burdenof proof

8/6/2019 Burdenof Proof

1/165

Burden of Proof


2/165

Burden of proof

What is meant by saying that the

Evidence Act is not applicableto the proceedings under the

Income-tax Act is that therigour of the rules of evidence

contained in Evidence Act isnot


3/165

Burden of proof

..applicable, but that does not

mean that if the taxingauthorities are desirous of

that Act in proceedings

before them, they are notprevented from doing so.


4/165

Burden of proof

If a fact has to be proved, theperson whose interest it is to

prove it, should adduce

,slight, upon which a

Court could find thefact


5/165

Burden of proof

As the facts decide the

taxability /non taxability ofthe amount /person-in-

, ,burden should discharged by

the party claiming taxabilityor otherwise .


6/165

Burden of proofDoctrine - party who desires to move the

Court must prove facts -is subject to two

exceptions-

i)He is not required to prove such facts

as are es eciall within the

knowledge of the other party.

ii)He is not required to prove the allegations

in respect of which there is any

presumption oflaw or of fact.


7/165

Burden of proof

*The burden of proof lies

on the party substantiallyasserting it not upon the

par y w o en es .It is diffucult to prove a

negative.


8/165

Burden of proof

So, if a party in possession of

best evidence withholds it thecourt draws an adverse

n erence aga ns mNotwithstanding that the onus

of proof does not lie on him.


9/165

Burden of proof

In such cases party cannot rely

on abstract doctrine of onusof proof

Or

On the fact that he was not

called upon to produce it in

such a case.


10/165

Burden of proof

Similarly, the plaintiff can

not take advantage of theweakness of the defence.

The plaintiff case must

stand or fall upon theevidence adduced by him


11/165

Burden of proof

In issue regarding bonafide andgenuine /sham -bogus transaction,

the burden of proof would be onthe party alleging it to be

.

establishing mala fide is veryheavy on the person whoalleges it.


12/165

Burden of proof

Fraud ,like any other chargesof criminal offence, whethermade in Criminal or Civil

established beyond

reasonable doubt bythe person alleging it.


13/165

Burden of proofS.106.

When any fact is especiallywithin the knowledge of

any person, the burden ofproving that fact is upon

him.


14/165

Burden of proof

Facts*Property purchased by wife of

the assessee while he was abroad.*AO made addition.

r una e e e a on as e anot discharged his Burden. AO

should have proved with help of facts

and figures that the investment was

made by the assessee.


15/165

Burden of proof

In our judgment,the Tribunal went wrong in

the above direction and that too erroneously

changing the onus of proof...Certain facts

by their very nature can only be

known by a person and in regardthereto the burden can not be shiftedto Revenue (223 ITR 550: 142 Taxtion 602-Ker.)


16/165

Burden of proof

S.110 - When the question is

whether any person is owner ofanything of which he is shown

o e n possess on, e ur enof proving that he is not the

owner is on the person whoaffirms that he is not the owner.


17/165

Burden of proof

This is based on the wellknown rinci le that

possession is prima facie

proof of ownership.


18/165

All that section 110 of the

Evidence Act does is that itembodies a salutary principle

of common law jurisprudencewhich could be attracted to a

set of circumstances that

satisfy its condition.


19/165

Burden of proof

S.114 -The Court may presume theexistence of any fact which it

thinks likely to have happened,regard being had to the common

course of natural events, humanconduct and public and private

business, in their relation to thefacts of the particular case.


20/165

Burden of proof

Sections 104 to 113 direct

on whom burden of proofwill lie. No o tion is iven

to the court as to whether

it will presume the fact ornot.


21/165

Presumption

Sec.114 is a permissive and not a

mandatory section. Court mayrefuse to raise a presumption in

a par cu ar case a ougsuch a presumption might

have been properly raised inother cases.


22/165

PresumptionSec. permits the court to

raise a presumption with

as well as documentary

evidence.


23/165

Presumption

A presumption is not

evidence or proof. It mayshift the burden of proof,

and it may be rebutted notonly by evidence but also

by presumption of law or

fact.


24/165

A presumption is an inference of

fact drawn from other knownor proved facts. It is a rule of

aw un er w c courts areauthorized to draw a

particular inference from aparticular fact.


25/165

Presumption

Presumptions may be either of

law or fact, and when of lawmay be either conclusive or

re utta e ut w en o act arealways rebuttable. Mixed

presumption are those which arepartly of law and partly of fact.


