can rest. Where such a statement is the only material against a party, the power in s.19(1)(b) of the Prohibition of Benami Property Transactions Act to summon and examine the witness stops being discretionary and becomes a duty, and income-tax assessment findings on the source and genuineness of the funds are relevant material the Initiating Officer is bound to consider.
• Sashi Bhusan Prasad Bhuian v State of Jharkhand High CourtHelps departmentValidity unconfirmed
  My clerk filed the return and I am illiterate. Is that a defence to a 277 prosecution?
  No. Under s.278E the court must presume a culpable mental state and it is for the accused to prove he had none. Pleading illiteracy or blaming an office clerk does not discharge that burden, and a conviction and six-month sentence for a refund claim built on a forged TDS certificate and a non-existent housing loan were upheld.
• PCIT v KRBL Infrastructure Ltd High CourtHelps taxpayerValidity unconfirmed
  The officer accepts my lender exists but says the lender's own purchases were bogus. Do I have to explain where the lender got the money?
  No, not for an assessment year before 2023-24. Once identity, creditworthiness and genuineness are established the assessee does not have to prove the genuineness of the funds in the lender's hands, and the officer cannot travel into the lender's own purchases without material connecting them to the assessee. The requirement to explain the source of the source of a loan came in with the Finance Act 2022 and operates from assessment year 2023-24.
• PCIT v Colo Colour Private Limited High CourtHelps taxpayer
  The officer accepted my purchases but estimated a profit element on them because the sales tax department listed my suppliers as hawala dealers. Can he then levy concealment penalty on that estimate?
  No. The Bombay High Court dismissed the Revenue's appeal, holding that no substantial question of law arose. The Assessing Officer had himself recorded that the purchases were not in doubt, because without the material the corresponding sales could not have been made, and had merely estimated 12.5 per cent of the purchase price as the benefit, with one per cent for commission. Penalty under section 271(1)(c) cannot be founded on an addition made on estimate or guesswork. Having accepted the assessee's material for assessment as not amounting to concealment, the Department could not relabel the same material as concealment under the garb of penalty proceedings.
• Tivoli Investment & Trading Co v ACIT High CourtHelps departmentValidity unconfirmed
  The officer says my declared rent is too low and has fixed a much higher annual value. Is he bound by the municipal rateable value?
  No. The Bombay High Court held that the municipal rateable value does not bind the Assessing Officer when he determines annual value under s.23(1)(a), and upheld an annual letting value of Rs 22,00,000 against a declared licence income of Rs 1,17,900 where the premises had been let to a bank for a nominal monthly fee alongside an interest-free security deposit of Rs 1.54 crore.
• PCIT v Prabodh Kumar Tiwari High CourtCuts both waysValidity unconfirmed
  The department says the section 278E presumption means I must face the whole trial. Has any court actually held the presumption rebutted, and on what material?
  Yes. The Delhi High Court dismissed the department's leave petitions and let an acquittal under section 276CC stand, holding that the statutory presumption of a culpable mental state under section 278E had been rebutted. It applied the burden at its strictest - once the presumption is triggered the accused must disprove wilful default, and to the criminal standard - and still found it discharged on the Commissioner's own findings and the surrounding circumstances. But the Court reached that result on its own reasoning, and expressly rejected the appellate court's ground that cancellation of a penalty under section 271(1)(b) vitiates a prosecution under section 276CC.
• PCIT v Rajesh Suresh Chopra High CourtHelps taxpayerValidity unconfirmed
  If an estimate on the disputed purchases cannot be avoided, is there a High Court figure I can point to?
  Yes, on these facts. The Gujarat High Court dismissed the department's appeal against a Tribunal order that had confined the addition on roughly Rs 116.50 crore of alleged accommodation-entry purchases to 6 per cent, holding that no substantial question of law arose because the questions proposed were already answered by a coordinate bench, which had held 6 per cent of bogus purchases to be fair and reasonable. It is a percentage a High Court has let stand, not a rule — the figure follows the facts, and the department's contrary line on whole-invoice additions is unaffected.
• Pramod Swarup Agarwal v PDIT (Inv) High CourtHelps taxpayerValidity unconfirmed
  The authorised officer who searched us has now summoned us under s.131(1A). Can he?
  No, not after the search is over. The officer who issued the notice was the authorised officer for the s.132 search, and s.131(1A) lets the authorised officer use that power only before he takes action under clauses (i) to (v) of s.132(1). The action having already been taken, the notice was quashed; and the department could not save it by pointing to the same person's substantive designation as Deputy Director.
• PCIT v Drisha Impex (P) Ltd High CourtHelps department
  The Tribunal gave me a small percentage addition on disputed purchases. Can the department get the whole disallowance back on appeal?
  Yes, where the file is empty. The Bombay High Court set aside the Tribunal's 3% estimate and restored the Assessing Officer's disallowance of the whole of the disputed purchases under s.69C, and the assessee's SLP was dismissed. What decided it was a list of documents that were not produced: no evidence of actual delivery of material, no supplier confirmations, no audited accounts, no quantitative details and no correlation between the purchases and the sales.
• PCIT v Kanak Impex (India) Ltd High CourtHelps department
  The officer says my purchases are accommodation entries. Can he add the whole purchase, or only a percentage?
  The whole of it, if you cannot show the purchases were real. The Bombay High Court set aside the Tribunal's order restricting the addition to a 12.5% profit estimate and restored the Assessing Officer's disallowance of the entire Rs 20.06 crore under s.69C, and the Supreme Court dismissed the assessee's SLP. The profit-element line only runs where the purchases themselves are accepted as having happened.
• Sonansh Creations P Ltd v ACIT High CourtHelps taxpayerValidity unconfirmed
  The officer says I took accommodation entries and I say I received nothing. Must he have material that the entries exist before he reopens?
  He must. The Delhi High Court set aside a s.148A(d) order and the consequent notice where the information was that eleven entities controlled by an entry operator had given the company fictitious loans, the company denied receiving anything from them and disclosed the bank accounts it operated, and the officer never referred to any material showing that the money had in fact come into those accounts. The Court rejected the contention that at the s.148A(d) stage the officer need form no opinion on the genuineness or veracity of the information; he must be reasonably certain that the alleged entries exist, though he need not conclusively decide that they are accommodation entries. Liberty was reserved to issue a fresh notice if material is found.
• Meera Pandey v UOI High CourtHelps taxpayerValidity unconfirmed
  A benami show-cause and attachment have come on the strength of one contractor's statement. Can I go to the High Court now?
