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 367,368 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

Anjali Jalan, Kolkata vs. ITO, Ward - 34(2), Kolkata

ITA 1305/KOL/2018[2014-15]Status: DisposedITAT Kolkata26 Apr 2019AY 2014-15

Bench: Shri S.S.Godara & Dr. A.L. Sainiassessment Year :2014-15 Anjali Jalan V/S. Income Tax Officer, Room No. 64, Martin Burn Ward-34(2), 110, House, 1 R.N. Mukherjee Shantipally, Road, Kolkata-700001 Kolkata-107 [Pan No.Acppj 1805 M] .. अपीलाथ" /Appellant ""यथ"/Respondent Shri A.K. Tibrewal, Fca अपीलाथ" क" ओर से/By Appellant Shri Sital Das, Addl.Cit-Sr-Dr ""यथ" क" ओर से/By Respondent 18-04-2019 सुनवाई क" तार"ख/Date Of Hearing 26-04-2019 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per S.S.Godara:- This Assessee’S Appeal For Assessment Year 2014-15 Arises Against The Commissioner Of Income Tax (Appeals)-10, Kolkata’S Order Dated 20.04.2018 Passed In Case No.305/Cit(A)-10/Wd-35(2)/14-15/2016-17 / Kol, Involving Proceedings U/S 143(3) Of The Income Tax Act, 1961; In Short ‘The Act’. Heard The Learned Representative As Well As The Revenue Reiterating Their Respective Stands Against & In Support Of The Impugned Bogus Ltcg Addition Followed By Disallowances Of Unexplained Commission Expenditure. Case File Perused. 2. It Emerges At The Outset That Both The Lower Authorities Have Adopted Identical Line Of Reasoning In Treating The Assessees Ltcg/Losses Derived From Transfer Of Shares To Be Bogus Thereby Treating The Same As Unexplained Cash Credits U/S 68 Of The Act.

Section 143(3)Section 68

…operators. He takes us to assessment order indicating the assessee to have allegedly invested her money in Kailash Auto Finance Ltd. not having any sound financial position or business activity so as to justify the LTCG in issue. Case law Sumati Dayal vs. CIT 214 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR (SC) is quoted in support to plead that both the lower authorities have made it clear in their respective order(s) about the assessee having acted in collusion with various entry operators for the purpose of bogus LTCG in issue. 4. We have given our thoughtful consideration to rival contentions. T…

Income Tax Officer-19(3)(5), Mumbai vs. Umeshbhai R. Patel, Prop: M/S.Uma Gems, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 4864/MUM/2017[2007-08]Status: DisposedITAT Mumbai26 Apr 2019AY 2007-08

Bench: Shri C.N. Prasad, Hon'Ble & Shri Manoj Kumar Aggarwal, Hon'Bleincome Tax Officer – 19(3)(5) V. Shri Umeshbhai R. Patel Room No. 201 Prop: M/S. Uma Gems Matru Mandir, Tardeo Road, 117/A, Pancharatna, Mumbai – 400 007 Opera House Mumbai – 400 004 Pan: Acfpp 2969 N (Appellant) (Respondent) Assessee By : None Department By : Shri Rajeev K. Gubgotra

For Appellant: NoneFor Respondent: Shri Rajeev K. Gubgotra
Section 132(4)Section 147

…with the concept of burden of proof, onus of proving is always on the person who makes the claim. While dealing with the issue of deciding the burden of proof, Hon'ble Supreme Court in the cases of CIT Vs. Durgaprasad More 82 ITR 540 and Sumati Dayal Vs. CIT 214 ITR 801 has held that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not real and that Taxing Authorities are entitled to look into surrounding circumstances to find out the reality and the matter has to be considered by studying the test of human probabilities. The Hon'ble court also held th…

Pooja Ajmani, New Delhi vs. ITO, Ward-20(4), New Delhi

In the result, the Appeal of the Assessee is dismissed

ITA 5714/DEL/2018[2014-15]Status: DisposedITAT Delhi25 Apr 2019AY 2014-15

Bench: Shri H.S. Sidhu

Section 10(38)Section 131Section 143(2)

…le Supreme Court in the case of CIT Vs. Durgaprasad More (82 ITR 540) wherein the Hon'ble Court have made reference to the test of human probability. Reliance was also placed on the decision of the Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT (214 ITR 801). It was held that transactions showing exempt Long Term Capital Gain under section 10(38) though appear to be real but as a fact were sham transactions. It was also noted that it has been 6 held by the Hon’ble Kolkata High Court in the case of CIT Vs. Precison Finance Pvt. Ltd. (208 ITR 465) that payment through account payee is not sacrosan…