26/165

Presumption

Rules of presumption are

deduced from enlightened

human knowledge and

from the connection, relation

and consideration offacts andcircumstances.


27/165

Presumption

May presume leaves it

to the discretion of the

presumption according

to the circumstances of

the case.(287 ITR 209- SC)


28/165

Presumption

Shall presume leaves no option

with the court not to make the

presumption. The court is

until evidence is given to

disprove it. In this sense such

presumption is also rebuttable.


29/165

Presumption

Conclusive proof gives an artificial

probative effect by the law to

certain facts. No evidence is

allowed to be roduced with a

view to combatting that effect.In this sense, this is an

irrebuttable presumption.


30/165

Presumption

Sumati Dayal(214 ITR 801:1995 AIR SC 2109:

125 CTR 124: 80 Taxman89:125Taxation 446)

Assessee claimed to have won

of which ten winnings were

from jackpots and threewere from treble events.


31/165

Presumption

(Enlightened human knowledge

and experience principle).A jackpot is a stake of five

events in a single day and onecan believe a regular and

experienced punter clearing ajackpot occasionally.


32/165

Presumptionbut the claim of the assessee of

having won a number of jackpots in

three or four seasons not merely atone place but at three different

centres- Madras, Bangalore andHyderabad appeared, prima facie, to

be wild and contrary to statisticaltheories and experience of

frequencies and probabilities. .


33/165

Presumption

. settlement Commission after

considering the surrounding

circumstances and applying the

test of human robabilities had

rightly concluded that the

appellant's claim about the amount

being her winnings from races was

not genuine.


34/165

Presumption

Sec.132 (4A) raises apresumption

that documents found during

search belong to the person

.

Sec.292C provides for

presumption as to assets, booksof account, etc., found during

search/survey operations.


35/165

Presumption

(321 ITR 254) ..there was apresumption

that the contents of the document were

true, as the document was seized fromthe premises in the control of the

assessee and the document belonged to

the assessee. ..Thepresumption

ought to have been rebuttedby the assessee.


36/165

Presumption. assessee at the first available

opportunity did not deny the

existence of the document nor did theassessee at any subsequent stage of

appeal or before the court deny thedocument. The only contention raised

was that the transaction was notgiven effect to.


37/165

Presumption

Sec.278E provides that for

prosecution of the offence under

the Act which requires a

part of the accused, the court

shall presume the existence of

such mental state.(254 ITR 388-Del.N K Jain)


38/165

PresumptionThe rule of evidence thus stands

changed by the above section. In the

prosecution for an offence under the

Act it is for the accused to

prove his defence, which hecan do by cross-examining the

prosecution witnesses or by

leading defence evidence.


39/165

Presumption

magistrate was conscious of

the fact that the presumptionunder section 278E of the Act

operate an t ere ore, at t atprima facie stage, the court

had to presume the culpablemental state of the accused.

(290 ITR 55 Mad J.Jaylalita-276 CC)


40/165

Presumption

Contention raised by the assessee - byfiling returns within the time prescribed

in the notice u/s.148 he was exoneratedfrom prosecution under section 276CC

f r n filin h r rn i hin h

statutory due date Sec.139(1) of the Actwas not tenable. (327.226 Mad)

In view of the presumption undersection 278E of the Act of

culpable mental state.


41/165

Presumption

.the burden was on the assessee to

show that there was no wilful

default. The absence of such

the assessee as a defence and it

was for the trial court to decide

the issue at the stage of

conclusion of trial.


42/165

Presumption

During a survey operation at the

business premises of theassessee excess stock was

oun . e rea e estockas undisclosed

investment of the assesseeand made an addition..

P i


43/165

Presumption

.CIT(A) deleted the addition on

the ground that the evidence

submitted by the assessee was

neither roved b the Assessin

Officer to be false or bogus

nor genuineness of the

transactions doubted.


44/165

Burden of proof

It was held that a

presumption taking the

the books was not

justified.(319 ITR 396)


45/165

Presumption

322.ITR 309 -

There is no resum tion

that the delay in

approaching the courtis always deliberate.

P ti


46/165

Presumption

19 ITR 228 AAR -A non-resident

Co.agreed to an Indian company a

non-exclusive perpetual irrevocable

ri ht to use the know-how as well as

to transfer the ownership in treadand sidewall designs and patterns

required for the manufacture of

radial tyres for a lump sum .

