Landmark Cases on Evidence, Onus and Natural Justice

The Revenue must prove that the assessee received more consideration than declared when challenging a sale transaction. The declared sale consideration is accepted unless evidence proves otherwise.

An assessment cannot be made on the basis of a retracted statement alone, nor can income be assessed without supporting material. There must be some evidence to justify the assessment.

Addition for alleged bogus purchases is deleted when the Revenue takes a contradictory stand by rejecting books of account and simultaneously making additions for purchases recorded in those books.

The Assessing Officer fails to appreciate affidavits of the concerned parties furnished by the appellant confirming that no cash was involved in a transaction.

Evidence brought on record without the assessee's knowledge and used against them without an opportunity to rebut violates the principles of natural justice. The Assessing Officer is not bound by strict rules of evidence and can rely on material not admissible in a court of law.

An act that is legally valid cannot be considered void or non-existent solely because of an alleged underlying motive that results in economic detriment or prejudice to national interests.

Statements made during a survey should not be used as the basis for an addition unless they are confronted to the partners of the assessee.

When assessing compensation for permanent disability, the percentage of disability should not be mechanically applied to loss of earning capacity; the actual impact on the victim's ability to earn must be considered.

The requirements of natural justice are not rigid rules but depend on the specific circumstances of a case, the nature of the inquiry, the governing rules, and the subject matter.

The Supreme Court remands a matter when an assessee is deprived of the opportunity to cross-examine individuals whose statements were relied upon by the Revenue under Section 132(4) of the Income Tax Act.

The Commissioner (Appeals) is not required to confront the Assessing Officer with additional evidence that the Commissioner (Appeals) obtains on their own motion. However, if additional evidence is admitted on the assessee's request, the Assessing Officer must be given an opportunity to rebut it.

An addition to income cannot be made on the basis of deeming fiction without evidence that the assessee actually paid more than what was declared in the registered deed. The Assessing Officer bears the burden of proving the assessee's liability to tax.

The Income Tax Appellate Tribunal has the discretion to allow the production of additional evidence under Rule 29 of the ITAT Rules, 1963, even if documents were not produced before lower authorities, if it is required for passing orders or for any substantial cause in the interests of justice.

The law laid down by the Supreme Court is binding on all courts and tribunals, and departmental circulars cannot prevail over it. Courts may need to clarify the intention behind specific paragraphs in judgments to prevent misinterpretation.

Admissions constitute the best evidence because they are self-harming statements made by the maker believing them to be true.

An application for the admission of additional evidence under Rule 46A of the Income Tax Rules, 1962, must include reasons explaining the purpose of the evidence and the justification for not producing it earlier. Failure to do so can lead to the rejection of the application.

Additions to income cannot be made solely on the basis of a statement made during a survey operation or a retracted surrender, unless supported by cogent material and corroborative evidence.

The High Court's jurisdiction to interfere with lower appellate court decisions under Section 100 of the Code of Civil Procedure is limited to substantial questions of law, and re-appreciation of evidence to interfere with findings of fact is not warranted.

Evidence collected during an illegal search can still be used against the assessee. An assessment made based on such evidence is valid.

Estimation of on-money payments is permissible even for periods prior to the discovery of evidence, provided there is a consistent pattern suggesting such payments. The Assessing Officer can rely on evidence found for one transaction to estimate similar transactions, especially when variations are explicable by factors like floor rise.

Evidence found from a third party cannot be used against an assessee to draw a presumption under section 132(4A) unless it is recovered from the assessee's premises. In block assessments, the burden is on the Assessing Officer to prove that an item is undisclosed income.

Presumptions raised under section 132(4A) regarding the contents of documents found during a search can be rebutted.

A statement made under section 132(4) is valid evidence if it is based on the assessee's exclusive knowledge, and retractions made after a long gap or without strong evidence are unacceptable. A sworn statement under section 132(4) can be used as evidence.

An ex-parte statement recorded under section 131 cannot be used against an assessee without giving them an opportunity to present rebuttal evidence, as doing so violates the principles of natural justice and vitiates the assessment order.