Pramod Kumar Seth, New Delhi vs. ITO, New Delhi

In the result, the appeal is dismissed

ITA 5318/DEL/2013[2009-10]Status: DisposedITAT Delhi23 Apr 2019AY 2009-10

Bench: : Shri Amit Shukla & Shri L.P. Sahuassessment Year: 2009-10

Section 171Section 271(1)(c)Section 80C

…ticity of the claim of the appellant and reject the paper trail created by the appellant and require it to show that the transaction is really one which is above board which the appellant has failed to prove. “Hon’ble Supreme Court in the case of Sumiti Dayal 214 ITR 801 has held that the genuineness of the transaction is to be considered on the basis of surrounding circumstances, human probabilities and the conduct of the connected parties. A transaction does not become genuine merely because a paper trail has been created/filed. The AO while exercising his power as an investigating officer has a right to go bey…

Ajay Kumar Seth, New Delhi vs. ITO, New Delhi

In the result, the appeal is dismissed

ITA 5317/DEL/2013[2009-10]Status: DisposedITAT Delhi23 Apr 2019AY 2009-10

Bench: : Shri Amit Shukla & Shri L.P. Sahuassessment Year: 2009-10

Section 171Section 271(1)(c)Section 80C

…ticity of the claim of the appellant and reject the paper trail created by the appellant and require it to show that the transaction is really one which is above board which the appellant has failed to prove. “Hon’ble Supreme Court in the case of Sumiti Dayal 214 ITR 801 has held that the genuineness of the transaction is to be considered on the basis of surrounding circumstances, human probabilities and the conduct of the connected parties. A transaction does not become genuine merely because a paper trail has been created/filed. The AO while exercising his power as an investigating officer has a right to go bey…

Mitesh Ilesh Gadhia, Mumbai vs. DCIT Cen Cir 4(2), Mumbai

In the result, the appeal filed by the assessee is partly allowed

ITA 354/MUM/2019[2010-11]Status: DisposedITAT Mumbai12 Apr 2019AY 2010-11

Bench: Shri B.R. Baskaran & Shri Ravish Soodshri Mitesh Ilesh Gadhia Dcit, Central Circle-4(2) 201, Vyapar Bhavan, 2Nd Floor Room No. 1918 368/270 Narshi Natha Street Vs. Air India Building Masjid Bunder (W) Nariman Point Mumbai 400009 Mumbai 400021 Pan – Aegpg2818A Appellant Respondent

For Appellant: Shri Mayur KisnadwalaFor Respondent: Shri Narendra Jang Pangi
Section 143(3)

…f transaction is “Preponderance of Probabilities” and surrounding circumstances as per the decision rendered by Hon’ble Supreme Court in the case of C. Vasantlal & Co. vs. CIT (1962)(45 ITR 206), Chaturbhuj Panauj AIR 1969 (SC) and Sumati Dayal vs. CIT (1995)(214 ITR 801)(SC) and CIT vs. Durga Prasad More (82 ITR 540). The AO also held that the purchases made from hawala dealers falls within the ambit of “colouorable devices” as observed by Hon’ble Supreme Court in the case of Mc Dowell and Co Ltd vs. CTO (154 ITR 148). The AO also relied upon various other case laws to hold that the entries made in the books of…

Singhal Exim P.Ltyd, New Delhi vs. ITO, Ward-23(4), New Delhi

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

ITA 6520/DEL/2018[2014-15]Status: DisposedITAT Delhi12 Apr 2019AY 2014-15

Bench: Shri Before Shri G.D. Agrawal, Before Shri Before Shri G.D. Agrawal, G.D. Agrawal, Vice G.D. Agrawal, Vice & And & Ms. Suchitra Kamble Ms. Suchitra Kamblems. Suchitra Kamble Ms. Suchitra Kamble

For Appellant: Shri S.R. WadhwaFor Respondent: Shri S.S. Rana, CIT-DR
Section 131(1)Section 68

…remained debtor till they made the payment of the value of the goods purchased by them. Thus, Section 68 is not at all applicable in this case. He also stated that on these facts, the decision of Hon’ble Apex Court in the case of Sumati Dayal Vs. CIT – [1995] 214 ITR 801 (SC) relied upon by the Assessing Officer is not applicable. 5. Learned DR, on the other hand, stated that Section 68 is a deeming provision. The Assessing Officer issued notice under Section 133(6) to the alleged buyers of the mobile phones of the assessee. All 5 ITA-6520/Del/2018 the notices issued remained unserved. That the alleged buyers c…