P ti


47/165

Presumption

The documents which were sent

through courier were received in

India. The delivery of the documentswas conditional on Indian Company

presenting certain documents to thecourier. Indian Company derived the

right under the agreement only on

the date that they were received in

India

P ti


48/165

Presumption . the transfer was not complete

till then. In the absence of any

material, the reasonableresum tion to be drawn was

that the delivery of variousdocuments which was an integral

part of the agreement signed inIndia would take place in India.

P ti


49/165

Presumption

If there were funds available both

interest-free and overdraft and/or

loans taken, then apresumptionarises -investments would be out of

the interest-free funds generated oravailable with the company, if the

interest-free funds were sufficientto meet the investments.

Presumption


50/165

Presumption

When an assessee produces hisbooks of account before AO

in support of a return, there

in his favour that the

books have not beenfabricated.

Presumption


51/165

Presumption

Thispresumption is an

application of the general

presumption which the law

every kind, including crime,

fraud, forgery, dishonestyand fabrication.

Presumption


52/165

Presumption

But when the AO puts in issuebefore the assessee about

truth of an entry in the

,

Section 106 of the Evidence

Act commences to operate

Presumption


53/165

Presumption

and the transaction underreference being a fact

peculiarly and solely within the

onus of proving the

correctness of the entryshifts to the assessee.

Presumption


54/165

Presumption

If presumption of accuracy is attached to

balance sheet and profit and loss account

and not to auditors certificate, then mereproduction of auditors certificate will not

.

to correctness of balance

sheet and profit and loss

account is on company.

Section 69


55/165

Section 69

Sec.69 is a deeming

provision and it cannot beextended to the penalty

proceedings. AO can notpresume that there is a

concealment.

Section 69


56/165

Section 69

There must be an

independent finding.Mere rejection of

explanation would not bea ground for levying

penalty. (327ITR 477 Mad. Proprty purchased jointly )

Section 69


57/165

Section 69

If assessee refuses to

produce account booksregarding remittances

from foreign branchespresumption is that

remittances are out of

profits

Section 69


58/165

Section 69

The question of burden of

proof cannot be made to

depend exclusively upon the

ac o a cre en ry n ename of the assessee or in the

name of a third party


59/165

Burden of A O Receipts items

covered by Charging Sectionsof taxation laws i.e. Receipt

under consideration is

Revenue is to be provedby Revenue.(125.713 SC T T Transfer matter) (241.363 Mad.bank stt.matter)


60/165

Two S C cases of Excise Matters Article /Thing

to taxed,if Goods.

Crude PVC(Bhor Industries-184.129)&

ar cu ar s arc ucoseare goods in market has to

be proved by AO. (185.87)


61/165

The onus lies on the Revenue

to bring on record, cogentmaterial/evidence to

establish that the trust/charitable institution is hit

by the provisions of section

13.


62/165

Department has to be specificabout the name of the

beneficiary and had thereafter

establish that such a person

fell in the category ofprohibited persons.

(279.89-All.Kamla Town matter)


63/165

Burden is noton the assessee toprove that the debt has gone bad

and the deduction can be claimedin the ear it is written off in the

books of account as irrecoverable.If AO wants to disallow it he has

to arrive at a conclusion that thedecision was not bona fide. (Oman Int.)


64/165

To invoke Sec.40A(2)(a)AO

has to prove thatexpenditure is be excessive

or unreasonable havingregard to the fair market value

of the goods, services orfacilities ..

Burden of proof-Assessee


65/165

p

The burden of proving that aparticular income has its

origin in a capital source lies

upon e assessee, or swithin his particular

knowledge to know that fact.

Burden of proof


66/165

p

If he claims that the income isfrom a specified capital

source and fails to prove it, it

Income-tax Officer to prove

that the income is fromrevenue sources.

Burden of proof


67/165

p

If he accepts that the income isfrom a revenue source but

seeks to claim exemption the

bring it within the four

corners of the exemption.

Burden of proof


68/165

p

As per established law -it is

for the assessee to provethat the incoming receipt

is exempt from taxation.(1 ITR 182 All.-Intt.Narayandas Mohanlal ,

2 ITR 121 Ran.-Bengali Urban

5 ITR 307 Lahore /Security income /Amritsar Produce Exchange.)

Burden of proof


69/165

In order to claim an exemption inrespect of agricultural income, it

is the assessee who has to place

enabling him to come to the

conclusion that the it is

Agricultural income.

