What is McDowell & Co. Ltd. v. CTO authority for?

The Supreme Court held that while legitimate tax planning is permissible, transactions structured as a "colourable device" or "subterfuge" solely to avoid tax are impermissible. It mandates a judicial shift to look beyond the form to the substance of a transaction, allowing the lifting of the corporate veil in tax evasion arrangements.

How many judgments cite McDowell & Co. Ltd. v. CTO?

741 judgments on BharatTax cite McDowell & Co. Ltd. v. CTO (154 ITR 148), spanning 2008 to 2026.

Which sections of the Income Tax Act does McDowell & Co. Ltd. v. CTO come up under?

It is most often cited in judgments turning on Section 143(3), Section 148, Section 147, Section 68, Section 69C, Section 133A.

McDowell & Co. Ltd. v. CTO (154 ITR 148)

Sanjay Kumar Karnani, Jaipur vs. ACIT, Central Circle-3, Jaipur

In the result, all appeals of the assessee are disposed off in terms of

ITA 672/JPR/2025[2015-16]Status: DisposedITAT Jaipur15 Oct 2025AY 2015-16

Bench: DR. S. SEETHALAKSHMI (Judicial Member)

For Appellant: Shri Deepak Sharma, AdvFor Respondent: Mrs. Alka Gautam, CIT

Section 153ASection 250Section 68

…the mouth of the assessee. No Court or the Tribunal should countenance an assessee the attitude of failure to produce relevant material and ask the adversary to disprove it. This attitude was decried by Chinnappa Reddy, J. in McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148 (SC)." (3) Also the specific presumptions provided under the income tax act also operates against the appellant and the appellant is bound by the documents found during the course of search and seizure action. Presumption as to assets, books of account, etc. 292C. (1) Where any books of account, other documents, money, bullion, jewellery or other…

Shri Ambica Garments, Jodhpur vs. ACIT, Central Circle-3, Jaipur

In the result, all appeals of the assessee are disposed off in terms of

ITA 61/JPR/2025[2019-20]Status: DisposedITAT Jaipur15 Oct 2025AY 2019-20

Bench: DR. S. SEETHALAKSHMI (Judicial Member)

For Appellant: Shri Deepak Sharma, AdvFor Respondent: Mrs. Alka Gautam, CIT

Section 153ASection 250Section 68

…the mouth of the assessee. No Court or the Tribunal should countenance an assessee the attitude of failure to produce relevant material and ask the adversary to disprove it. This attitude was decried by Chinnappa Reddy, J. in McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148 (SC)." (3) Also the specific presumptions provided under the income tax act also operates against the appellant and the appellant is bound by the documents found during the course of search and seizure action. Presumption as to assets, books of account, etc. 292C. (1) Where any books of account, other documents, money, bullion, jewellery or other…

Shri Ambica Garments, Jodhpur vs. ACIT, Cental Circle-3, Jaipur, Jodhpur

In the result, all appeals of the assessee are disposed off in terms of

ITA 59/JPR/2025[2017-18]Status: DisposedITAT Jaipur15 Oct 2025AY 2017-18

For Appellant: Shri Deepak Sharma, AdvFor Respondent: Mrs. Alka Gautam, CIT

Section 153ASection 250Section 68

…the mouth of the assessee. No Court or the Tribunal should countenance an assessee the attitude of failure to produce relevant material and ask the adversary to disprove it. This attitude was decried by Chinnappa Reddy, J. in McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148 (SC)." (3) Also the specific presumptions provided under the income tax act also operates against the appellant and the appellant is bound by the documents found during the course of search and seizure action. Presumption as to assets, books of account, etc. 292C. (1) Where any books of account, other documents, money, bullion, jewellery or other…

Shri Ambica Garments, Jodhpur vs. ACIT, Cental Circle-3, Jaipur

In the result, all appeals of the assessee are disposed off in terms of

ITA 57/JPR/2025[2015-16]Status: DisposedITAT Jaipur15 Oct 2025AY 2015-16

For Appellant: Shri Deepak Sharma, AdvFor Respondent: Mrs. Alka Gautam, CIT

Section 153ASection 250Section 68

…the mouth of the assessee. No Court or the Tribunal should countenance an assessee the attitude of failure to produce relevant material and ask the adversary to disprove it. This attitude was decried by Chinnappa Reddy, J. in McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148 (SC)." (3) Also the specific presumptions provided under the income tax act also operates against the appellant and the appellant is bound by the documents found during the course of search and seizure action. Presumption as to assets, books of account, etc. 292C. (1) Where any books of account, other documents, money, bullion, jewellery or other…

