Sumati Dayal v. CIT

214 ITR 801Supreme Court of India1995#12 most cited

What is Sumati Dayal v. CIT authority for?

The Revenue is entitled to look behind the apparent form of a transaction to discover its true nature, applying the test of human probabilities and surrounding circumstances. If transactions defy logic or are unnatural, they can be treated as bogus, even if supported by some documentation, especially in cases of cash credits or unexplained investments.

1,967

judgments rely on this decision, according to BharatTax’s citation analysis of 367,154 Indian tax judgments — from 2010 to 2026.

Also referred to as

Sumati Dayal v CIT · Section 68 · human probabilities · genuineness of transaction · true nature of transaction · accommodation entry · bogus capital gains · penny stock · look behind apparent form · preponderance of probability · colourable device · unexplained loans

Also reported as

80 Taxmann 89125 CTR 124

Sections most often in play

Section 68Section 143(3)Section 147Section 148Section 142(1)Section 115BBESection 69CSection 69A
Read the full judgment

Issues it is cited on

price riggingcolourable devicepreponderance of probabilitybogus ltcgpenny stocksection 10(38)entry operatoraddition under section 68addition u/s 68genuineness of the transactionaccommodation entryshare application money

Judgments citing Sumati Dayal v. CIT

Kishor Rameshbhai Mehta, Surat vs. ITO, Ward-1(5), Bharuch

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

ITA 60/SRT/2025[2013-14]Status: DisposedITAT Surat10 Nov 2025AY 2013-14

Bench: Shri Sanjay Garg & Shri Bijayananda Prusethआयकर अपील सं./Ita No.60/Srt/2025 Assessment Year: 2013-14 (Hybrid Hearing) Kishor Rameshbhai Mehta Vs. Ito, Prop. Of Aditya Infrastructure, Ward - 1(5), 139, Maher Nagar, Opp. Baps Bharuch Hospital, Adajan Gam Circle, Surat - 395 009 "थायीलेखासं./जीआइआरसं./Pan/Gir No: Adepm 4458 R (Appellant) (Respondent) Appellant By Shri P. M. Jagasheth, Ca Respondent By Shri Ajay Uke, Sr. Dr Date Of Hearing 12/08/2025 Date Of Pronouncement 10/11/2025

Section 194ASection 194CSection 2(24)Section 250Section 253(3)Section 36(1)(iii)Section 40Section 68Section 69A

…nexplained. Thereafter, the AO issued a show cause notice dated 15.03.2016. In response, the assessee had submitted his reply, but neither any documentary evidences/explanation had furnished. The AO relied upon various decision, viz. (i) Sumati Dayal vs. CIT, 214 ITR 801 (SC), (ii) Kale Khan Mohammad Hanif vs. CIT, 50 ITR 1 (SC), (iii) Roshan Di Hatti vs. CIT, 107 ITR 938 (SC), (iv) CIT vs. M. Ganapathi Mudaliar, 53 ITR 623 (SC), (v) A. Govindarajulu Mudaliar vs. CIT, 34 ITR 807 (SC), (vi) Shankar Industries vs. CIT, ITA No.60/SRT/2025/AY 2013-14 Kishor Rameshbhai Mehta 114 ITR 689, (vii) Shreelekha Banerjee v…

Income Tax Officer 23 2 6, Mumbai vs. Manmohan Daulal Rathi, Mumbai

In the result, appeal filed by the revenue is dismissed

ITA 5467/MUM/2025[2010-11]Status: DisposedITAT Mumbai07 Nov 2025AY 2010-11

Bench: Shri Om Prakash Kant & Shri Raj Kumar Chauhan

Section 10(38)Section 147Section 148Section 250Section 271(1)(c)

…s?" 9. "Whether on the facts and circumstances of the case and in law, the Ld CIT(A) has erred in not considering the fact that the direct and circumstantial evidences in view of the decision of Durga Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal [1995] 80 Taxmann 89(SC) [1995] 2014 ITR 801 (SC)/ (1995) 125 CTR 124(SC), rendered by the Supreme Court, where it was held that Hon'ble Court and Tribunal have to judge the evidences before it by applying the test of probabilities, the surrounding circumstances which exercise had been done by the Assessing Officer?" 10. "Whether on the facts and circumstances of t…

Income Tax Officer 1(1)(3), Ahmedabad vs. Sureshkumar Bhikalal Thakker, Ahmedabad

In the result, the appeal of the Department is allowed

ITA 1593/AHD/2025[2015-16]Status: DisposedITAT Ahmedabad06 Nov 2025AY 2015-16

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Dipen Shukhadia, ARFor Respondent: Shri Ravindra, Sr. DR
Section 10(38)Section 147Section 69A