Burden of proof


70/165

p

29 ITR 529 (SC)- ..it was not for the IT

authorities to prove that it was not

agricultural income, and that the HighCourt therefore erroneousl laced the

burden of proofon the Department*35 ITR 312(SC)- It is for the assessee to

prove that the income sought to betaxed is agricultural income ( tree-matter*)

(R Vankataswamy- cows- pasture milk- income = 29.529)

Burden of proof


71/165

When the assessee is claims

exemption, burden is onhim to roduce relevant

materials and to claimexemption

[w.r.t.sec.10(22)] (296 .492 Ker- Charitable intitute? )

Burden of proof


72/165

Exemption claim u/s. 5(1)(xiv) of G T Act was

made by the assessee. SC held Where

an assessee claims an-

Act, the burden of proving

facts which entitle him to theexemption lies on him. (74.328)

Burden of proof


73/165

In absence of non-furnishing of

particulars by the assessee to

claim the benefit u/s. 80-O, the

c a m cou no e ,

because burden to prove

entitlement of exemption ison the assessee . (323.151 kar-Wipro)


74/165

If a Co-op.soc.claims that it isentitled to deduction u/s.

80P(2) (a) onus is on it to

the society has a direct or

proximate nexus or connectionwith the business of the

society.


75/165

The burden is on the

assessee, which is seekingto claim benefit of

exemption to show that itis covered by the said

exemption. (245.616-AP )

Burden of proof


76/165

When an assessee claims that a

particular expenditure is for

the purpose of business, the

ur en o es a s pr ma

facie lies on the assessee to

place on record the material insupport of this claim.

Burden of proof


77/165

Sec.37 deals with the questionrelating to the allowability of the

expenditure incurred for the

.

of proof is upon the assessee to

prove each of the following

ingredients -

Burden of proof


78/165

(a) the item of expenditure

must not be of the nature

described under sections 30 to

o e c ; e em o

expenditure must not be in the

nature of capital or personalexpenses of the assessee ;

Burden of proof


79/165

(c) the expenditure must be laidout wholly and exclusively for

the purpose of business or.

to satisfy any of these tests, theexpenditure claimed is not

allowable. ( 256 ITR 134 Bom- Ramanand Sagar)

Burden of proof


80/165

Assessee engaged in the business of

printing and publishing of

newspapers and periodicals

-

the object to grant relief andaid to persons affected by

natural calamities.

Burden of proof


81/165

Assessee contributed Rs.26.94 lakhs to the trust and

the amount was spent in

rehabilitating the victims of

the earthquake.

Burden of proof


82/165

burden is entirely on the assessee toestablish that the amount laid out

or expended by the assessee waswholly or exclusively used for the

purpose of its business..The merefact that indirectly the assessee

earned goodwill of the victims and

the general public.

Burden of proof


83/165

did not mean that theexpenditure incurred by the

assessee was wholly or.

The contribution made by theassessee would not allowable

under section 37(1).(80G was allowed-284.69 ker.Malayam Manorama)

Burden of proof


84/165

Mere payment by itself would notentitle the assessee to deduction of

expenditure unless the same wasroved to be aid for commercial

considerations. The burden

of proof is alwaysupon the assessee

Burden of proof


85/165

..it is for the taxpayer to establishby evidence that a particular

allowance is justified. It is notfor the AO to inde endentl

collect evidence and prove thatthe deduction claimed by the

assessee is baseless.

Burden of proof


86/165

Assessee has to prove that incurredexpenditure is for commercial

cosideration.In Transport

HC upheld the decision of the AOto disallow the payment made on

a/c. of Secret commission. (256.701)

Burden of proof

B d i l h


87/165

Burden is always on the assessee to

produce relevant documents to

prove embezzlement-the date on

expenses vouchers,circumstances underwhich he detectes the embezzlement,

letter of termination and date of filing of

police complaint etc.

Burden of proof

A th t bl t b t ti t


88/165

As the assessee was not able to substantiatethat sending a person for training abroad

was for the benefit of the business of the

assessee, so expenditure not deductible (328.290)

that expenditure on education of

director's son / foreign travel of

wife of director/medical expense

has nexus with assessee's business.

Burden of proof


89/165

Regarding purchases made by

the assessee from the persons

falling under the category

under section 40A(2)(b) theburden is upon the assessee to

establish that the price paid byit is not excessive or.