Sunil Kumar Agarwal, Jaipur vs. ACIT, Cen. Cir-2, Jaipur

In the result the appeal of the assessee in ITA no

ITA 513/JPR/2025[2016-17]Status: DisposedITAT Jaipur14 Oct 2025AY 2016-17

For Appellant: Shri S. L. Poddar, AdvFor Respondent: Mrs. Anita Rinesh, JCIT, Sr-DR

Section 132Section 139Section 153ASection 234B

…o the total declared stock. This is factually admitted and legally immaterial. The core issue is not the amount, but the fact that the stock found was not recorded in the books of account as on the date of search. As held in McDowell & Co. Ltd. v. CTO [(1985) 154 ITR 148 (SC)], any colourable attempt to evade tax must be seen through and struck down. Income must be taxed on the basis of its true character and not camouflage. Thus, once excess stock is found: Its non-disclosure triggers application of Section 69. Valuation is not disputed. Presumption under Section 292C holds unless rebutted with cogent evidence w…

Devang Bhupendra Shah, Mumbai vs. Income Tax Officer 32(1)(4), Mumbai

In the result, the appeal of the assessee is allowed

ITA 4218/MUM/2023[2014-15]Status: DisposedITAT Mumbai13 Oct 2025AY 2014-15

Bench: Shri Sandeep Gosain & Shri Prabhash Shankardevang Bhupendra Shah, V/S. Income Tax Officer, Ward – B/9, Neminath Apt., बनाम 32(1)(4), Kautilya Bhavan, Shimpoli Road, Borivali Bandra Kurla Complex, West, Mumbai – 400 092, Bandra (East), Mumbai– Maharashtra 400051, Maharashtra स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aadps1211L Appellant/अपीलार्थी .. Respondent/प्रतिवादी

For Appellant: Shri Rahul Kapadia,ARFor Respondent: Shri Annavaran Kasuri, (Sr. AR)

Section 10(38)Section 143(3)Section 68Section 69C

…ns or capital loss for the benefit of the beneficiaries involved. The circumstantial evidence and preponderance of probabilities has to be considered.Reliance was placed on the decision of the Hon'ble Supreme Court in the case of McDowell and Company Limited, 154 ITR 148 MK. Rajeshwari vs. ITO in ITA No.17231 Bangl 2018, order dated 12.10.2018, Abhimanyu Soin vs. ACIT in ITA No. 9511/Chd/2016, order dated 18.04.2018,Sanjay Bimalchand Jain vs. ITO 89 taxmann.com 196 etc.stating that in the case the penny stock modus operandi was P a g e | 8 A.Y. 2014-15 Devang Bhupendra Shah examined minutely and concluded that t…

Globus Housing, Bhopal vs. Assessment Unit, NFAC, Delhi

The appeal of the assessee is allowed and the “impugned

ITA 872/IND/2024[2014-15]Status: DisposedITAT Indore10 Oct 2025AY 2014-15

Bench: Shri Bhagirath Mal Biyani & Shri Paresh M Joshi

Section 142(1)Section 147Section 148Section 250Section 253Section 68

…and details on 19.03.2022. The assessee has failed to substantiate the genuineness of alleged share transactions in respect of STCG. In view of above discussions, the landmark decision of the Hon'ble Supreme Court in the case of McDowell and Company Limited, 154 ITR 148 are squarely applicable in this case wherein it has been held that tax planning may be legitimate provided it is within the framework of the law and any colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods. It is relevant to ment…

Sanjay Jayantilal Shah, Ahmedabad vs. The ITO, Ward-2(1)(1), Ahmedabad

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 79/AHD/2025[2014-15]Status: DisposedITAT Ahmedabad07 Oct 2025AY 2014-15

Bench: S/Shri Sanjay Garg & Makarand V.Mahadeokarasstt.Year : 2014-2015 Sanjay Jayantilal Shah Ito, Ward-2(1)(1) 202/A, Shivalik 10 Vs. Vejalpur Opp: Sbi Zonal Office Ahmedabad. Ambawadi, Ahmedabad 380 015 Pan : Aktps 8891 A (Applicant) (Responent) : Assessee By Shri S.N. Divatia & Shri Samir Vora, Ars. : Shri Kalpesh Rupavatia, Sr.Dr Revenue By सुनवाई क" तारीख/Date Of Hearing : 30/09/2025 घोषणा क" तारीख /Date Of Pronouncement: 07/10/2025 आदेश/O R D E R आदेश आदेश आदेश Per Makarand V.Mahadeokar, Am: This Appeal By The Assessee Is Directed Against The Order Dated 29.11.2024 Passed By The Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi, [Hereinafter Referred To As "Cit(A)"], For The Assessment Year 2014–15, Arising Out Of The Assessment Order Dated 31.03.2022 Passed U/S 147 Read With Section 144B Of The Income-Tax Act, 1961 (Hereinafter Referred To As "The Act") By The National Faceless Assessment Centre, Delhi [Hereinafter Referred To As "Assessing Officer Or Ao"].