…d the true ratio must be understood in light of the questions that were before the Court; a decision takes its colour from the facts of the case in which it was rendered." 13. The principle enunciated by the Hon'ble Supreme Court in Sumati Dayal v. CIT [1995] 214 ITR 801 (SC) is also squarely applicable here, wherein it was held that the test of human probabilities and surrounding circumstances must prevail over mere documentary evidence while determining genuineness of income transactions. The pattern of conduct of the assessee in the instant case, the absence of commercial rationale, and the artificially inflat…

Mohanbhai Becharbhai Chauhan, Ahmedabad vs. Income Tax Officer Ward 1(2)(3), Ahmedabad

ITA 1570/AHD/2025[2012-13]Status: DisposedITAT Ahmedabad06 Nov 2025AY 2012-13

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Ms. Vidhi V. Pandya, CAFor Respondent: Shri Ravindra, Sr. DR
Section 144Section 147Section 234ASection 234BSection 271FSection 272ASection 272A(1)(b)Section 272A(1)(c)Section 69Section 69A

…source of any credit appearing in his bank account, and in the present case, such onus had not been discharged. Relying on the principles laid down by the Hon’ble Supreme Court in CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) and Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), the CIT(Appeals) invoked the test of human probabilities and concluded that the claim of agricultural income was not substantiated. The CIT(Appeals) also referred to Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) and McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148 (SC), and held that unexplained money, if not properly explained by the assesse…

Anita Gorver, Delhi vs. ITO Ward-43 (7), New Delhi

In the result, the Assessee’s appeal is allowed for statistical purposes

ITA 5565/DEL/2025[2017-18]Status: DisposedITAT Delhi06 Nov 2025AY 2017-18

Bench: Shri Mahavir Singh, Hon’Bleasstt. Year : 2017-18 Anita Grover, Vs. Ito, Ward 43(7), Up-13, 1St Floor, Maurya Enclave, Delhi – 110002 Pitampura, Delhi 34 (Pan: Aappg0883L) (Appellant) (Respondent) Appellant By : None Respondent By : Shri Manoj Kumar, Sr. Dr

For Appellant: NoneFor Respondent: Shri Manoj Kumar, Sr. DR
Section 115Section 115BSection 68

…2-13 and AY 2016-17. However, no plausible reason was provided for continuous withdrawals if large sums were already held in cash. Further, there is no evidence that the cash so withdrawn was not spent in the intervening period. In Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC), the Hon’ble Supreme Court has clearly held 2 | P a g e that when there are surrounding circumstances, human probabilities, and conduct of the assessee which cast doubt on the claim, the same must be rejected. 5. However, Ld. CIT(A) did not consider the aforesaid explanation of the assessee properly, and confirmed the addition made by the A…

Dy. Commissioner of Income Tax, Central Circle-1, Ludhiana vs. M/S Jamna Dass Nikkamal Jain Saraf Pvt. Ltd., Ludhiana

In the result, the appeal filed by Revenue is dismissed and the appeal filed by the Assessee is allowed

ITA 628/CHANDI/2025[2022-23]Status: HeardITAT Chandigarh04 Nov 2025AY 2022-23

Bench: SHRI. LALIET KUMAR (Judicial Member), SHRI. KRINWANT SAHAY (Accountant Member)

For Appellant: Shri Sudhir Sehgal, AdvocateFor Respondent: Shri Manav Bansal, CIT, DR
Section 115BSection 143(3)Section 145(3)Section 148BSection 151Section 69A

…not the real and the tax authorities are entitled to look at the surrounding circumstances to find out the realities and the matter has to be considered by applying the test of human probabilities.” 21 b) In Sumati Dayal vs. Commissioner of Income tax (1995) 214 ITR 801 (SC) the Supreme Court observed “It is no doubt true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act…

Jamna Dass Nikkamal Jain Saraf Private Limited, Ludhiana vs. The Deputy Commissioner of Income Tax Central Circle 1, Ludhiana

In the result, the appeal filed by Revenue is dismissed and the appeal filed by the Assessee is allowed

ITA 403/CHANDI/2025[2022-2023]Status: HeardITAT Chandigarh04 Nov 2025AY 2022-2023

Bench: SHRI. LALIET KUMAR (Judicial Member), SHRI. KRINWANT SAHAY (Accountant Member)

For Appellant: Shri Sudhir Sehgal, AdvocateFor Respondent: Shri Manav Bansal, CIT, DR
Section 115BSection 143(3)Section 145(3)Section 148BSection 151Section 69A

