“preponderance of probability”

Judicial DoctrinesEvidenceEvidence547 judgments

The decision most relied on for preponderance of probability is Sumati Dayal v. CIT (214 ITR 801), cited in 1,967 judgments on BharatTax.

Leading authorities on preponderance of probability

Sumati Dayal v. CIT

214 ITR 801 · 1995 · Supreme Court

1,967

citing judgments

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.

CIT v. Durga Prasad More

82 ITR 540 · 1971 · Supreme Court

1,579

citing judgments

Tax authorities must judge evidence using the test of human probabilities and consider the apparent as real until there are reasons to believe it is not. They can rely on circumstantial evidence and the preponderance of probabilities to determine the genuineness of transactions.

CIT v. P. Mohanakala

291 ITR 278 · 2007 · Supreme Court

525

citing judgments

The Supreme Court emphasized that in the absence of concrete rebuttal by the assessee, circumstantial evidence holds significant weight, applying the doctrine of preponderance of probability, particularly when assessing undisclosed income or unexplained cash credits.

PCIT v. Krishna Devi

126 Taxmann.com 80 · 2021 · High Court

249

citing judgments

The genuineness of share transactions, particularly those generating long-term capital gains, cannot be rejected solely based on general investigation reports, third-party statements, or a mere increase in share price, when the assessee provides comprehensive documentary evidence, without the Revenue bringing substantial evidence to the contrary.

CIT v. Jamnadevi Agarwal

328 ITR 656 · 2010 · High Court

230

citing judgments

When faced with allegations of bogus long-term capital gains from penny stocks, the Assessing Officer must discharge the onus of proving that the assessee's transactions were not genuine. The assessee can rely on the principle of preponderance of probability, and the Revenue must present substantial evidence to establish that the transactions were a colourable device or that the assessee was an entry operator.

Mukesh R.Marolia v. Addl. CIT

6 SOT 247 · 2006 · ITAT

139

citing judgments

The department must substantiate its allegations of a bogus long term capital gain scheme; if not substantiated, the addition made by the Assessing Officer for purported bogus LTCG derived from the purchase/sale of shares cannot be sustained. An assessee's claim for long term capital gains exemption on share transactions should be allowed where documentation supports the transactions.

Delhi in Suman Poddar v. Income Tax Officer 99

112 Taxmann.com 330 · 2019 · Supreme Court

138

citing judgments

Exemption under Section 10(38) is not allowable for long-term capital gains arising from bogus share transactions involving penny stocks or manipulative dealings. The Income Tax Department can establish such a case based on the preponderance of probabilities where there is no genuine financial worth.

CIT v. Daulat Ram Rawatmull

103 ITR 344 · 1976 · High Court

citing judgments

The assessee is not required to prove the source of the source of funds, nor the origin of the origin of the funds. The onus is discharged if the identity of the creditor and the actual receipt of money are proved.

Judgments citing preponderance of probability

Aakruti Ketan Mehta, Mumbai vs. ITO, Ward-35(1)(1), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 53/MUM/2023[2014-2015]Status: DisposedITAT Mumbai31 Jan 2024AY 2014-2015

Bench: SHRI AMIT SHUKLA (Judicial Member), MS. PADMAVATHY S (Accountant Member)

Section 10(38)Section 131Section 143(3)Section 68

there would be any direct evidence or information against the assessee. A holistic approach has to be examined based on a test of ‘preponderance of probabilities’ wherein various factors are to be analysed. The factors which are explained and contended by the assessee and the factors and circumstances brought ... basis of conduct of parties and abnormality of practices. In other words, the requirement is for proving that in a factual matrix, preponderance of probabilities indicate a fraud. In this regard, the observations of Hon'ble Supreme Court of India in SEBI vs. Kishore R. Ajmera

ITO, Ward-1(1), Kol, Kolkata vs. M/S. Illusion Barter Pvt. Ltd., Kolkata

In the result, the appeal filed by the revenue in ITA No

ITA 537/KOL/2023[2015-16]Status: DisposedITAT Kolkata30 Jan 2024AY 2015-16

Bench: Dr. Manish Borad & Sri Anikesh Banerjee

Section 143(3)Section 250Section 271(1)(c)

evidence. The relevant part of the assessment order is inserted as below: - “9. In view of the discussion made above and applicability of preponderance of probability in unveiling a colourable transaction while determining matters under taxing statutes, as repeatedly observed by the Hon'ble Supreme Court in cases referred