Laxmipat Dudheria, Bangalore vs. Assistant Commissioner of Income Tax Circle-7(1)(2), Bangalore

In the result, all the four appeals filed by the assessee are allowed

ITA 2376/BANG/2018[2015-16]Status: DisposedITAT Bangalore08 Apr 2019AY 2015-16

Bench: Shri Arun Kumar Garodia & Shri Pavan Kumar Gadale

For Respondent: Shri K.R. Pradeep, Advocate &
Section 144Section 147Section 148Section 234BSection 234DSection 68Section 69C

…ece of evidence. But in that sphere the decision of the final fact finding authority is made conclusive by law". The above ratio laid down by the Hon'ble Supreme Court has been reiterated and applied by the Hon'ble Apex Court in the case of Sumati Dayal V CIT 214 ITR 801 (SC). It is essential on the part of the AO to look into the real nature of transaction and what happens in the real word and contextualize the same to such transactions in the real market situation. It is pertinent to state here, the wisdom of Hon'ble Supreme Court in CIT v Arvinda Raju (TN)(1979) 120 ITR 46 (SC) wherein it was held that - " One…

Laxmipat Dudheria, Bangalore vs. Assistant Commissioner of Income Tax Circle-7(1)(2), Bangalore

In the result, all the four appeals filed by the assessee are allowed

ITA 2375/BANG/2018[2014-15]Status: DisposedITAT Bangalore08 Apr 2019AY 2014-15

Bench: Shri Arun Kumar Garodia & Shri Pavan Kumar Gadale

For Respondent: Shri K.R. Pradeep, Advocate &
Section 144Section 147Section 148Section 234BSection 234DSection 68Section 69C

…ece of evidence. But in that sphere the decision of the final fact finding authority is made conclusive by law". The above ratio laid down by the Hon'ble Supreme Court has been reiterated and applied by the Hon'ble Apex Court in the case of Sumati Dayal V CIT 214 ITR 801 (SC). It is essential on the part of the AO to look into the real nature of transaction and what happens in the real word and contextualize the same to such transactions in the real market situation. It is pertinent to state here, the wisdom of Hon'ble Supreme Court in CIT v Arvinda Raju (TN)(1979) 120 ITR 46 (SC) wherein it was held that - " One…

Laxmipat Dudheria, Bangalore vs. Assistant Commissioner of Income Tax Circle-7(1)(2), Bangalore

In the result, all the four appeals filed by the assessee are allowed

ITA 2374/BANG/2018[2013-14]Status: DisposedITAT Bangalore08 Apr 2019AY 2013-14

Bench: Shri Arun Kumar Garodia & Shri Pavan Kumar Gadale

For Respondent: Shri K.R. Pradeep, Advocate &
Section 144Section 147Section 148Section 234BSection 234DSection 68Section 69C

…ece of evidence. But in that sphere the decision of the final fact finding authority is made conclusive by law". The above ratio laid down by the Hon'ble Supreme Court has been reiterated and applied by the Hon'ble Apex Court in the case of Sumati Dayal V CIT 214 ITR 801 (SC). It is essential on the part of the AO to look into the real nature of transaction and what happens in the real word and contextualize the same to such transactions in the real market situation. It is pertinent to state here, the wisdom of Hon'ble Supreme Court in CIT v Arvinda Raju (TN)(1979) 120 ITR 46 (SC) wherein it was held that - " One…

Laxmipat Dudheria, Bangalore vs. Assistant Commissioner of Income Tax Circle-7(1)(2), Bangalore

In the result, all the four appeals filed by the assessee are allowed

ITA 2373/BANG/2018[2012-13]Status: DisposedITAT Bangalore08 Apr 2019AY 2012-13

Bench: Shri Arun Kumar Garodia & Shri Pavan Kumar Gadale

For Respondent: Shri K.R. Pradeep, Advocate &
Section 144Section 147Section 148Section 234BSection 234DSection 68Section 69C

…ece of evidence. But in that sphere the decision of the final fact finding authority is made conclusive by law". The above ratio laid down by the Hon'ble Supreme Court has been reiterated and applied by the Hon'ble Apex Court in the case of Sumati Dayal V CIT 214 ITR 801 (SC). It is essential on the part of the AO to look into the real nature of transaction and what happens in the real word and contextualize the same to such transactions in the real market situation. It is pertinent to state here, the wisdom of Hon'ble Supreme Court in CIT v Arvinda Raju (TN)(1979) 120 ITR 46 (SC) wherein it was held that - " One…

Shri Birendra Prasad, Bokaro vs. ITO Ward-3(1), Bokaro

In the result, all the appeals filed by the assessee are allowed

ITA 365/RAN/2016[2007-08]Status: DisposedITAT Ranchi05 Apr 2019AY 2007-08

Bench: Shri S. S. Godara, J.M. & Dr.A.L.Saini, A.M.)