  Yes. The Allahabad High Court quashed both the s.24(1) notice and the provisional attachment where the Initiating Officer's whole case was a contractor's statement with no supporting material. It held that s.24(1) requires two things — material in the officer's possession, and material sufficient to cause a reason to believe — and that "reason to believe" is a stronger standard than "is satisfied" or "reason to suspect".
• PCIT v DSG Papers (P) Ltd High CourtHelps taxpayer
  The addition rests on statements of ex-employees and third parties I was never allowed to question. Is the assessment good?
  The additions were deleted, but read the High Court decision for what it is. The Chandigarh Tribunal directed deletion of the additions in all five years, holding that the assessee had not been allowed to cross-examine the persons on whose statements the Assessing Officer relied and that the evidence was internally contradictory — invoices said to have been destroyed were recovered from the residence of an ex-president against whom the company had filed an FIR before the search. The Punjab and Haryana High Court dismissed the revenue's appeal, but its order is two paragraphs long and gives no reasons of its own: it adopts a detailed judgment of even date in a companion appeal, IT Appeal No. 38 of 2023, which is not available in a subscription case-law database.
• PCIT v Indravadan Jain, HUF High CourtHelps taxpayerHigh Courts differ
  SEBI has found that the broker rigged the price of the scrip I sold. Does that finding by itself make my capital gain bogus?
  No. The Bombay High Court dismissed the Revenue's appeal where the shares had been bought on the floor of the Kolkata Stock Exchange through a registered broker, paid for by cheque, held in demat for more than a year and sold on the floor of the exchange with contract notes and bills produced and the sale proceeds received from the exchange. The Assessing Officer's case was that the scrip was a penny stock, that the broker had been found by SEBI to have manipulated the price through synchronised cross-deals, and that the price had gone from Rs. 3.12 to Rs. 155.04 in two years. That was held not to be enough, because the price manipulation was the broker's conduct and nothing connected the assessee to it.
• Suman Jeet Agarwal v ITO High CourtCuts both ways
  The department says my section 148 notice was issued on 31 March because the ITBA screen shows it was generated that day, but the e-mail only reached me in April. Which date counts, and can I take that to a writ court?
  The date it went out. The Delhi High Court, deciding a batch of more than 170 writ petitions, held that 'issue' means the officer must, after drawing up and signing the notice, do an overt act to ensure its due despatch, and that it is only upon due despatch that a notice can be said to have been issued. Mere generation of the notice on the ITBA screen is therefore not issue, in fact or in law. The Court noted from the department's own compliance affidavit that generation and digital signing are the officer's acts while the e-mail carrying the notice is drafted and triggered by the ITBA software.
• PCIT v Swati Bajaj High CourtCuts both waysValidity unconfirmed
  My long-term capital gain on a listed share has been treated as bogus because the scrip appears in the investigation wing's penny-stock report — can the department do that when all my paperwork is in order?
  It depends, and this record cannot tell you which way this batch went. The Calcutta High Court heard the Revenue's appeals under section 260A against a common Tribunal order of 26 June 2019 that had allowed some 90 assessees' appeals on penny-stock long-term capital gains. The questions framed were whether the Tribunal ignored the direct and circumstantial evidence of price manipulation, whether its order was perverse, and whether the exemption and the related commission disallowance were rightly deleted. The harvested text carries the facts and the parties' arguments but stops before the Court's reasoning and order, so the holding is not stated here.
• CIT (E) v Hamdard National Foundation (India) High CourtHelps taxpayer
  The officer says we let our building to a related party below market rent. Is that by itself a breach of s.13(2)(b)?
  No, not by itself. The burden of showing that the rent was inadequate is on the Department, and the market rate is not the only yardstick. Where the rent charged was higher than the valuation the municipal corporation had adopted for house tax, and the officer's only material was enquiries from estate agents and figures picked off the internet, the Delhi High Court held that s.13(2)(b) was not attracted and the s.11 exemption stood.
• PCIT v Anand Kumar Jain (HUF) High CourtHelps taxpayer
  The addition rests only on an entry operator's search statement. Is that enough to assess me?
  No. A s.132(4) statement has evidentiary value, but standing alone and without any other material found in the search it cannot support the assessment. Where the statement came out of a search of a third party, s.153C is the route and cannot be bypassed, and the deponent must be offered for cross-examination.
• PCIT v Smt Krishna Devi High CourtHelps taxpayerHigh Courts differ
  The Assessing Officer has added my long-term capital gain on a share whose price rose 4,849%, relying on the Investigation Wing's penny-stock report. Is the price rise by itself enough?
  No. The Delhi High Court accepted that the price movement and the company's financials were odd, and still refused to sustain the addition. The assessee had bought online, paid through a bank, held the shares in demat form and sold through the demat account with sale proceeds received by banking channel. The officer issued notices under ss.133(6)/131 to the company and to the entity that had paid for the shares; they produced nothing and came back unserved, and he then went no further. On that record the Court held the finding that there was an arrangement to convert unaccounted money was an assumption based on conjecture, and that suspicion is not proof. Read it with the contrary Calcutta line in PCIT v Swati Bajaj, which the library also carries.
• Pawan Kumar Goel v Union of India High CourtHelps taxpayer
  The officers came in on a survey, I cooperated and showed them everything, and then they turned it into a search and took away the cash. Can they do that?
  No, not on this record. The Punjab and Haryana High Court quashed the action. Section 133A(4) forbids an income-tax authority acting under that section from removing any cash, stock or valuable article from the premises, and it is only where the person refuses or evades cooperation that section 133A(6) lets the authority fall back on the powers in section 131(1). Here the assessee had voluntarily disclosed and handed over Rs 2,09,89,090, the department produced no material to show non-cooperation, and no satisfaction was ever recorded for converting the survey into a search. The summons under section 131 was also vague, specifying nothing that was required of him. The action was quashed with consequential benefits.
• Shankar Sales Promotion Pvt Ltd v CIT High CourtHelps taxpayerValidity unconfirmed
  My company lends money and also deals in shares. How is it decided which is the 'principal business' for the exclusion in the Explanation to s.73?
  There is no single test. The Calcutta High Court held that the memorandum of association, turnover, capital expenditure and the relation of profit to expenses are all relevant, that all of them must be judiciously analysed and assessed, and that what emerges is a tricky question of fact which the Tribunal must determine threadbare on the record. Because the Tribunal had not done that, the Court set its order aside and remitted the appeal with a direction to decide within six months.
• PCIT v Mohommad Haji Adam & Co High CourtHelps taxpayer
  Your purchases are called bogus but your sales were accepted. How much can be added?