Burden of proof

bl I f lli


90/165

unreasonable. In cases fallingunder section 40A(2)(b) it is

the duty of the assessee to

prove an sc arge s ur en

by leading proper evidence

subject to cross-examinationby the Department.(261.258-Bom. Satrunjay- Average cost price of rough diamomds)

Burden of proof

A h l i


91/165

An assessee who claims

depreciation has to satisfy the

Revenue, that he is entitled for

grant o eprec at on on temsclaimed by it. The burden of

proof is on the assessee.

Burden of proof

F t T ti f l d


92/165

Facts- Transaction of sale and

immediate lease of heavy

machinery to vendor.

o reg strat on o sa e

No identification of machinery

Lessor claiming full depreciation(266ITR 178 KAR)

Burden of proof

B d i t th t


93/165

Burden is noton the assessee toprove that the debt has gone bad

and the deduction can be claimed

books of account as irrecoverable.IfAO wants to disallow it he has to

arrive at a conclusion that thedecision was not bona fide.

Burden of proof

As against the purchase price disclosed by the


94/165

As against the purchase price disclosed by theassessee in a sale deed ,if AO intends to adopt

the purchase price according to stamp duty

paid and to hold that the assessee must havepaid over and above the purchase price

disclosed in the sale deed - ur en s on

him to prove that valuation done

by State agency for the purpose of

stamp duty is the real sale

consideration .

Burden of proof

AO was obliged to bring on record positive


95/165

AO was obliged to bring on record positiveevidence supporting the price assessed by

the State Government for the purpose ofstamp duty. In the absence of any

legally acceptable evidence the

valuation done for the purpose of

Sec.50C would not represent the

actual consideration passed on to

the seller. (323 ITR 510 P & H)

Burden of proof

Difference between market value and


96/165

Difference between market value andconsideration declared not sufficient

to make an addition.Assessee mustbe shown to have received more than

what is declared or disclosed by himas consideratio. Burden of proof lies

on Department. (131 ITR 597 SC

about Sec.52(2)- deleted Section)

Burden of proof

There is no presumption in


97/165

There is no presumption inlaw that an amount standing

in the name of the wife

onus of proof in such a case

will not be on the

assessee....

Burden of proof

but will be on the AO to show


98/165

but will be on the AO to showby at least some material that

the amount standing in the'

does not belong to her but

belongs to the assessee.

Burden of proof

Onus is on the Co to prove that


99/165

Onus is on the Co.to prove thatit derives 51% or more of its

income from production /

thus is an Industrial Company-

entitled for lower tax-rate.(The burden to

prove that the assessee is such a company is on the assessee itself. 258.106

Mad.)

Burden of proof

since the assessee had not placed


100/165

..since the assessee had not placedbefore the taxing authorities a

detailed description of the process...and the assessee had not

established that its activitiesamounted to processes involving

production or manufacture, the

assessee was not an industrial

company. (252 ITR 658 SC)

Burden of proof

Onus of proving that assessee is


101/165

Onus of proving that assessee isresident of India lies upon the

department. But, once his

admitted, the onus shifts to himto prove that he was

NRI/NOR,if he claims such

status . (300-231 sc)

Burden of proof

Documents furnished to


102/165

Documents furnished tobanks or other agencies or

statement recorded in some

o er connec on can no

form basis for addition or

treating an amount arevenue.

recipt Without corroborative


103/165

recipt.Without corroborative

evidences it is rebuttable

presumption.AO has to prove

t at rece pt n quest on was

from unexplained

sources.(241 ITR 363- Mad)

Burden of proof

But,When an assessee who is


104/165

But,When an assessee who isrequired to explain a sum

credited in his books as capital,offers an ex lanation which is

false and unbelievable, there isnothing in law which casts the

burden of proof on the AO

Burden of proof

or the appellate authority to


105/165

..or the appellate authority toprove by positive evidence

that the sum represents

ncome assessa e to tax.

is not prevented from basing

his conclusion oncircumstantial evidence.

Burden of proof

AO ,not the assessee,has to prove


106/165

AO ,not the assessee,has to prove

that Single and isolated

transaction is Adventure in the

. n a am a emen

Ltd. matter AO had proved thatdisputed amount was revenue

receipt,so his stand was upheld evenby the SC. (105 ITR 633)

Cash Credit/ Unexplained moey/inv/exp

Statutory provision (Sec 68


107/165

Statutory provision (Sec.68

to 69 C)are merelyclarificatory in nature,

these sections embodyrules of evidence which are

even otherwise quite clear.