Section 10(38)Section 144BSection 147Section 148Section 234ASection 271(1)(c)Section 68Section 69C

…lied on statements and reports of the Investigation Wing and placed reliance on judicial precedents such as the decision of the Hon’ble Supreme Court in Sumati Dayal vs. CIT (214 ITR 3 801), CIT vs. Durga Prasad More (82 ITR 540), McDowell & Co. Ltd. vs. CTO (154 ITR 148), and other authorities to hold that the apparent must be considered in the light of surrounding circumstances and the test of human probabilities must be applied. On such analysis, the Assessing Officer came to the conclusion that the claim of Long Term Capital Gain was not genuine. 2.5 Consequently, the Assessing Officer treated the amount of…

Asst. Commissioner of Income-Tax, Mumbai vs. Bona Sera Hospitality Pvt. Ltd., Mumbai

ITA 863/MUM/2024[2014-15]Status: DisposedITAT Mumbai30 Sept 2025AY 2014-15

Bench: Shri Amit Shukla & Shri Girish Agrawal

For Appellant: Shri M. M. Golwala, CAFor Respondent: Shri Leyaqat Ali Aafaqui, Sr. DR

Section 143(3)Section 14A

…ances of the case and in law, the Ld. CIT(A) is erred in not holding that transaction entered into by the assessee company is legitimate financial restructuring and as such the principle of laid down by Apex Court in the case of McDowel and Co. vs. CTO (1984) 154 ITR 148 will not applicable in the case of the assessee company? 03. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is erred in restricting the disallowance u/s.14A to the extent of exempt income earned ignoring the fact that the AO has computed disallowance u/s 14A as per rule 8D? 04. Whether on the facts and circumstances…

B & B Sharecom Pvt Ltd., Hisar vs. DCIT, Circle, Hisar

In the result, the appeal filed by the assessee is partly allowed for statistical purposes

ITA 2877/DEL/2024[2016-17]Status: DisposedITAT Delhi24 Sept 2025AY 2016-17

Bench: Shri Challa Nagendra Prasad & Shris.Rifaur Rahmanb & B Sharecom Pvt. Ltd., Vs. Dcit, Circle, 133, 1St Floor, Parijat Complex, Hisar. Hisar – 125 001. (Pan :Aagcb1363A) (Appellant) (Respondent) Assessee By : Shri K. Sampath, Advocate Shri V Rajakumar, Advocate Revenue By : Shri Abhishek Deavel, Sr. Dr Date Of Hearing : 22.08.2025 Date Of Order : 24.09.2025 O R D E R

For Appellant: Shri K. Sampath, AdvocateFor Respondent: Shri Abhishek Deavel, Sr. DR

Section 133Section 143(2)Section 271Section 43(5)Section 68

…to the three subscribing Companies remains unstated by the AO. 9 9.5 Besides the above, there is not a shred of evidence to support the several fallacious allegations of the AO. The decision relied upon by the AO of the apex Court in Mcdowells vs. CTO (1985)154 ITR 148, is totally distinguishable on facts. Mcdowells decision was not with regard to subscriptions of share capital and so to invoke that decision in a non-income tax matter to allege an accommodation entry and that too without an iota of proof is grossly fallacious and totally uncalled for. 9.6 There is no quarrel with the proposition enunciated by t…

Income Tax Officer, Mumbai vs. Haresh Kumar Manjibhai Patel, Gujarat

In the result, the appeal of the Revenue fails and is dismissed in its entirety

ITA 3633/MUM/2024[2018-19]Status: DisposedITAT Mumbai11 Sept 2025AY 2018-19

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI ARUN KHODPIA (Accountant Member)

Section 10(38)Section 144Section 147Section 68Section 69C

…out appreciating the fact that that a sham transaction or make-believe transaction or colorable device part of tax planning. Reliance is placed on the decision the Hon'ble Supreme Court in a landmark judgment in the case of McDowell and Co. Ltd. v. CTO (1985) 154 ITR 148 (SC)?” 3. The brief factual matrix, essential to the adjudication of the present controversy, is that the assessee is an individual who had duly filed his return of income for the assessment year 2018–19 on 03/10/2018, declaring therein a total income of ₹18,77,700/– In the computation accompanying the said return, the assessee disclosed that he…

Anusha Finvest Pvt Ltd, Jaipur vs. Assistant Commissioner of Income Tax Circle 1, Jaipur

In the result, the appeal of the assessee is allowed

ITA 985/JPR/2024[2010-2011]Status: DisposedITAT Jaipur10 Sept 2025AY 2010-2011

Bench: SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member), SHRI NARINDER KUMAR (Judicial Member)