  Only the gross profit difference. Without purchases there cannot be sales, so where the department accepts the sales it cannot add the whole purchase amount — the addition is restricted to the GP rate on those purchases at the rate applied to genuine ones.
• Smt Tharakumari v ITO High CourtHelps department
  The officer refused me cross-examination of the person whose statement he used. Does that alone get the addition deleted?
  Not by itself, and this case shows why. The assessee's counsel argued in the Madras High Court that she had been denied the opportunity to cross-examine Shri Deepak Patwari, on whose sworn statement before the Investigation Wing the addition rested. The Court did not reject the principle. It dismissed the appeal because she had not co-operated in the assessment, had not appeared before the CIT(A) on any of five hearing dates, and had put no evidence on record to show that the statement was wrong or to explain how she came to identify and sell the scrip. The concurrent findings that the transaction was sham and taxable under s.68 were therefore not perverse.
• PCIT v NDR Promoters (P) Ltd High CourtHelps departmentValidity unconfirmed
  I have PAN cards, bank statements, ROC filings and confirmations for every share subscriber. Can the Assessing Officer still add the share capital under section 68?
  Yes, where there is material showing the subscribers are paper companies. The Delhi High Court set aside the Tribunal and restored an addition of Rs.1,51,50,000 under section 68 for assessment year 2008-09. Five subscriber companies shared one address, were run by an entry operator whose search had produced statements from his employee-directors and auditors, and the assessee had no business and no assets yet issued Rs.10 shares at Rs.40 premium. The Court held the transactions were sham and make-believe with excellent paper work to camouflage their bogus nature, and that the Tribunal's approach was superficial and contrary to human probabilities.
• PCIT v Chain House International (P) Ltd High CourtHelps taxpayerValidity unconfirmed
  The Assessing Officer says the premium on my share issue is far too high and has added the whole share capital under section 68 — is the amount of premium his business?
  No. The Madhya Pradesh High Court held that the premium at which a company issues its shares is a question of fact and the prerogative of the board of directors, and it is for the shareholder to decide whether to subscribe at that premium. Section 68 lays down no law about share premium; all it requires is the identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants. Those having been established before the Commissioner (Appeals) and the Tribunal, the additions of Rs 55 crore could not be revived in a further appeal on a pure question of fact.
• PCIT v Best Infrastructure (India) P Ltd High CourtHelps taxpayerUnder appeal
  The share capital addition rests on a statement I was never allowed to cross-examine. Does it stand?
  No. Statements under s.132(4) do not by themselves constitute incriminating material; a copy of the statement and an opportunity to cross-examine the deponent must be given, and where the statement is retracted or cross-examination is refused it has to be discarded. The s.68 additions fell.
• CIT v Green Infra Ltd High CourtCuts both waysValidity unconfirmed
  The officer says nobody would pay this premium for shares in my company. Is that a ground for taxing it under s.68?
  No. Even if the premium at which the shares are issued defies commercial prudence, the receipt cannot be assessed as an unexplained credit where the identity of the payer, the genuineness of the transaction and the capacity of the subscriber are not disputed. Whether to subscribe at a heavy premium is the shareholder's decision, not the officer's.
• Rajmandir Estates P Ltd v PCIT High CourtHelps departmentValidity unconfirmed
  Can the officer look past my subscriber at where the subscriber's own subscribers got their money?
  It depends on what the file shows. This is the decision the department relies on for going up the chain. Upholding a revision under s.263, the Calcutta High Court quoted the Special Bench in Sophia Finance for the width of the words 'any sum found credited in the books' and held that the officer is not precluded from enquiring into the true nature and source of a credit even where it is entered as share application money; it recorded that the submission that the source of the source is irrelevant did not appear to be correct. What it decides is that the enquiry could be directed on this file, not that the credits were bogus.
• CIT v Harjeev Aggarwal High CourtCuts both ways
  The department is taxing me on what I admitted in my statement during the search. Can an addition rest on that statement alone?
  No. The Delhi High Court held that a statement recorded under section 132(4) is not itself "evidence found as a result of search" for the purposes of section 158BB(1). It is information, and it can support a block assessment only so far as it is relatable to incriminating material actually unearthed in the search. A standalone admission, with no document or asset behind it, cannot trigger a block assessment. On the facts, though, the Court found there was such material - a diary of unaccounted sales and books that did not record admittedly cash payments - so the addition of Rs.74 lakh was restored.
• CIT v Suresh Nanda High CourtHelps taxpayerValidity unconfirmed
  My passport was seized and I could not leave India. Do those days count towards the 182 days?
  No, where the stay was involuntary and the seizure itself was found to be wrongful. The Delhi High Court upheld the Tribunal and held that the period for which a citizen is in India against his will, brought about by executive action later found to be without authority of law, must be excluded in calculating the period under s.6(1)(a). The test it laid down is one of animus: there must be something to show that the individual intended, or had the animus, of residing in India for the minimum prescribed duration. The Court added that this is not a thumb rule - each case has to be examined on its own facts.
• CIT v Navodaya Castles (P) Ltd High CourtHelps departmentValidity unconfirmed
  I have produced the share subscribers' incorporation certificates, PAN cards, bank statements and confirmations — is that enough to discharge my onus under section 68?
  Not necessarily. The Delhi High Court held that certificates of incorporation and PAN establish existence on paper but have their limitation where there is material showing the subscriber was a paper company and not a genuine investor. Identity, creditworthiness and genuineness must be tested in depth, having regard to human probabilities and the normal course of human conduct, not superficially. Creditworthiness is not proved by a cheque or a bank statement where the account merely shows cash deposited and cheques issued out. The Tribunal's order upholding deletion of a Rs 54 lakh addition was set aside and the matter remitted for fresh decision.
• CIT v Satya Narain Patni High CourtHelps taxpayer
  The search party left our jewellery alone but the AO has still added part of it. Can he do both?
  No, on these facts, and the reason is wider than the seizure decision. The Rajasthan High Court held that once the Board has expressed the opinion in Instruction No. 1916 that jewellery up to 500 grams for a married lady, 250 grams for an unmarried lady and 100 grams for a male member is not to be seized, it should normally follow that jewellery within those quantities will not be questioned as to its source and acquisition either. Here the family's entitlement was 2,700 grams against 2,202.464 grams found, the authorised officer had seized nothing, and the Assessing Officer's later addition on part of the same jewellery had no basis — he gave no reason for fixing 1,600 grams as the reasonable quantity. The Court preserved the department's power over the excess: jewellery beyond those weights can be questioned and, if not properly explained, treated as unexplained investment.