Sec.68 is recognition of provisions of Evi.ActS 106


108/165

g pSec.106.

.and the assessee offers noexplanation about the nature and

source thereof or the explanationoffered by him is not, in the

opinion of the Assessing Officer,satisfactory..


Entries in the books is


109/165

Entries in the books isconsidered prima facie

evidence against the assessee.

positive evidence to provegeneuiness of the entries

appearing in the Books of theassessee.


Considering circumstantial evidence he candecide the matter In a case Del HC observed


110/165

decide the matter. In a case Del HC observed

The defence of trade credit set up by the

assessee was against normal

supplier/commission agent/fruitvendor would give money four to nine

months in advance for supply ofvegetables.


A delicate balance must be


111/165

A delicate balance must be

maintained while walking the

tightrope of sections 68 and 69

of the Act. The burden of proofcan seldom be discharged to

the hilt by the assessee


if the AO harbours doubts of the


112/165

if the AO harbours doubts of the

legitimacy about any transaction,

he is empowered, to carry out

oroug nves ga ons. u e

fails to unearth any wrong or

illegal dealings, he cannot adhere

to his suspicions.


Credibility of the explanation


113/165

y pis given preference over

materiality of proof in

credit ,as such cases have tobe decided on preponderance

of probability.


Canadian Co. lending money to ani C i i


114/165

g yIndian Co. without security and

intt.Transaction was treated as cashdeposit up to ITAT.Authoritiesgnore e e er o e ana an

Co. admitting that it had advancedloan.SC upheld HC order deleting

the addition. Prima facie burden wasproved. (230.580)


Mere filing of confirmatory letters (187.96) orpayment by a/c payee cheque (200 465)or


115/165

payment by a/c. payee cheque (200.465)or

furnishing details of the creditor(256.331)is not

sufficient to prove the basic ingredients of

credit 327.178

-totality of the transaction istaken in to consideration

while deciding the onus.


Similarly in matters of gifts all threeb i diti h ld b


116/165

basic pre-conditions should be

fulfilled.In case of Yashpal (310.75)circumstances to prove love anda ec on were m ss ng onus no

proved) - but in the case of Sureshkumar kakkar (324.231) gift from

mother to a son was found to begenuine (onus discharged)


With regard to the creditworthiness, theassessee had been able to discharge the


117/165

assessee had been able to discharge the

onus cast upon him by furnishing the

bank statement of his mother (donor) as

mother confirming the gifts. Once theassessee had discharged the primary

onus, which was cast upon the assessee, it

was incumbent upon the AO to prove on

the basis of cogent evidence.


.that the transaction was not genuine. Therewas no such evidence Conjectures and


118/165

was no such evidence. Conjectures andassumptions could not take the place of proof,

once the assessee had discharged the primaryburden which had been cast upon him.

. en e en y an e capac y

were proved beyond doubt and thesource of the gifts was the mother,

there was no question of making theaddition under section 68 of the Act.


Established law regarding Public Issues ofthe Cos *Share application money to be


119/165

the Cos.*Share application money to be

received by way ofaccount payee cheques

and through normal banking channels.

* Relevant details of the address or PAN

identity of the subscriber to be furnished

to AO along with copies of the

shareholders register, share applicationforms, share transfer register, etc.,


*Shares to be actually allotted*AO ld not b j tifi d i d i


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*AO would not be justified in drawing an

adverse inference only because thesubscriber fails or neglects to respond to

its notices

*Onus would not stand discharged if the

subscriber denies /repudiates transaction

nor should the AO take such repudiationat face value against the assessee


*If the AO has any doubt about the identity ofthe share applicants, he should be summoned


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*Co.concerned cannot be expected to know

every detail pertaining to the identity as wellas financial worth of each of its subscribers.

*Co.must, however, maintain and makeavailable to the AO for his perusal, all

the information contained in the

statutory share application documents.(329.271,299.268)


Once above conditions fulfilled Co.cannotbe held responsible to prove whether


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be held responsible to prove whether

applicant himself invested the money orsome other person had made investment

in his name. Burden then shifts to

the AO to establish that such

investment has come from the

assessee-company itself.