Additional evidence should primarily be led before the Income-tax Officer, and its admission at the appellate stage under Rule 46A is permissible only under specific circumstances, not as a matter of course.

Past performance is a significant factor that courts consider when estimating income during assessments. Historical data is reiterated as important in assessments.

The Tribunal is justified in not entertaining new evidence where the assessee fails to discharge their onus and provide an explanation for not producing such evidence at a lower stage.

A statement made before an enforcement officer must be voluntary to be relied upon. If the statement appears to have been obtained by inducement, threat, or coercion, it must be rejected.

The addition of income is not permissible without independent or corroborative evidence of the actual movement of cash, as the Revenue bears the onus of proving such payments.

When interpreting fiscal statutes, courts must strictly adhere to the language used and ascribe ordinary meaning to words, avoiding the addition of external interpretations or substituting personal views for legislative intent.

In income tax proceedings, an assessee must provide reasonable and plausible explanations to discharge the burden of proof. If explanations are incomplete or contradictory, the Assessing Officer may draw suitable inferences and estimate facts.

Notings on a scribbling pad are not inherently incriminatory and cannot be the sole basis for an addition without reference by the Assessing Officer or penalty order.

A statement made during a search or survey that is later retracted is not, by itself, sufficient to establish incriminating material or support additions to income. The retraction must be considered, and the authorities must demonstrate a basis for the additions beyond the retracted statement.

A decision obtained by fraud is a nullity and can be challenged at any time, in any court, as fraud vitiates every solemn act.

Statements, admissions, and confessions made during income tax proceedings are binding and cannot be retracted unless proven to be involuntary or under coercion, as Income Tax Officers do not use unfair means.

The issue of whether a device is a 'colourable device' to artificially create loss for tax evasion is a matter for the Assessing Officer's determination, potentially involving the analysis of employee benefit schemes.

A statement recorded by the Assessing Officer cannot be treated as incriminating material for making additions in unabated assessment years.

A taxpayer must be supplied with all oral and documentary evidence used against them to prepare their defence, including the opportunity to cross-examine witnesses, as the failure to do so vitiates proceedings.

An appellate authority has the discretion to allow the production of additional evidence if it is required to pass orders or for any substantial cause, which must be exercised judicially.

The assessee bears the burden of proving the genuineness of transactions, including the identity, creditworthiness, and genuineness of parties involved in purchases, especially when the parties have migrated or cannot be located.

A handwritten loose document found during a search at a third party's premises is insufficient on its own to make an addition under section 69 for on-money payment for property purchase in the assessee's hands.

When an assessee fails to produce bills or vouchers to substantiate expenses, an ad-hoc disallowance may be made. However, if bills and vouchers are duly produced and examined, a different approach may be warranted.

A presumption of receipt of on-money cannot be raised by the revenue solely on the basis of documents if they fail to provide corroborating material or evidence.

If a company has both interest-free funds and borrowed funds, a presumption arises that investments are made from interest-free funds, unless the Assessing Officer establishes a nexus between borrowed funds and the investments.

The Supreme Court dismisses a Revenue appeal, upholding the deletion of additions made under Section 10(38) where the assessee was denied an opportunity to cross-examine 'entry operators' whose statements were used against them, violating natural justice.

Additional evidence cannot be admitted by appellate authorities if it was not produced before the Assessing Officer, unless the assessee shows sufficient cause for not filing it earlier.

A retraction of a statement made during a search, filed after a significant delay, is generally not given weight, especially when the statement aligns with seized documents.

If an assessee is non-cooperative throughout the assessment and appellate proceedings, despite multiple opportunities, the authorities are justified in deciding the proceedings ex-parte based on the available material.

Dismissal of a Special Leave Petition (SLP) in limine does not create a declaration of law or a binding precedent under Article 141 of the Constitution, as it implies the case was not deemed worthy of examination on its merits.

Extrapolation is generally not permissible when the Assessing Officer relies on additional evidence and investigations indicating large-scale undervaluation by the assessee, and the facts differ from V.M. Spinning Mills.