• Dipen Laljibhai Mandalia v DGIT High CourtHelps taxpayer
  The department is justifying my search warrant with discrepancies it discovered after the satisfaction note was recorded. Can material found later prop up the authorisation?
  No. The Gujarat High Court held that material collected after the satisfaction note is recorded and the search authorisation issued cannot be pressed into service to support that authorisation. The Court read the satisfaction note itself, found that the department already knew of the gold, had the lease documents and the assessee's books before it, and that the explanation offered was corroborated by the goldsmiths' statements. There was therefore no material on which a reasonable belief under section 132(1)(c) could be formed. The petitions were allowed and the search and seizure operations were quashed.
• CIT v Usha International Ltd High CourtCuts both waysValidity unconfirmed
  I disclosed everything in a scrutiny assessment, the Assessing Officer never asked about one particular item, and now he wants to reopen within four years — is that a change of opinion?
  It depends on what happened at the original assessment. The Delhi High Court Full Bench, on 21 September 2012, took up four referred questions on the meaning of change of opinion under section 147 after the 1989 amendment. Two propositions are settled on the face of the judgment. Where the return was only processed under section 143(1) and no scrutiny assessment was made, there is no opinion and so no change of opinion. Where the assessment order itself records that the issue was raised and decided for the assessee, reopening is barred. The hard case — full disclosure, a section 143(3) assessment, but silence in the order — is where the Bench divided.
• Jagran Prakashan Ltd v DCIT (TDS) High CourtHelps taxpayerValidity unconfirmed
  I publish a newspaper and allow accredited advertising agencies the standard 15 per cent trade discount. The TDS officer says that is commission under section 194H and has raised a demand on me. Is that right?
  No, on the reasoning available in this judgment. The Allahabad High Court held that section 194H applies only where the recipient acts on behalf of the payer, and here there was no agreement between the newspaper and the advertising agencies and no agency had ever been appointed. The Kerala decision in Director, Prasar Bharati, on which the department relied, turned on a written agency agreement containing an express clause about withholding tax, and was held to be inapplicable. The Delhi High Court had already decided the same question against the department in Living Media India, and the Supreme Court had dismissed the department's special leave petition against it on 11 December 2009.
• CIT v Nova Promoters & Finlease (P) Ltd High CourtHelps departmentValidity unconfirmed
  I have given the Assessing Officer PAN, bank statements and ROC records for every share applicant — does Lovely Exports mean the addition under section 68 must go?
  No, not where the department holds material linking you to admitted entry operators. The Delhi High Court held on 15 February 2012 that Lovely Exports applies where the assessee furnishes complete particulars and the Assessing Officer neither enquires into them nor holds material showing them to be false. It does not apply where the Assessing Officer has the statements of self-confessed accommodation entry providers whose companies are the very subscribers, and the assessee blocks every attempt to examine them. The Court also held the Tribunal wrong in law in requiring the Assessing Officer to prove the money came out of the assessee's own coffers. The addition of Rs.1,18,50,000 and the commission addition were restored.
• CIT v Manish Build Well P Ltd High CourtCuts both waysValidity unconfirmed
  The CIT(A) admitted my extra papers and deleted the addition. Can the department upset that on appeal?
  Yes. Where additional evidence is admitted on the assessee's own application, sub-rule (3) of Rule 46A makes it mandatory to give the AO a reasonable opportunity to examine it or cross-examine the witness. A deletion made without that opportunity cannot stand — which is different from the appellate authority's own power under s.250(4) to direct further enquiry.
• CIT v Sardar Exhibitors P Ltd High CourtHelps departmentValidity unconfirmed
  My client lets its shop to a group company at a low rent, and that company sub-lets to an outsider at many times the figure. Can the Assessing Officer assess my client on the sub-letting rent?
  The Delhi High Court refused to let that structure pass unexamined. It found the Tribunal had proceeded on the factually wrong footing that the tenant was not a sister concern, when the assessee had admitted the connection before the Assessing Officer, and it remitted the appeals to the Tribunal for fresh consideration, answering the question of law partly in favour of the Revenue. It expressly did not decide whether the sub-letting rent can be taxed in the owner's hands, and left that question open.
• CIT v Oasis Hospitalities (P) Ltd High CourtCuts both waysValidity unconfirmed
  What exactly do I have to file to discharge my onus on share application money under section 68, and what happens once I have filed it?
  It depends on what you can produce. The Delhi High Court set out the initial onus as three ingredients — identity of the shareholder, genuineness of the transaction and creditworthiness of the shareholder — and held that for a corporate subscriber, PAN, acknowledgement of the return, the bank statement for the relevant period and confirmations discharge it. Once they are filed the onus shifts to the Assessing Officer, who must have cogent material and cannot act on suspicion. But where the assessee produces only names and the persons produced are shown to have no capacity, the onus is not discharged. Three appeals went for the assessees and one against.
• CIT v Dhingra Metal Works High CourtHelps taxpayerValidity unconfirmed
  A partner surrendered income during a survey and we have since reconciled the stock. Can we withdraw it?
  Yes. Section 133A does not give a statement recorded in a survey evidentiary value, and an admission is not conclusive: the maker may show it to be wrong. Once the stock difference was reconciled from the records and the officer had made no independent enquiry, nothing was left to support the addition.
• CIT v Dwarkadhish Investment (P) Ltd High CourtHelps taxpayerValidity unconfirmed
  I gave the officer the share applicants' PAN, incorporation papers, affidavits and bank statements, but he could not find them at their addresses and has added the money under section 68. Is that right?
  No. The Delhi High Court held that the onus under section 68 is not static. The initial burden is on the assessee, but once he proves the identity of the share applicants by furnishing a permanent account number or assessment particulars and shows the genuineness of the transaction by producing the money received through account payee cheque, draft or other traceable mode, the onus shifts to the Revenue. That the applicants could not be found at the addresses given does not by itself let the officer invoke section 68 - it is the Revenue that has the power and the machinery to trace people. The assessee need not prove the source of the source.
• CIT v Ratanlal Vyaparilal Jain High CourtHelps taxpayer
  Does the jewellery instruction explain the source of the gold, or only stop the department seizing it?
  It explains the source, to the extent of the quantities in it. The Gujarat High Court held that the Board's circular proceeds on recognised customs prevailing in Hindu society, so possession of jewellery within those quantities is taken to be explained unless the Revenue shows otherwise.
• CIT v Shri Raj Kumar High CourtHelps taxpayer
  The company advanced money to me against goods I was to supply. Is that a 'loan or advance' under s.2(22)(e)?