For Appellant: Shri Devesh Poddar Advocates, ld.ARsFor Respondent: Shri P.K. Mondal, JCIT, ld. DR
Section 133(6)Section 143(3)Section 234ASection 263Section 68

…rmed the addition; observing the following: “3.2 In view of the above finding of the Assessing Officer, I hold; relying on the Hon'ble Supreme Court decision in the case of CIT Vs.P. Mohan Kala (2007) 291 ITR, 278 and in the case of Sumati Dayal VS.CIT(J 995) 214 ITR 801 that if the cash credits are not explained and proved to the satisfaction of the Assessing Officer, the same can be added as unexplained cash credit u/s. 68 of the I.T Act. The Assessing Officer's action is, therefore, upheld. The appellant fails on his grounds of appeal. 7. Aggrieved, by the order of CIT(A), the assessee is in appeal before us.…

Smt. Sushila Devi Kajaria, Kolkata vs. ACIT, Circle - 36, Kolkata

ITA 1255/KOL/2018[2014-15]Status: DisposedITAT Kolkata03 Apr 2019AY 2014-15

Bench: Shri S.S, Godara

Section 143(3)Section 68

…itled to look into the surrounding circumstances to find out the reality of such recitals." Similarly in the case of Sumati Dayal vs. CIT ITA No.1254-1255/Kol/2018 A.Y.2014-15 Navin Kr. Kajaria & Smt. Sushila Devi Kajaria Vs. ACIT Cir-35/36 Kol Page 3 (1995) 214 ITR 801 (SC), their Lordships held as under: "In view of section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income tax as the income of the assesses of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of t…

Navin Kumar Kajaria, Kolkata vs. ACIT, Circle - 35, Kolkata

ITA 1254/KOL/2018[2014-15]Status: DisposedITAT Kolkata03 Apr 2019AY 2014-15

Bench: Shri S.S, Godara

Section 143(3)Section 68

…itled to look into the surrounding circumstances to find out the reality of such recitals." Similarly in the case of Sumati Dayal vs. CIT ITA No.1254-1255/Kol/2018 A.Y.2014-15 Navin Kr. Kajaria & Smt. Sushila Devi Kajaria Vs. ACIT Cir-35/36 Kol Page 3 (1995) 214 ITR 801 (SC), their Lordships held as under: "In view of section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income tax as the income of the assesses of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of t…

Nand Bhagwandas Motwani, Mumbai vs. Income Tax Officer Ward-2(5), Kalyan

ITA 5855/MUM/2017[2007-08]Status: DisposedITAT Mumbai03 Apr 2019AY 2007-08

Bench: Hon’Ble Sh. Sandeep Gosain, Jm & Hon’Ble Sh. G. Manjunatha, Am आयकरअपीलसं./ I.T.A. No. 5855/Mum/2017 (निर्धारणवर्ा / Assessment Year: 2007-08)

For Appellant: Shri Bhadresh DoshiFor Respondent: Ms. Bharti Singh, DR
Section 143(3)Section 147Section 148

…it is within their exclusive knowledge. JJj. In the case of J.S.Parkar reported in 94 ITR 616 the .Hon'ble Bombay High Court held that under the I.Tax Act, inference can be drawn upon the basis of circumstantial evidence. JJJj Sumati Dayal vs. CIT reported in 214 ITR 801(SC)-held that as laid down by 20 I.T.A. No. 5855/Mum/2017 Nand Bhagwandas Motwani, this court, apparent must be considered real until it is shown that there are reasons to believe that the apparent is not real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be c…

Deputy Commissioner of Income Tax, Central Circle, Kota vs. M/S. Agrasen Agro Industries Private Limited, Kota

ITA 1205/JPR/2018[2011-12]Status: DisposedITAT Jaipur27 Mar 2019AY 2011-12
Section 143(3)Section 153Section 153ASection 68