Smt. Hema Ramesh Jain, Thane vs. ITO Ward - 1(5), Kalyan

In the result, the appeal of the assessee is partly allowed

ITA 2966/MUM/2023[2014 - 15]Status: DisposedITAT Mumbai29 Jan 2024

Bench: Shri Aby T. Varkey, Jm & Shri S Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No.2966/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2014-15) Smt. Hema Ramesh Jain बिधम/ Ito, Ward-1(5) 1St Floor, Mohan Plaza, Flat No. 1501, Bldg 2-Greens, Vs. Vasant Lawns, Voltas Wayale Nagar, Compound, Nr Majiwada Khadakpada, Kalyan Flyover, Thane (West)- (W), Maharashtra- 400601. 421301. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Afdpj0407L (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Ajay R. Singh Revenue By: Shri S. N. Kabra (Sr. Ar) सुनवाई की तारीख / Date Of Hearing: 05/01/2024 घोषणा की तारीख /Date Of Pronouncement: 29/01/2024 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Against The Order Of The Ld. Commissioner Of Income Tax (Appeals)/(Nfac), Delhi Dated 08.08.2023 For The Assessment Year 2014-15. 2. The Main Grievance Of The Assessee Is Against The Action Of The Ld. Cit(A) Upholding The Disallowance Made By Ao Regarding The Claim Of Long Term Capital Gain (Ltcg) Of Rs.23,37,135/- & Taxing The Entire Sale Consideration Of Rs.25,12,020/- On Sale Of Shares Of M/S. Sunrise Asian Ltd. (Hereinafter “M/S. Sunrise”).

For Appellant: Shri Ajay R. SinghFor Respondent: Shri S. N. Kabra (Sr. AR)

Section 10(38)Section 132(4)Section 391Section 44A

direct evidence and therefore, the genuineness of such transactions would have to be adjudicated by testing the circumstantial evidence on the touchstone of preponderance of probabilities and by keeping in view the surrounding facts and circumstances of the case. 21.5. The belief regarding the existence of a fact ... case of penny stock transaction involving parties identified as tainted Operator, Syndicate Member, Broker, and/or Exit Operator by Investigation Wing, SEBI etc. the preponderance of probability that the transaction undertaken being tainted would be in favour of the Revenue and against an assessee claiming the transaction to be genuine, putting

M/S Veer Enterprises, Ludhiana vs. DCIT, CC-III, Ludhiana

In the result, the appeal is allowed

ITA 255/CHANDI/2023[2019-20]Status: DisposedITAT Chandigarh23 Jan 2024AY 2019-20

Bench: SHRI A.D.JAIN (Vice President), SHRI VIKRAM SINGH YADAV (Accountant Member)

For Appellant: Shri Tejmohan Singh, AdvocateFor Respondent: Shri Dharamvir, JCIT, Sr.DR

Section 115BSection 133ASection 69Section 69ASection 69B

other source of income of the Assessee is there on record either disclosed by the Assessee or unearthed by the Revenue. The preponderance of probability therefore is that the debtors were sourced from the business of the Assessee. Therefore, there is no question of treating it as deemed income from ... income of the Assessee was on record either disclosed by the Assessee or unearthed by the Revenue. The Bench further held that the preponderance of probability, therefore, is that the debtors were sourced from the business of the Assessee. Therefore, there was no question of treating it as deemed income

Amarjit Kaur Surinder Singh Kochhar, Mumbai vs. Income Tax Officer Ward-12(1)(1), Aayakar Bhawan, Mumbai

ITA 2513/MUM/2023[2013-14]Status: DisposedITAT Mumbai22 Jan 2024AY 2013-14

Bench: Shri Pavan Kumar Gadaleamarjit Kaur Surinder Vs. Ito Ward-12(1)(1), Singh Kochhar, Aayakar Bhawan, 4, Plot No.667, 4Th Floor M.K.Road, Satguru Sundari, Mumbai-400020. Dr. Ambedkar Road, Khar (W), Mumbai-400052. Pan/Gir No. : Agspk6461F Appellant .. Respondent