Sec.68 uses word books of an it f t th


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assessee -it refers to the

assessee whose books show thecre en ry. ere en r es are

found in the books of a firm

and the assessment is that of

an individual Sec. 68 will not

apply.


Income from undisclosed sources, ifcredited in the books of the


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credited in the books of theassessee, is liable to be assessedu/s. 68,but if such income fromun sc ose sources, oug

invested has not been recorded inhis books of account, such

investment is liable to be assessedu/s. 69.


Like cash credits sources ofinvestments are to be proved by


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investments are to be proved by

the assessee. But,once provedprima facie-burden of proof willshift to Revenue. It can bedischarged by the AO byestablishing facts and

circumstances .


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Provisions of section 69A can be


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applied if an assessee is found

to be owner of any money,

bullion, jewellery or other

valuable article, and same had

not been recorded in the booksof account


In order to find out whetherthe assessee is the owner of


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the assessee is the owner of

the money in terms of sectione pr nc p e o common

law jurisprudence in section

110 of the Evidence Act can beapplied. (292.682 SC)


So when assessee was found to be in possessionof loose slips it was held that the provisions of

ti 69A f th A t t li bl


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section 69A of the Act were not applicable.

(294.78) The assessee had dulyex lained that these were rou h

calculations and the assesseesexplanation had not beenrebutted by any materialevidence.


But,when an assessee is found inpossession of currency, it is for him


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possession of currency, it is for him

to prove that he is not the owner of

Revenue to prove that theassessee is the owner of the

currency found in hispossession.


Assessee admitted the possessionof the money but denied the


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of the money but denied the

ownership of it .In light of. .

presumption of IT Act Delhi HCheld that provisions of Sec.69

were applicable(285.256)


Scope and ambit of section 69Band Sec.69C are altogether


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and Sec.69C are altogether

different. The connotation to

Sec.69B has to be in thecontext of investment made in

some property or any othertype of


..investment and it could notbe business expenditure. The


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be business expenditure. The

word investment contained in

investment in bullion,jewellery or other valuable

articles, etc


For the purpose of Sec. 69 and 69B it is notnecessary that the books of account have


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to be rejected expressly or that it is to be,

in express terms, recorded that the books

explanation is not satisfactory. It has to begathered from the order whether AO was

satisfied with the explanation or had

found that the books were not reliable. It

is not the technical terms..


which must appear in the order. It is thesubstance of the order that the AO was notsatisfied with the explanation which is


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satisfied with the explanation which is

relevant. Where accounts are not reflected inthe account books, they can be explained by, .

opportunity to explain. If in the opinion ofthe AO the explanation is notsatisfactory, the income can be added.

The phraseology of Sec.69 creates a legalfiction.

Section 69B

In order to invoke theprovisions of Sec.69B the


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p

burden is on the Revenue to

exceeds the investments shownin the books of account of the

assessee. (261.664)

Section 69B

Merely on the basis of the fairmarket value and valuation


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market value and valuation

report no addition can be made. ,

sufficient material on record somereasonable inference can be

drawn and addition can be madeas unexplained investment.

Section 69B

After obtaining VR notice was given theassessee to take value of the plot as perVR and comparable cases Assessee did


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VR and comparable cases. Assessee did

not give any reason as how she couldurchase the ro ert for rou hl half

the prevalent market rate. In absence of

that the only inference was that theshe had made unexplained investment.

Addition made u/s.69B was upheldby Raj HC.(226.344)

Section 69B

Statement made by Counsel forassessee in a civil suit about


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aparticular investment is not

upon AO. Difference between theamount reflected in books and

claimed in court is not assessableas unexplained investment (261.664)

Section 69B

Addition was made u/s. 69B onaccount of difference between the


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closing stock furnished in astatement to the bank for availin of

credit facility and that shown in thebooks of a/cs. Assessee prima facie

proved that the statement submitted

by it to the bank was on estimate

basis and that the..

Section 69B

value of the stock was inflated toavail of greater credit from the


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bank.AO could not rebut the standtaken by the assessee nor could he

produce evidence of unexplained

investment.Addition deleted by

Tribunal was upheld by the

Guj.HC.(323.341)

Section 69B

A O found that a ticket of the CSE from ShriA.K.Dey was purchased for Rs. 50,000 bythe assessee. AO took the value of the ticket


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the assessee. AO took the value of the ticket

at Rs. 11.5 lakhs and added income of Rs. 11lakhs as unexplained investment to theincome of the assessee.Payment was made t

the CSE through normal banking channels.