  No. The word 'advance' in s.2(22)(e) takes its colour from the word 'loan' next to it, so it means an advance carrying an obligation of repayment. Money moved to give effect to a genuine commercial transaction — a trade advance — is outside the clause.
• Kailashben Manharlal Chokshi v CIT High CourtHelps taxpayer
  I disclosed a large sum in the search statement and retracted two months later. Will the retraction hold?
  Partly, and only for what the department cannot corroborate. An admission is evidence but not conclusive, so additions for house property, gold and furniture that rested only on the retracted statement were deleted, while the amount matched by unaccounted cash actually found was upheld.
• Commissioner of Income Tax v Girish Chaudhary High CourtHelps taxpayer
  A loose sheet seized in the search has bare figures on it and the officer has read '48' as Rs 48 lakhs of undisclosed income. Can that stand without anything more?
  No. The Delhi High Court upheld the deletion of the Rs 48 lakh addition. There was no material on record to show on what basis the officer concluded that the figure 48 was to be read as Rs 48 lakhs. Following the Supreme Court in CBI v V.C. Shukla, a file of loose sheets is not a book of account, so entries in it are not admissible under section 34 of the Evidence Act, 1872, and the seized annexure was a dumb document leading nowhere. The Court endorsed the Tribunal's view that it was for the Revenue to put life into the document by collecting other relevant and connected material, which it had not done. The appeal was dismissed.
• Nemi Chand Kothari v CIT High CourtHelps taxpayer
  My lender is a genuine assessee and paid me by cheque, but the Assessing Officer says the people who lent to him have no means, and has added the loan to my income. Can he do that?
  No, not on that reasoning alone. The Gauhati High Court held that the assessee's burden under section 68 stops at his own transaction: identity of the creditor, genuineness of the transaction with that creditor, and that creditor's creditworthiness. Section 106 of the Evidence Act puts on him only what is within his special knowledge, and what his creditor's own lenders did is not. The Assessing Officer may investigate the sub-creditors, but a failure by them proves nothing against the assessee. Unless there is evidence that the money was in truth the assessee's own, the addition belongs in the creditor's or sub-creditor's hands, not his.
• Paul Mathews and Sons v CIT High CourtHelps taxpayer
  Can the officer treat what I said during a survey as sworn evidence against me?
  No. The officer conducting a s.133A survey has no power to administer an oath or record a sworn statement, so the statement is not given evidentiary value and cannot by itself found an addition. Section 132(4), by contrast, expressly allows a search statement to be used as evidence.
• CIT v Metachem Industries High CourtHelps taxpayerValidity unconfirmed
  There are credits in my partners' capital accounts. The officer says the partners cannot prove where the money came from and is adding it to the firm's income. Can he?
  No, once the firm has identified the depositor and he owns the entry. The Madhya Pradesh High Court answered the reference against the Revenue and held that where it is established that an amount was invested by a particular person, partner or otherwise, the firm's responsibility is over. The firm cannot be asked whether the money invested was properly taxed; it need only explain that the investment was made by that individual, and it is for him to account for it. If he owns the entry the firm's burden under section 68 is discharged, and the officer's remedy is to proceed against that person, if necessary under section 69.
• Awadhesh Pratap Singh Abdul Rehman v CIT High CourtHelps departmentValidity unconfirmed
  The officer rejected my books and made a best-judgment assessment because I kept no stock register. Is that enough on its own to reject?
  Not on its own — but it does not have to be. The absence of a stock register or cash memos may not by itself show that the accounts are false or incomplete; where it is coupled with unverifiable purchases and sales, missing vouchers for expenses and an implausibly low profit, the officer is justified in rejecting the books and assessing to the best of his judgment.
• CIT v Bhaichand H. Gandhi High CourtHelps taxpayer
  An unexplained deposit appears in my bank statement but nowhere in my own cash book. Can it be added under section 68 as a cash credit in my books?
  No. The Bombay High Court held that a pass book supplied by a bank to its customer is a copy of the customer's account in the bank's own books. The relationship between banker and customer is debtor and creditor, not trustee and beneficiary, so the bank does not keep the pass book as the customer's agent or under his instructions. It is therefore not a book of the assessee, nor a book maintained by him for any previous year, and section 68 - which operates on a sum found credited in the books of an assessee maintained for any previous year - does not apply to it.
• Smt. Prabhavati S. Shah v CIT High CourtCuts both ways
  If additional evidence does not fit any of the four gateways in Rule 46A, is the CIT(A) powerless to look at it?
  The Bombay High Court held that Rule 46A fetters the assessee's right to produce evidence but does not fetter the CIT(A)'s own powers under s.250(4) and s.250(5). Where the appellate authority considers evidence necessary to examine the claim, it can direct an inquiry or the production of documents even though the assessee could not have brought the evidence in as of right.
• Manoj Kumar Jagetia v ITO ITATHelps taxpayerValidity unconfirmed
  My s.80GGC donation has been disallowed and the same money added back under s.69A, purely because the Investigation Wing says the party ran a cash-back racket. Nothing in the order names me. Can that stand?
  No. A general modus operandi found in a search of the recipient political party may justify opening an enquiry, but it cannot by itself prove that this donor got his money back; the Revenue must produce assessee-specific material and must confront the donor with it. The Tribunal restored the full Rs.3,00,000 deduction under s.80GGC and deleted the consequential Rs.2,85,000 addition under s.69A.
• Sumit Maloo v ITO, Kishangarh ITATHelps taxpayerValidity unconfirmed
  The Assessing Officer has disallowed my whole Chapter VI-A block — 80C, 80D, 80G — and my HRA, saying I filed no documentary evidence. I did file it. What do I do?
  The Jaipur Tribunal restored almost all of it, holding that where the assessee has actually placed the evidence on record the Assessing Officer and the CIT(A) cannot disallow "arbitrarily" without discussing those documents. On s.80D in particular the Tribunal allowed Rs 50,000 of medical expenditure incurred on a dependent father who was a senior citizen suffering from Parkinson's, on the strength of a doctor's prescription, the father's Aadhaar showing his age, and bank entries evidencing the spend — with no insurance policy at all.
• Meetkumar Hasmukhbhai Chaturvedi v ITO ITATHelps departmentValidity unconfirmed
  I paid the political party by cheque and I hold the receipt. Is that enough to save my s.80GGC deduction when the department says the party was running an accommodation-entry racket?
  Not on this record. The Tribunal dismissed the appeal, holding that payment through banking channels and production of a donation receipt cannot override the search material showing that the recipient party systematically layered donations through shell entities and returned the cash. It also rejected the challenge to the s.148 notice.