For Appellant: ShriManiJain&ShriPrateekJain.ARFor Respondent: Shri.G.J.Ninawe. Sr.DR

Section 10(38)Section 143(1)Section 148Section 151Section 68Section 69C

assessee, first the AO and later the Ld. CIT (A) completely discarded the submissions of the assessee merely on the basis of preponderance of probability as well as on the basis of the statement of Shri Harshvardhan Kayan with whom the assessee had no dealings whatsoever and whose statement

DCIT Non- Corporate Circle-4 Coimbatore, Coimbatore vs. Dharma Jewellers, Coimbatore

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

ITA 781/CHNY/2023[2017-18]Status: DisposedITAT Chennai18 Jan 2024AY 2017-18

Bench: Shri V. Durga Rao & Shri Manjunatha, G.आयकर अपील सं./I.T.A. No.781/Chny/2023 िनधा"रण वष"/Assessment Year: 2017-18 The Deputy Commissioner Of Vs. Dharma Jewellers, Income Tax, 75, Savithiri Nagar, Non Corporate Circle 4, Aayakar Coimbatore 641 001. Bhavan, 63, Race Course Road, Coimbatore. [Pan:Aaffd3210Q]

For Appellant: Shri D. Hema Bhupal, JCITFor Respondent: ShriV. Karthickkrishnan, CA

Section 143(2)Section 143(3)

reporting bogus cash sales figures could not be ruled out- that observation itself is uncertain. I believe the 7 I.T.A. No. 781/Chny/23 preponderance of probability favours the appellant and additions can be made on mere surmises. The addition of Rs. 2,31,20.500 u/s 68 of the Act is hereby ... them, how the assessee could have been made sales as shown by it. Under these facts, the ld. CIT(A) has applied the preponderance of probability in favour of the assessee and deleted the addition, which appears to be not correct. Before us, the assessee filed certain details, such

Samrat Finvestors Private Limited., Kolkata vs. ITO, Ward- 10(2), Kolkata.

In the result, appeal of the assessee is allowed

ITA 840/KOL/2023[2014-15]Status: DisposedITAT Kolkata11 Jan 2024AY 2014-15

Bench: Shri Rajesh Kumar, Hon’Ble & Shri Sonjoy Sarma, Hon’Blei.T.A. No. 840/Kol/2023 Assessment Year: 2014-15 Samrat Finvestors Private Limited Income Tax Officer, Ward – 10(2), 20/1, Maharshi Debendra Vs Kolkata 2Nd Floor, Room No. 13A Kolkata - 700007 [Pan : Aadcs4698G] अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri Soumitra Choudhury, A/R Revenue By : Shri B.K. Singh, Jcit, Sr. D/R सुनवाई क" तारीख/Date Of Hearing : 14/12/2023 घोषणा क" तारीख /Date Of Pronouncement: 11/01/2024 आदेश/O R D E R Per Shri Rajesh Kumar: The Present Appeal Is Directed At The Instance Of The Assessee Against The Order Of The National Faceless Appeal Centre, Delhi, [Hereinafter The “Ld. Cit(A)”] Dt. 27/06/2023, Passed U/S 250 Of The Income Tax Act, 1961 (“The Act”) For The Assessment Year 2014-15. 2. The Assessee In The Instant Appeal Has Raised Two Effective Issues In The Various Grounds Before Us Which Are Summed Up As Under:- (I) That The Ld. Cit(A) Has Erred On Facts & In Law In Confirming The Disallowance Of Rs.3,98,50,208/- As Made By The Assessing Officer On Account Alleged Bogus Loss In Share Trading & In F&O Segment. (Ii) The Ld. Cit(A) Has Erred On Facts & In Law In Upholding The Addition Of Rs.11,58,944/- As Made By The Assessing

For Appellant: Shri Soumitra Choudhury, A/RFor Respondent: Shri B.K. Singh, JCIT, Sr. D/R