…not the real and the tax authorities are entitled to look at the surrounding circumstances to find out the realities and the matter has to be considered by applying the test of human probabilities.” 21 b) In Sumati Dayal vs. Commissioner of Income tax (1995) 214 ITR 801 (SC) the Supreme Court observed “It is no doubt true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act…

Deputy Commissioner of Income -Tax Central Circle-1(1), Ahmedabad, Gujarat vs. Bhaveshkumar Girishbhai Bhandari, Ahmedabad, Gujarat

ITA 979/AHD/2025[2018-19]Status: DisposedITAT Ahmedabad04 Nov 2025AY 2018-19
Section 132Section 143(1)Section 143(3)Section 144BSection 147Section 250Section 37(1)Section 68

…ined credits within the meaning of section 68 of the Act. The Assessing Officer relied upon various judicial precedents, including Suman Poddar v. ITO [2019] 112 taxmann.com 330 (SC), CIT v. Durga Prasad More [1971] 82 ITR 540 (SC), Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), and the principle of human probability, the AO held that the transactions were part of a colorable device to convert unaccounted income into tax-free gains. The AO held that despite receiving payments by cheque and executing trades through a recognized broker, the overall pattern of transactions, abnormal profits, lack of financial strength…

Deputy Commissioner of Income -Tax Central Circle-1(1), Ahmedabad, Gujarat vs. Bhaveshkumar Girishbhai Bhandari, Ahmedabad, Gujarat

In the result, the appeal of the Department is allowed and the order of

ITA 978/AHD/2025[2016-17]Status: DisposedITAT Ahmedabad04 Nov 2025AY 2016-17
For Respondent: Shri Abhijit Sr.DR
Section 132Section 143(1)Section 143(3)Section 144BSection 147Section 250Section 37(1)Section 68

…ined credits within the meaning of section 68 of the Act. The Assessing Officer relied upon various judicial precedents, including Suman Poddar v. ITO [2019] 112 taxmann.com 330 (SC), CIT v. Durga Prasad More [1971] 82 ITR 540 (SC), Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), and the principle of human probability, the AO held that the transactions were part of a colorable device to convert unaccounted income into tax-free gains. The AO held that despite receiving payments by cheque and executing trades through a recognized broker, the overall pattern of transactions, abnormal profits, lack of financial strength…

Deputy Commissioner of Income -Tax Central Circle-1(1), Ahmedabad, Gujarat vs. Girishkumar Amratlal Bhandari HUF, Himatnagar, Gujarat

In the result, the appeal of the Department is allowed and the order of

ITA 977/AHD/2025[2018-19]Status: DisposedITAT Ahmedabad04 Nov 2025AY 2018-19
For Respondent: Shri Abhijit Sr.DR
Section 132Section 143(1)Section 143(3)Section 144BSection 147Section 250Section 37(1)Section 68

…ined credits within the meaning of section 68 of the Act. The Assessing Officer relied upon various judicial precedents, including Suman Poddar v. ITO [2019] 112 taxmann.com 330 (SC), CIT v. Durga Prasad More [1971] 82 ITR 540 (SC), Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), and the principle of human probability, the AO held that the transactions were part of a colorable device to convert unaccounted income into tax-free gains. The AO held that despite receiving payments by cheque and executing trades through a recognized broker, the overall pattern of transactions, abnormal profits, lack of financial strength…

Gitaben Dineshbhai Patel, Ahmedabad vs. ITO Ward 5(3)(1), Ahmedabad

In the result, the appeal filed by the assessee is dismissed

ITA 717/AHD/2025[2017-18]Status: DisposedITAT Ahmedabad04 Nov 2025AY 2017-18

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Anil Kshatriya, AdvocateFor Respondent: Shri Abhijit, Sr. DR
Section 10(38)Section 144BSection 147Section 148Section 68

…the true ratio must be understood in light of the questions that were before the Court; a decision takes its colour from the facts of the case in which it was rendered.” 13. The principle enunciated by the Hon’ble Supreme Court in Sumati Dayal v. CIT [1995] 214 ITR 801 (SC) is also squarely applicable here, wherein it was held that the test of human probabilities and surrounding circumstances must prevail over mere documentary evidence while determining genuineness of income transactions. The pattern of conduct of the assessee in the instant case, the absence of commercial rationale, and the artificially inflat…