Delhi HC(290.245) -Burden of proving

the fact of unexplained investmentwas on the AO.If he had any

Section 69C

doubt in regard to the bona fides of theassessee, nothing prevented him from

exercising his powers under the Act and


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exercising his powers under the Act and

summoning the record of the Calcutta

.

appear before him and produce relevantrecord in regard to the receipt. The bare

reading of the order of the AO shows that his

conclusion was not based on any

record or books of a/cs.

Section 69C

For invoking Sec.69C A.O.should prove that assessee has


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p

incurred some expenditure and

by the assessee about thesource of expenditure is not

satisfactory.

Section 69C

So, when there was nothing toshow that expenditure was in


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fact incurred by the assesseeand AO did not brin an thin

on record in this regard ,addition made under 69C wasdeleted by Delhi HC. (Items

such as..

Section 69C

dinner, gift, projector, slideprojector, advertisements in


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newspapers, magazines andhoardin s Ex ewere otted

down in pencilnditure relatedto advertisements innewspapers was also notverified by the AO. (311.175 )

Section 69C

It is not the reasonableness ofthe expenditure that requires


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p q

satisfactory explanation. It is

expenditure, which needs tobe satisfactorily explained

u/s.69 C

Section 69C

AO for the purpose ofgettinghimself satisfied about the


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purported unexplained

69C can not not invokethe powers under section

142A. (319.276 -Del.)

Deduction claim


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Service of Notices

Wherever service of a notice isessential or critical, Sec.27 of


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the General Clauses Act, 1897

to the effect that if a letter isproperly addressed, it must be

deemed to have been served.

Service of Notices

It is the established lawabout the service of


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about the service of

notices that the initial

onus of service is on theperson who alleges

service.

Service of Notices

Proper service of notices is thefirst condition before demanding


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tax or seeking compliance fromthe assessee.So,when an affidavitis filed by him stating that notice

was not served on him,burden ison AO to prove service of

notice within time.

Service of Notices

A notice was claimed to had been

dispatched on October 30, 2002.As

per further cliam thereafter it was


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per further cliam thereafter it was

redirected to the Noida address of

the assessee. ere was not ng on

record to show on which date thisnotice was received at the given

address of the assessee and onwhich date it was redirected..

Service of Notices

There was nopresumption underthe law that any notice sent by


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speed post must have been

24 hours. More-over, there wasnothing on record to show at

whose instance the notice wasredirected and sent.

Penalty

For delay in filing returnsburden is on assessee to show


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that there was sufficient cause. ,

should he file a belated return,to show reasonable cause for

the delay.

Penalty

An order imposing a penalty is theresult of quasi-criminal proceedings


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and the burden lies on the

disputed amount representsincome and that the assessee hasconcealed the particulars of hisincome /

Penalty

has furnished inaccurateparticulars. Burden of proof in


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a penalty proceeding variesfrom that involved in an

assessment proceedings. Inpenalty proceeding AO is bound

to consider the matter afresh.

Penalty

Expl.5 to Sec.271(1)(c) deals withpenalty arising out of search

operations. When the assessee does


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operations. When the assessee does

not disclose the income and offer

payment of tax in the course of

search the assessee is deemed to

have concealed particulars ofincome. (323 ITR 529 ker)

Penalty

Return due on June 30, 1990 and searchcarried out in Feb.,1990.The assessee not

only failed to disclose the income in the


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course of search but also offered an

belonged to another person whichwas not established by

him.

Penalty

In the circumstances,concealment of income was


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proved by operation of the

Expl.5 Sec.271(1)(c)

Consequently, the assessee

was liable for penalty .

Benami Transactions

There is no formula or acidtest uniformly applicable to


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decide benami transactions,the question depends

predominantly upon the

intention of ....

Benami Transactions

...the person who pays thepurchase money. In such


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p y

matters burden of roof is

on the person who assertsthat it is a benami

transaction.

Benami Transactions

However, if it is proved that thepurchase money came


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from a person other thanthe recorded owner(ostensible owner) there can

be a factual presumption atleast in certain cases.

Benami Transactions

.depending on the facts, thatthe purchase was for the


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benefit of the person whosupp e t e purc ase money.

This is, of course, a

rebuttable presumption.


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THANKS