Section 133(6)Section 14ASection 250

prior meeting of minds is also a very important factor. A holistic approach is required to be made and the test of preponderance of probabilities has to be applied. The Hon’ble High Court observed that the assessees therein had failed to justify the rationale behind investment in the companies ... Samrat Finvestors Private Limited making the additions on the basis of the material available on record, the surrounding circumstances, the human conduct and preponderance of probabilities. 10. Now, we have to examine the contentions of the assessee in the light of the ratio of law laid down

Nalanda Builders Pvt. Ltd., Kolkata vs. D.C.I.T., Central Circle - 2(1), Kolkata

In the result the appeal of the assessee is allowed

ITA 763/KOL/2022[2013-2014]Status: DisposedITAT Kolkata11 Jan 2024AY 2013-2014

Bench: Shri Rajesh Kumar, Hon’Ble & Shri Sonjoy Sarma, Hon’Blei.T.A. No. 763/Kol/2022 Assessment Year: 2013-14 Nalanda Builders Pvt. Ltd. Dcit, Central Circle-2(1), Kolkata 5, Sree Charan Sarani Vs Bally Howrah – 711201 (West Bengal) [Pan : Aabcn7736Q] अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri Soumitra Choudhury, A/R Revenue By : Shri P.P. Barman, Addl. Cit, Sr. D/R सुनवाई क" तारीख/Date Of Hearing : 30/11/2023 घोषणा क" तारीख /Date Of Pronouncement: 11/01/2024 आदेश/O R D E R Per Shri Rajesh Kumar: The Present Appeal Is Directed At The Instance Of The Assessee Against The Order Of The National Faceless Appeal Centre, Delhi, [Hereinafter The “Ld. Cit(A)”] Dt. 23/11/2022, Passed U/S 250 Of The Income Tax Act, 1961 (“The Act”) For The Assessment Year 2013-14. 2. The Issues Raised In Ground Nos. 2 To 4 Is Against The Confirmation Of Addition As Made By The Assessing Officer On Account Of Difference Between The Value Taken By The Assessee & The Fair Market Value (Fmv) U/S 50C Of The Act. 3. The Facts In Brief Are That During The Year, The Assessee Sold Two Flats For An Aggregate Consideration Of Rs.3,00,00,000/- & Accordingly Addition Of Rs.3,26,37,314/- Was Made To The Income Of The Assessee. In 2

For Appellant: Shri Soumitra Choudhury, A/RFor Respondent: Shri P.P. Barman, Addl. CIT, Sr. D/R

Section 131Section 133(6)Section 250Section 50CSection 56(2)(x)

prior meeting of minds is also a very important factor. A holistic approach is required to be made and the test of preponderance of probabilities has to be applied. The Hon’ble High Court observed that the assessees therein had failed to justify the rationale behind investment in the companies ... officer was justified in making the additions on the basis of the material available on record, the surrounding circumstances, the human conduct and preponderance of probabilities. 10. Now, we have to examine the contentions of the assessee in the light of the ratio of law laid down

Arvind Walia, Delhi vs. ACIT Central Circle 30, Delhi

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

ITA 440/DEL/2022[2017-18]Status: DisposedITAT Delhi09 Jan 2024AY 2017-18

Bench: Dr. B. R. R. Kumarshri Yogesh Kumar Us

For Appellant: Sh. Gaurav Jain, AdvFor Respondent: Sh. Amit Katoch, Sr. DR

Section 143(3)Section 69A

explanation. One should not consider and reject an explanation as concocted and contrived by applying prudent man's behaviour test. Principle of preponderance of probability as a test is to be applied and is sufficient to discharge onus. Probability means likelihood of anything to be true. Probability refers to appearance ... Evidence can be oral and cannot be discarded on this ground. Assessment order and the appellate orders fall foul and have disregarded the preponderance of probability test. 9. In view of the observations recorded above, we would answer the substantial question of law in favour of the appellant-assessee