Anshu Sahai (HUF), Jaipur vs. ACIT, Central Circle

ITA 468/JPR/2025[2018-19]Status: DisposedITAT Jaipur03 Nov 2025AY 2018-19
For Appellant: Sh. Rajeev Sogani, CA &For Respondent: Sh. Sanjay Dhariwal, CIT-DR
Section 115BSection 132Section 133ASection 139Section 153CSection 153D

…nce had to be drawn on the basis of circumstances available on the record and that the genui ness of claim had to be considered in view of the surrounding circumstances and applying the test of human probabilities. [Sumati Dayal v. CIT [1995] 80 Taxman 89/214 ITR 801 (SC)] A party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by…

Ramji Vaish, Allahabad vs. DCIT(CC), Allahabad

In the result, all the appeals filed by the assessees are held to be partly allowed as above, while the Departmental appeals in the matter of Vijay Stone

ITA 38/ALLD/2023[2007-08]Status: DisposedITAT Allahabad31 Oct 2025AY 2007-08

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudhary

For Appellant: Sh. Praveen Godbole, C.A. & Sh. SuyashFor Respondent: Sh. Amalendu Nath Mishra, CIT DR & Sh
Section 132(1)Section 153Section 153ASection 153DSection 250

…reciating that the said decision was distinguishable because the income tax proceedings being civil in nature, the rules of evidence are different and even the circumstantial evidence is also enough to fasten the tax liability, as held in case of Sumati Dayal 214 ITR 801 (SC). 16. On facts & circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 2,08,97,456/- on account of gross profit earned and Rs. 1,44,00,000 on account of stock for the unaccounted mining turnover as mentioned in seized annexure 23 on grounds that the alphabets Band "W" as mentioned on the seized registered refe…

Ramji Vaish, Allahabad vs. DCIT, (CC), Allahabad

In the result, all the appeals filed by the assessees are held to be partly allowed as above, while the Departmental appeals in the matter of Vijay Stone

ITA 37/ALLD/2023[2006-07]Status: DisposedITAT Allahabad31 Oct 2025AY 2006-07

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudhary

For Appellant: Sh. Praveen Godbole, C.A. & Sh. SuyashFor Respondent: Sh. Amalendu Nath Mishra, CIT DR & Sh
Section 132(1)Section 153Section 153ASection 153DSection 250

…reciating that the said decision was distinguishable because the income tax proceedings being civil in nature, the rules of evidence are different and even the circumstantial evidence is also enough to fasten the tax liability, as held in case of Sumati Dayal 214 ITR 801 (SC). 16. On facts & circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 2,08,97,456/- on account of gross profit earned and Rs. 1,44,00,000 on account of stock for the unaccounted mining turnover as mentioned in seized annexure 23 on grounds that the alphabets Band "W" as mentioned on the seized registered refe…

Ramji Vaish, Allahabad vs. DCIT, (CC), Allahabad

In the result, all the appeals filed by the assessees are held to be partly allowed as above, while the Departmental appeals in the matter of Vijay Stone

ITA 36/ALLD/2023[2005-06]Status: DisposedITAT Allahabad31 Oct 2025AY 2005-06

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudhary

For Appellant: Sh. Praveen Godbole, C.A. & Sh. SuyashFor Respondent: Sh. Amalendu Nath Mishra, CIT DR & Sh
Section 132(1)Section 153Section 153ASection 153DSection 250

…reciating that the said decision was distinguishable because the income tax proceedings being civil in nature, the rules of evidence are different and even the circumstantial evidence is also enough to fasten the tax liability, as held in case of Sumati Dayal 214 ITR 801 (SC). 16. On facts & circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 2,08,97,456/- on account of gross profit earned and Rs. 1,44,00,000 on account of stock for the unaccounted mining turnover as mentioned in seized annexure 23 on grounds that the alphabets Band "W" as mentioned on the seized registered refe…

Ramji Vaish, Allahabad vs. DCIT(CC), Allahabad

In the result, all the appeals filed by the assessees are held to be partly allowed as above, while the Departmental appeals in the matter of Vijay Stone

ITA 127/ALLD/2023[2011-12]Status: DisposedITAT Allahabad31 Oct 2025AY 2011-12

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudhary

For Appellant: Sh. Praveen Godbole, C.A. & Sh. SuyashFor Respondent: Sh. Amalendu Nath Mishra, CIT DR & Sh
Section 132(1)Section 153Section 153ASection 153DSection 250

…reciating that the said decision was distinguishable because the income tax proceedings being civil in nature, the rules of evidence are different and even the circumstantial evidence is also enough to fasten the tax liability, as held in case of Sumati Dayal 214 ITR 801 (SC). 16. On facts & circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 2,08,97,456/- on account of gross profit earned and Rs. 1,44,00,000 on account of stock for the unaccounted mining turnover as mentioned in seized annexure 23 on grounds that the alphabets Band "W" as mentioned on the seized registered refe…