…reliance to the said judgment with that of the case of Appellant is a misconceived interpretation of the Ld. AO. (iii) Commissioner of Income-tax v. Durga Prasad More [1971] 82 ITR 540 (SC) and Sumati Dayal v. Commissioner of Income-tax [1995] 80 TAXMANN 89/214 ITR 801 (SC): Ld. AO, while placing reliance upon the aforesaid judgments has held that the theory of preponderance of human probability as pronounced by the Hon’ble Apex Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 and Sumiti Dayal v. CIT (1995) 80 Taxmann 89/214 ITR 801 (SC) is of utmost importance. In the cases where it has been est…

Deputy Commissioner of Income Tax, Central Circle, Kota vs. M/S Rajasthan Cable Industries Limited, Kota

ITA 1189/JPR/2018[2016-17]Status: DisposedITAT Jaipur27 Mar 2019AY 2016-17
For Appellant: Shri Vijay Goyal (CA) &For Respondent: Shri Varinder Mehta (CIT-DR)
Section 143(3)Section 153ASection 68

…while placing reliance upon the aforesaid judgments has held that the theory of preponderance of human probability as pronounced by the Hon’ble Apex Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 and Sumiti Dayal v. CIT (1995) 80 Taxmann 89/214 ITR 801 (SC) is of utmost importance. In the cases where it has been established that the source company is a near ‘Paper Company’ solely engaged in the activity of providing accommodation entries, the presumption on the basis of human probability is important. Ld. AO has placed reliance upon the ITA 1121, 1189 & 1052/JP/2018_ 18 M/s Rajasthan Cable Ind…

Deputy Commissioner of Income Tax, Central Circle, Kota vs. M/S. Agrasen Agro Industries Private Limited, Kota

ITA 1188/JPR/2018[2010-11]Status: DisposedITAT Jaipur27 Mar 2019AY 2010-11
Section 143(3)Section 153Section 153ASection 68

…reliance to the said judgment with that of the case of Appellant is a misconceived interpretation of the Ld. AO. (iii) Commissioner of Income-tax v. Durga Prasad More [1971] 82 ITR 540 (SC) and Sumati Dayal v. Commissioner of Income-tax [1995] 80 TAXMANN 89/214 ITR 801 (SC): Ld. AO, while placing reliance upon the aforesaid judgments has held that the theory of preponderance of human probability as pronounced by the Hon’ble Apex Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 and Sumiti Dayal v. CIT (1995) 80 Taxmann 89/214 ITR 801 (SC) is of utmost importance. In the cases where it has been est…

M/S Rajasthan Cable Industries Limited, Kota vs. Deputy Commissioner of Income Tax, Central Circle, Kota

ITA 1121/JPR/2018[2015-16]Status: DisposedITAT Jaipur27 Mar 2019AY 2015-16
For Appellant: Shri Vijay Goyal (CA) &For Respondent: Shri Varinder Mehta (CIT-DR)
Section 143(3)Section 153ASection 68

…while placing reliance upon the aforesaid judgments has held that the theory of preponderance of human probability as pronounced by the Hon’ble Apex Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 and Sumiti Dayal v. CIT (1995) 80 Taxmann 89/214 ITR 801 (SC) is of utmost importance. In the cases where it has been established that the source company is a near ‘Paper Company’ solely engaged in the activity of providing accommodation entries, the presumption on the basis of human probability is important. Ld. AO has placed reliance upon the ITA 1121, 1189 & 1052/JP/2018_ 18 M/s Rajasthan Cable Ind…

M/S. Agrasen Agro Industries Private Limited, Kota vs. Deputy Commissioner of Income Tax, Central Circle, Kota

ITA 1053/JPR/2018[2010-11]Status: DisposedITAT Jaipur27 Mar 2019AY 2010-11
Section 143(3)Section 153Section 153ASection 68

…reliance to the said judgment with that of the case of Appellant is a misconceived interpretation of the Ld. AO. (iii) Commissioner of Income-tax v. Durga Prasad More [1971] 82 ITR 540 (SC) and Sumati Dayal v. Commissioner of Income-tax [1995] 80 TAXMANN 89/214 ITR 801 (SC): Ld. AO, while placing reliance upon the aforesaid judgments has held that the theory of preponderance of human probability as pronounced by the Hon’ble Apex Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 and Sumiti Dayal v. CIT (1995) 80 Taxmann 89/214 ITR 801 (SC) is of utmost importance. In the cases where it has been est…

Sumati Dayal v. CIT (214 ITR 801) — Cited in 1,967 Judgments | BharatTax