“Section 133(2)”
The decision most relied on for Section 133(2) is CIT v. Simit P. Sheth (356 ITR 451), cited in 1,465 judgments on BharatTax.
Leading authorities on Section 133(2)
Additions for alleged bogus purchases should be restricted to the profit element, not the entire turnover. The profit element is often estimated at 12.5% of the purported bogus purchases.
When an assessee provides the identity and address of a creditor or investor for a cash credit or share capital under Section 68, the burden shifts to the Department to establish lack of genuineness or creditworthiness, requiring it to conduct further inquiries; mere non-compliance by third parties to summons cannot be the sole basis for an adverse inference against the assessee.
If an assessee company receives share application money from alleged bogus shareholders and provides their details to the Assessing Officer, no addition can be made under Section 68 in the company's hands; the Department must proceed against the shareholders by reopening their individual assessments.
When computing deduction under Section 10A, if communication or telecommunication expenses are excluded from export turnover, they must also be excluded from total turnover to maintain consistency and apply the ordinary meaning of 'turnover' in context.
For a cash credit, merely transacting by cheque is insufficient to discharge the assessee's burden of proof. The assessee must prove the identity of the creditors, the genuineness of the transaction, and the creditworthiness of the creditors; upon which, the burden shifts to the revenue.
When making an addition under section 68, the creditworthiness or financial strength of an investor contributing share capital or share application money can be proved by producing their bank statements showing sufficient balance for the investment. The Supreme Court dismissed the SLP against this decision.
Under Section 68, an assessee is only required to prove the identity and creditworthiness of the immediate creditor or share subscriber and the genuineness of the transaction. The assessee is not obligated to establish the 'source of the source' of funds or the creditworthiness of sub-lenders, as this information may not be within the assessee's special knowledge.
Reasons for reopening an assessment must be specific and not vague, scanty, or based on borrowed satisfaction. The Assessing Officer must quantify the escaped income.