• Hirabhai Karshanbhai Solanki v ITO, Rajkot ITATHelps taxpayerValidity unconfirmed
  In a s.147 reassessment the Assessing Officer has thrown out my s.80U disability deduction along with 80C and 80TTA because I produced nothing during the assessment. Can I still prove it in appeal?
  Yes, on this order. The Rajkot Tribunal deleted the whole Chapter VI-A disallowance where the assessee produced LIC premium receipts and notified mutual fund receipts for s.80C, and for s.80U produced a disability certificate issued by the competent medical authority — the assessee also appearing personally before the Tribunal — holding that "such evidence cannot be ignored".
• TSC Fashions Pvt Ltd v ITO ITATHelps departmentValidity unconfirmed
  My client missed the tax audit because the old auditor stopped cooperating. Is that a reasonable cause that kills the s.271B penalty?
  Not on assertion alone. The Tribunal confirmed the penalty because the assessee produced no correspondence, email, letter, complaint or affidavit against the earlier auditor, and showed no proactive steps of its own; a bald plea of auditor non-cooperation is a mere allegation and does not discharge the burden under s.273B.
• Diach Chemicals and Pigments P Ltd v DCIT ITATHelps taxpayerValidity unconfirmed
  The department says my purchases are bogus. Do the suppliers' returns and the input credit allowed on those invoices count for anything in the income-tax assessment?
  They are part of the record, but they are not what carried this case. The addition was deleted on a much wider evidentiary base: notices the Assessing Officer himself issued under s.133(6) came back with direct confirmations from every supplier, the primary documents were complete, the books had been audited four ways with no defect pointed out, and actual production marginally exceeded the standard yield, so the raw material bought had demonstrably gone into the goods sold. The suppliers' returns and the input credit allowed on the purchases sit in that list of supporting facts; the operative paragraph rests on the addition being estimation and surmise with no substantive basis, and does not mention them.
• Abhishek Rajeshbhai Karia v ITO, Ahmedabad ITATCuts both waysValidity unconfirmed
  My s.148 reassessment started over a political donation but the Assessing Officer has disallowed my 80D and 80DDB for my parents' medical expenses as well. Are those safe?
  On this order the s.80D claim of Rs 75,000 for health insurance premium and medical expenditure incurred for the assessee's parents was allowed outright, the Tribunal holding the disallowance unjustified because the expenditure was incurred for his parents and is deductible under s.80D. The s.80DDB claim of Rs 87,000 for a father diagnosed with cancer was NOT allowed: it went back to the Assessing Officer because eleven documents called for had never been produced either before him or before the CIT(A).
• DCIT v ACE Infracity Developers P Ltd ITATHelps taxpayer
  My lenders are NBFCs that make hundreds of loans. How much of their own affairs do I have to prove?
  Not their internal affairs. Where the lender is a non-banking finance company and lending is its regular business, identity is not in doubt, and creditworthiness is tested against its share capital, reserves and long-term advances rather than its turnover for the year. Allegations that the lender's directors were dummies do not touch the borrower unless the borrower is shown to be connected to them.
• Deb Prasanna Choudhury v ADIT ITATHelps taxpayerValidity unconfirmed
  The AO says my gift is taxable because there is no registered gift deed. Is a deed required?
  No. The exclusion for a receipt from a relative turns on the relationship, not on the paperwork. Rs. 80 lakh that came to the assessee through banking channels from his sister's husband was outside the charge although no contemporaneous deed existed - the deed was drawn up nine years later before a notary abroad - and the whole addition sustained by the first appellate authority was deleted. The Tribunal gave a second reason as well: the Gift-tax Act has not been in operation since 1 October 1998, so no deed is called for. Questions about where the donor's own money came from are questions for the donor.
• Calories Count v DCIT ITATCuts both waysValidity unconfirmed
  The officer has rejected my books and worked out a much higher turnover from material impounded in a survey. If he does that, does he still have to apply the presumptive rate?
  On these facts, yes. The Tribunal upheld the Assessing Officer's determination of gross sales at Rs 1.87 crore against the Rs 87.34 lakh disclosed, but directed that the business profit be computed at 8 per cent of the redetermined turnover instead of the Rs 1.45 crore the officer had assessed.
• Ankit Gems (P) Ltd v ITO ITATHelps taxpayerValidity unconfirmed
  The officer says I took accommodation entries from a party I have never dealt with. What do I actually have to do?
  Show that the purchases are not in your books, and the burden goes back to the officer. A s.69C addition of Rs. 38,68,049 was deleted where the purchase register - covering both the firm and the company that succeeded it during the year - recorded no purchase at all from the concern named in the information from a search on a third-party group. Applying K.P. Varghese, the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue, and an assessee cannot be called upon to prove a negative. The first appellate authority had himself recorded that the register showed no such purchase and had then sustained the addition on a theory of his own.
• Manish Kumar Vijay v ITO ITATHelps taxpayer
  CPC added income because Form 26AS shows more receipts than my 44AD turnover. Can they do that?
  Not on the 26AS entry alone. Form 26AS is a third-party information source and is subject to error; here the deductor had reported the TDS against the wrong PAN, so the figure evidenced no receipt at all. An adjustment made without verifying the underlying transaction was deleted.
• Vinod Sharma v ACIT ITATCuts both waysValidity unconfirmed
  I claimed HRA on rent paid to my wife. We are co-owners of the flat and we live in it together. The officer has disallowed it. What exactly will sink the claim?
  Four things sank it here, and any one of them is dangerous: the assessee was himself a co-owner of the accommodation, there was no rent agreement, no monthly rent outgo could be traced in the bank account, and the recipient's return of income showing the rent as her income was never produced — not before the Assessing Officer, not before the Commissioner (Appeals), and not before the Tribunal. On those facts the Tribunal dismissed the ground in a paragraph.
• Smt. Madhu Khatri v DCIT ITATHelps taxpayerValidity unconfirmed
  My employer allowed my HRA and conveyance allowance in Form 16 after taking my Form 12BB with the landlord's name, address and PAN. The CPC has still added them back. Does the employer's Form 16, backed by the Rule 26C declaration, carry the claim?
  On these facts, yes. The Tribunal held the assessee eligible for the s.10(13A) exemption of Rs 7,41,983 and the s.10(14) conveyance allowance of Rs 19,200 because the claim was supported by the requisite documents — bank statement as proof of payment, the declaration under Rule 26C, Form 12BB carrying the landlord's name, address, PAN and rent receipts, and a Form 16 in which the employer had allowed both exemptions after satisfying itself — and because the Commissioner (Appeals) had ignored all of that. The Form 16 was disputed neither by the Commissioner (Appeals) nor by the Departmental Representative.