Ramji Vaish, Allahabad vs. DCIT(CC), Allahabad

In the result, all the appeals filed by the assessees are held to be partly allowed as above, while the Departmental appeals in the matter of Vijay Stone

ITA 126/ALLD/2023[2010-11]Status: DisposedITAT Allahabad31 Oct 2025AY 2010-11

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudhary

For Appellant: Sh. Praveen Godbole, C.A. & Sh. SuyashFor Respondent: Sh. Amalendu Nath Mishra, CIT DR & Sh
Section 132(1)Section 153Section 153ASection 153DSection 250

…reciating that the said decision was distinguishable because the income tax proceedings being civil in nature, the rules of evidence are different and even the circumstantial evidence is also enough to fasten the tax liability, as held in case of Sumati Dayal 214 ITR 801 (SC). 16. On facts & circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 2,08,97,456/- on account of gross profit earned and Rs. 1,44,00,000 on account of stock for the unaccounted mining turnover as mentioned in seized annexure 23 on grounds that the alphabets Band "W" as mentioned on the seized registered refe…

Ramji Vaish, Allahabad vs. DCIT(CC), Allahabad

In the result, all the appeals filed by the assessees are held to be partly allowed as above, while the Departmental appeals in the matter of Vijay Stone

ITA 125/ALLD/2023[2009-10]Status: DisposedITAT Allahabad31 Oct 2025AY 2009-10

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudhary

For Appellant: Sh. Praveen Godbole, C.A. & Sh. SuyashFor Respondent: Sh. Amalendu Nath Mishra, CIT DR & Sh
Section 132(1)Section 153Section 153ASection 153DSection 250

…reciating that the said decision was distinguishable because the income tax proceedings being civil in nature, the rules of evidence are different and even the circumstantial evidence is also enough to fasten the tax liability, as held in case of Sumati Dayal 214 ITR 801 (SC). 16. On facts & circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 2,08,97,456/- on account of gross profit earned and Rs. 1,44,00,000 on account of stock for the unaccounted mining turnover as mentioned in seized annexure 23 on grounds that the alphabets Band "W" as mentioned on the seized registered refe…

Ramji Vaish, Allahabad vs. DCIT(C.C.), Allahabad

In the result, all the appeals filed by the assessees are held to be partly allowed as above, while the Departmental appeals in the matter of Vijay Stone

ITA 101/ALLD/2023[2008-09]Status: DisposedITAT Allahabad31 Oct 2025AY 2008-09

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudhary

For Appellant: Sh. Praveen Godbole, C.A. & Sh. SuyashFor Respondent: Sh. Amalendu Nath Mishra, CIT DR & Sh
Section 132(1)Section 153Section 153ASection 153DSection 250

…reciating that the said decision was distinguishable because the income tax proceedings being civil in nature, the rules of evidence are different and even the circumstantial evidence is also enough to fasten the tax liability, as held in case of Sumati Dayal 214 ITR 801 (SC). 16. On facts & circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 2,08,97,456/- on account of gross profit earned and Rs. 1,44,00,000 on account of stock for the unaccounted mining turnover as mentioned in seized annexure 23 on grounds that the alphabets Band "W" as mentioned on the seized registered refe…

Asstt. Commissioner of Income Tax, Central Circle, Allahabad vs. Vijay Stone Product, Sonebhadra

In the result, all the appeals filed by the assessees are held to be partly allowed as above, while the Departmental appeals in the matter of Vijay Stone

ITA 65/ALLD/2019[2011-12]Status: DisposedITAT Allahabad31 Oct 2025AY 2011-12

Bench: Sh. Sudhanshu Srivastava & Sh. Nikhil Choudhary

For Appellant: Sh. Praveen Godbole, C.A. & Sh. SuyashFor Respondent: Sh. Amalendu Nath Mishra, CIT DR & Sh
Section 132(1)Section 153Section 153ASection 153DSection 250

…reciating that the said decision was distinguishable because the income tax proceedings being civil in nature, the rules of evidence are different and even the circumstantial evidence is also enough to fasten the tax liability, as held in case of Sumati Dayal 214 ITR 801 (SC). 16. On facts & circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 2,08,97,456/- on account of gross profit earned and Rs. 1,44,00,000 on account of stock for the unaccounted mining turnover as mentioned in seized annexure 23 on grounds that the alphabets Band "W" as mentioned on the seized registered refe…