For Appellant: Sh. Saurav Harsh, AdvFor Respondent: Sh. Gautam Singh Choudhary, JCIT

Section 142(1)Section 143(1)Section 143(2)Section 147Section 148

…d of the year (March in the case of the Appellant) is similar to the pattern observed by the SEBI in its order. In this connection, it is relevant to examine the ratio of landmark decision of the Hon'ble Supreme Court in the case of McDowell & Co. Ltd. v. CTO 154 ITR 148 (SC), which emphasized the concept of substance over form. The modus operandi adopted by the assessee by acquiring Losses or acquiring Profits with tacit connivance with the Brokers through Client Code Modifications without paying any taxes or avoid declaring true Profits is nothing but a colourable device as cited by Hon'ble SC Judgment. "The t…

Ismail Abdulaziz Lakhani, Bhavnagar vs. ITO, Ward-1(1), Bhavnagar

In the result, appeal filed by the assessee is allowed

ITA 803/AHD/2025[2014-15]Status: DisposedITAT Ahmedabad02 Sept 2025AY 2014-15

Bench: the same were transferred through registered broker, on the floor of the recognized stock exchange, after suffering Security Transaction Tax and ultimately settled through proper banking channel) as unaccounted income under Section 68 of the Act amounting to Rs.1,51,12,000/-.

For Appellant: Shri Sarju Mehta, A.RFor Respondent: Shri Sudhakar Verma, Sr. DR

Section 10(38)Section 132Section 133ASection 143(3)Section 147Section 148Section 250Section 68Section 69C

…had devised a colourable scheme by introducing his unaccounted money in to the bank to give it a colour of legitimate transaction. In this regard, reliance is placed on the judgement of supreme court in the case of Mc. Dowell Ltd. vs. commercial tax officer (154 ITR 148) it was held as under: "Tax planning may be legitimate provided it is within the frame work of law, colourable devices cannot be part of tax planning and it is wrong to encourage and entertain the belief that it is honourable to avoid the payment of by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honestly w…

S.C., Johnson Pvt. Ltd., Gurgaon Haryana vs. DCIT Circle 7(1), New Delhi

ITA 1850/DEL/2019[2006-07]Status: DisposedITAT Delhi28 Aug 2025AY 2006-07

Bench: Shri Anubhav Sharma & Shri Manish Agarwal

Section 1Section 139(1)Section 143(3)Section 147Section 148Section 250Section 80I

…rly held that the same would be termed as Goodwill. (f) At Page 10 to 21 of the Assessment order (Point 5.2.6(iii) & (vii) and 5.2.1(i), (page no. 70-81 of the Appeal Set) the Ld. AO rejected the reliance of the Assessee in case of McDowell & Co. Ltd vs CTO, 154 ITR 148 Padamdasuna Rao vs State of Tamilnadu 255 ITR 147 Raihi Commodities Limited (2010) 40 SOT 265 (ITd SB) (refer para 18 on page 242-245 of Case Law PB 2) Based on the above, the Ld. AO finally held that if the amalgamation had not taken place, the Assessee would be liable to pay MAT and just because merger had taken place, it should not alter the p…

Hamida Munir Chagani, Mumbai vs. ITO 24(2)(1), Mumbai

In the result, appeal of the assessee is allowed as per our aforesaid observations

ITA 4418/MUM/2025[2020-21]Status: DisposedITAT Mumbai22 Aug 2025AY 2020-21

Bench: Shri Amit Shukla & Shri Arun Khodpiaआयकर अपील सं. / Ita No.4418/Mum/2025 "नधा"रण वष" / Assessment Year :2020-21 Hamida Munir Chagani C-501, Green Park, Opp. New Link Road, Andheri (W), Mumbai-400 053 Pan :Aiapc7973L ........अपीलाथ" / Appellant बनाम / V/S. The Income Tax Officer-24(2)(1), Mumbai ……""यथ" / Respondent

For Appellant: Shri Vimal PunmiyaFor Respondent: Shri Himanshu Joshi, Sr. DR

Section 143(3)Section 50CSection 50C(1)

…haser in the Permanent Alternate Accommodation Agreement, bore stamp duty, but as seller, assumed the same liability, indicating inconsistency 5 Hamida Munir Chagani Vs. ITO-24(2)(1), Mumbai suggestive of tax avoidance. As held in McDowell & Co. Ltd. v. CTO [154 ITR 148 (SC)], tax planning crossing into avoidance is impermissible.Therefore, the disallowance of Rs.86,36,200/- is upheld. In view of the above, I am of the considered view that the Assessing officer was justified in making addition of in the assessment order, and accordingly, the grounds of appeal raised by the appellant are dismissed".” 4. Being ag…