• DCIT v M. Mahadevan ITATHelps department
  The Assessing Officer has computed my days in India from immigration records instead of the stamps in my passport. Can he go behind the passport like that?
  Yes, on this decision. The Chennai Bench of the Tribunal upheld the officer's reliance on data of the Foreigners Regional Registration Office in preference to passport stamps, holding that the agency is mandated to keep data of entry and exit on a real-time basis and that, being a Central Government agency, its data cannot be suspected or doubted. It also held that the burden lies on the assessee to prove by demonstrative evidence that his case falls outside section 6, and that having overseas business and travelling does not by itself put him outside Indian tax. A tax residency certificate from the UAE, obtained in 2021 for earlier years, did not displace the domestic computation.
• Garware Technical Fibres Ltd v DCIT ITATCuts both waysValidity unconfirmed
  The addition rests on a pen drive seized in the search and no s.65B certificate was drawn at the time. Does that kill it?
  No, not on these facts, and the reason is narrower than the headlines. The Commissioner (Appeals) called for a remand report, the Assessing Officer produced a certificate under s.65B(4) for the pen drive, and the assessee - which had never taken the point before the Assessing Officer - made no counter-comment when the certificate was put to it. On the record as the Commissioner (Appeals) found it the certificates had been drawn at the time of the search and were merely produced late. In the absence of any contrary material the addition based on the pen drive was upheld, for all eight years. The order was not otherwise against the assessee: on quantum it confined the tax to the profit element in the unrecorded receipts and directed year-by-year percentages, and on the weighted deduction it allowed the whole of the revenue expenditure for one year.
• Seo Lehenga House v DCIT ITATHelps taxpayerValidity unconfirmed
  I have already offered the profit on the disputed transactions. Can the officer add the broker's commission on top under s.69C?
  Not where the commission is already inside the profit you offered. The Tribunal deleted a s.69C addition for cash commission paid to a broker for arranging bogus purchases and sales, in each of six consolidated appeals covering two assessees and five assessment years, because in every year the gross profit the assessee had already declared on those transactions exceeded the commission the Assessing Officer himself had determined. For the leading year the gross profit was Rs. 14,57,154 at 1.60 per cent against a determined commission of Rs. 5,31,795, and the Rs. 3,32,371 the first appellate authority had sustained was deleted. The rates differ year by year.
• Adani Power Ltd v Dy CIT ITATCuts both waysValidity unconfirmed
  The AO has thrown out most of my IPO expenses because they are not named in s.35D(2). Is that list closed?
  It depends, and the burden is yours. The Tribunal accepted that the word 'being' in s.35D(2) makes the list inclusive, so there is room to argue for an item not spelled out. But it held the scope is not unrestricted and the assessee must prove each item is directly or indirectly connected with the issue of shares - vehicle hire, travel consultant fees, foreign travel and filing fees had gone through two authorities without that evidence. The order does not give one answer: for assessment year 2010-11 the claim went back to the Assessing Officer for verification, while for 2011-12 the identical ground was dismissed. The one part of the claim that survived on the merits was the amount the Commissioner (Appeals) had specifically tied to the share issue, which the Department failed to have restored.
• Thane Zilla Madhyamik Shikshak Sangh Sahakari Parpedhi Maryadit v ACIT ITATHelps taxpayerValidity unconfirmed
  My society's chartered accountant told the penalty officer it was a co-operative bank. Can the department use that admission to deny section 80P?
  No. The Mumbai Bench held that no addition and no denial of a deduction can be made merely on the admission of a person, still less the assessee's authorised representative, without going into the actual charter documents, and that there is no estoppel against the statute. The society's chartered accountant had argued before the Commissioner (Appeals) in a section 271D penalty matter that it was a co-operative bank, and the penalty was deleted on that basis; he later filed an affidavit saying it had been a genuine misinterpretation. On the bye-laws and objects the society took deposits only from members and lent only to members, and it held no licence from the Reserve Bank of India, so it was a co-operative credit society and not a co-operative bank. Section 80P(4) did not shut it out and the deduction under section 80P(2)(a)(i) was allowed for each of the years in appeal.
• TUV Rheinland NIFE Academy P Ltd v ITO ITATHelps department
  The officer says our projections were nowhere near what happened and that we never showed him how we built them. Does the 'method is our choice' argument still save the DCF report?
  Not on these facts, and this is the decision the Department will cite against you. The Bangalore bench upheld the addition because the assessee produced no basis for the estimates fed into the DCF working, either before the Assessing Officer or before the Tribunal. The point of the case is evidential rather than legal: the choice of method may be the assessee's, but the assessee still has to be able to show where the numbers came from, and where it cannot, the officer's finding that the valuation is unrealistic stands.
• DCIT v Varsity Education Management P Ltd ITATHelps taxpayerValidity unconfirmed
  The officer accepted part of my share premium as justified by the valuation certificate and taxed the rest. Can he split it like that?
  No. The premium worked out in a valuation certificate filed for exchange control purposes is the minimum the company may collect, not a ceiling, and there is no bar on collecting more. The premium is settled between the parties on commercial considerations and the tax authorities cannot question it; once identity, creditworthiness and genuineness are accepted, the excess cannot be assessed under s.68.
• Rameshwaram Strong Glass P Ltd v ITO ITATHelps taxpayer
  The Assessing Officer has discarded our DCF report and valued the shares on net asset value instead. Is the choice of method his or ours?
  It is the assessee's. Rule 11UA(2) offers two routes - book value under clause (a) and discounted cash flow under clause (b) - and the Jaipur bench held the option lies wholly with the assessee, so the officer cannot substitute a method of his own. He may look into the working: arithmetical errors can be corrected, and where the chartered accountant's computation is erroneous or self-contradictory he may propose modifications, provided his reasons are sound. What he cannot do is change the method. The Tribunal also refused to let the projections be tested against what actually happened afterwards, DCF being an exercise in estimation, and deleted the addition.
• Meena Vaswani v ACIT ITATHelps departmentValidity unconfirmed
  What evidence does the department actually need before it will accept HRA on rent paid to my mother?
  More than rent receipts. The Tribunal denied the exemption for three years on rent said to be paid to the assessee's mother, holding the arrangement a sham: there was no leave and licence agreement, the rent was paid in cash with nothing in the bank, the mother had not returned the rent as her income, and an inspector found the assessee actually living in her own flat nearby.
• DCIT v Rajeev G Kalathil ITATHelps taxpayer
  The only thing against my supplier is that the indirect-tax authorities have put him on a list. Is that enough to make my purchase bogus?
  No, not by itself. A supplier being declared a hawala dealer by the sales tax department is a good starting point for further investigation, but the Assessing Officer left the job at the initial point, and suspicion of the highest degree cannot take the place of evidence. The listing shifts the officer's attention; it does not discharge his burden. Two limits sit on the face of the order. Only one of the two suppliers in issue was on the listing - for the other the number on the bills returned no result at all - and the holding is conditional on what the officer failed to do: he had not called for the suppliers' bank accounts to look for an immediate cash withdrawal, movement of the goods to site was not in doubt, and part of the goods was in closing stock.
• Bajrang Prasad Ramdharani v ACIT ITATHelps taxpayerValidity unconfirmed
  I pay rent to my wife for the flat she owns and we live in it together. The officer says the whole thing is a colourable device and has disallowed my HRA. Is living under the same roof as my landlord by itself fatal?
  No. The Tribunal read s.10(13A) with its own Explanation and held that the provision imposes only two conditions — that the assessee occupies the accommodation, and that he has actually incurred expenditure on rent — and that neither of them is broken merely because the landlord is his wife and lives in the same house. Where rent receipts were produced and the payments were traceable to bank transfers, the exemption was restored even though the Assessing Officer and the Commissioner (Appeals) had both branded the arrangement a device.
• Jafferali K. Rattonsey v DCIT ITATHelps taxpayer
  I held shares in physical form for years and dematerialised them just before selling. The AO says my holding period runs from the demat date. Is he right?
  No. The date of purchase is taken from the broker's note or contract note, and the period of holding runs from that date, not from the date of dematerialisation. The Assessing Officer had converted a long-term gain into a short-term one by treating the demat date as the date of acquisition and the market price on that date as cost; the Tribunal rejected both moves.
• ITO v Smt. Parul Grover ITATHelps taxpayerValidity unconfirmed
  I refinanced. I took a fresh loan from another bank and used it to close my original house construction loan. The officer says the new loan was not taken for construction, so no s.24(b) interest. Is there authority against him?
  Yes. Where the second borrowing has really been used merely to repay the original loan taken for the house, interest on the second loan is deductible, and the Tribunal applied CBDT Circular No.28 dated 20 August 1969 to allow it. The deduction is confined to the part of the fresh loan actually traced to repayment of the original housing loan, worked out proportionately.
• T.S. Kumarasamy v Assistant Commissioner of Income-Tax ITATCuts both ways
  In my block assessment the officer said my seized books were unreliable, and then taxed the loan entries in those same books as undisclosed income. Can he have it both ways?
  No. The Chennai Bench deleted the addition of Rs 1.68 crores. An officer who doubts the veracity of the accounts cannot at the same time rely on entries in them to make an addition; that is blowing hot and cold in the same breath. Section 132(4A) requires the contents of books found in a search to be presumed true, so it is not open to the officer to say the loan entries are false, and loans recorded in the books are not undisclosed income within section 158B(b). The estimate that half the remaining creditors were bogus, drawn from an enquiry with four out of 43 whose report was never put to the assessee, was arbitrary. The Rs 50 lakhs admitted on oath, however, could not be retracted.
• CBDT letter of 29 May 2026 on invoking ss.68 to 69D with s.115BBE CBDT Circulars & InstructionsHelps taxpayer
  Is there anything from the Board telling the officer he has to establish the section before he makes a deeming addition?
  Yes. Following a C&AG compliance audit that found officers were invoking the wrong section and applying the wrong rate, the Board directed field offices that the Assessing Officer "has to satisfy himself as to the true nature and source of the amounts for which such sections are invoked", that the necessary enquiry — including under s.133(6) — may be carried out, and that "Based upon inquiry and facts of the case, relevant provisions of the Act may be invoked." The same letter maps each provision to its Income-tax Act 2025 counterpart.
• CBDT Instruction No. 03/2017 — the demonetisation cash verification SOP CBDT Circulars & InstructionsCuts both ways
  Is there a departmental instruction telling the officer how to verify my demonetisation cash deposits, and what comparisons is he supposed to make?
  Yes. The Board issued a Standard Operating Procedure on 21 February 2017 for the online verification of cash deposits made in the demonetisation window. It fixes deposit levels at which no further verification is to be made — up to 2.5 lakh for an individual without business income, and Rs. 5.0 lakh for a person above 70 — and it lists the comparisons an officer is to run before treating recorded cash sales as back-dated, the first of which is an abnormal jump in cash sales for November and December 2016 against the assessee's own earlier history.
• CBDT letter of 18 December 2014 — coercion in recording statements CBDT Circulars & InstructionsHelps taxpayer
  What is the department's own position if you were pressured into an admission?
  That it will be viewed adversely. The Board directed strict compliance with its earlier instructions, told officers to avoid obtaining admissions under pressure, and repeated that the focus must be on gathering evidence.
• CBDT Instruction of 10 March 2003 — no confessions in search or survey CBDT Circulars & InstructionsHelps taxpayer
  Are officers allowed to press you for an admission during a search or survey?
  No. The Board's own instruction says no attempt should be made to obtain a confession as to undisclosed income. Officers are to collect evidence instead, because confessions without credible evidence get retracted and achieve nothing.
• CBDT Instruction No. 1916 of 11 May 1994 — jewellery that is not to be seized CBDT Circulars & InstructionsHelps taxpayer
  The search party found my family's gold. Is there a quantity the department is not supposed to touch?
  Yes, for seizure. The Board's instruction tells the authorised officer not to seize gold jewellery and ornaments up to 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family where the person is not assessed to wealth-tax, and to leave more than that where the status of the family and the customs of the community justify it. It is written as a seizure instruction, and whether it also bars an addition is a separate fight.
• Union of India v Ganpati Dealcom P Ltd Supreme CourtCuts both waysOverruled
  Can benami proceedings be taken against me for a property bought before October 2016?
  On the current position, yes, because the judgment that said otherwise has gone. In 2022 the Supreme Court held that the 2016 amendment to the Prohibition of Benami Property Transactions Act created new substantive offences and could not operate on transactions before 25 October 2016, struck down s.3(2) and s.5 of the un-amended 1988 Act, and directed pre-amendment prosecutions and confiscations to be quashed. On 18 October 2024 it recalled that judgment in its entirety, holding that constitutional validity had been decided with no lis and no contest between the parties, and restored the appeal for fresh hearing.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.