Sh. Krishan Kumar, Khanna vs. DCIT, CC-1, Ludhiana

In the result, the appeal of the Assessee is allowed

ITA 175/CHANDI/2023[2019-20]Status: DisposedITAT Chandigarh04 Jan 2024AY 2019-20

Bench: Shri A.D. Jain & Shri Vikram Singh Yadav

For Appellant: Shri Sudhir Sehgal, AdvFor Respondent: Shri Anil Sharma, JCIT, Sr.DR

Section 115BSection 133ASection 139Section 143(1)Section 143(2)Section 68Section 69Section 69ASection 69BSection 69C

Aditya Jhanwar, Jaipur vs. ITO Ward 2(1), Jaipur

In the result, the appeal of the assessee is allowed

ITA 660/JPR/2023[2017-18]Status: DisposedITAT Jaipur02 Jan 2024AY 2017-18

Bench: SHRI SANDEEP GOSAIN (Judicial Member)

For Appellant: Shri Atharv Mundra, Advocate &For Respondent: Smt. Monisha Choudhary, Addl. CIT

Section 115BSection 142(1)Section 250Section 68

Notes, because, Specified Bank Notes cannot be a valid tender after specified date. The AO has just made imagination / assumption and go by preponderance of probability without providing any finding / any irregularity in cash book, sales invoices, accounts books. The Ld. AO has not give any valid and cogent reasons ... Notes, because, Specified Bank Notes cannot be a valid tender after specified date. The AO has just made imagination / assumption and go by preponderance of probability without providing any finding / any irregularity in cash book, sales invoices, accounts books. The Ld. AO has not given any valid and cogent reasons

The ACIT Central-Ujjain, Ujjain vs. M/S Italian Edibles P Ltd, Indore

In the result, appeal of the revenue is dismissed

ITA 219/IND/2022[2019-20]Status: DisposedITAT Indore19 Dec 2023AY 2019-20

Bench: Shri Vijay Pal Rao & Shri B.M. Biyaniacit (Central) M/S. Italian Edibles Pvt. Ujjain Ltd. Vs. Udhyog Nagar, Palda Indore (Appellant / Revenue) (Assessee /Respondent) Pan: Aacci 2746N Revenue By Ms. Simran Bhullar, Cit-Dr Respondent By Shri Pankaj Shah & Soumya Bumb Ars Date Of Hearing 12.10.2023 Date Of Pronouncement 19.12.2023

Section 115BSection 133ASection 69Section 69B

other source of income of the assessee is there on record either disclosed by the assessee or unearthed by the Revenue. The preponderance of probability therefore is that the debtors were sourced from the business of the assessee. Therefore, there is no question of treating it as deemed income from

ACIT, Circle- 54(1), New Delhi vs. Rajeev Verma, New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 3646/DEL/2019[2013-14]Status: DisposedITAT Delhi14 Dec 2023AY 2013-14

Bench: Shri G.S.Pannu, Hon’Ble & Shri Anubhav Sharmaassessment Year : 2013-14 Acit, Vs. Rajeev Verma Circle-54(1), 2/5, Gupta Market, New Delhi Lajpat Nagar-Iv, New Delhi-110024 Pan : Aabpv0413B (Appellant) (Respondent)

For Appellant: Sh. K Sampath, AdvFor Respondent: Shri Vivek Vardhan, Sr. DR

Section 133(6)Section 143(3)Section 68

made an error in concluding the transaction to be genuine. The ld. DR submitted that the ld. AO had considered the preponderance of probability which was sufficient to establish that the transaction of unsecured loan was doubtful. It was submitted that the ld. CIT(A) has considered the previous

Manju Devi Bagaria, Rourkela vs. ITO Ward-1, Rourkela

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

ITA 243/CTK/2023[2013-14]Status: DisposedITAT Cuttack28 Nov 2023AY 2013-14

Bench: Shri George Mathan & Shri Girish Agrawalआयकर अऩीऱ सं/Ita No.243/Ctk/2023 (ननधाारण वषा / Assessment Year : 2013-2014) Manju Devi Bagaria, Vs Ito, Ward-1, Rourkela Kk-24, Civil Township, Rourkela Pan No. :Abbpb 8915 B (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) .. ननधााररती की ओर से /Assessee By : Shri S.K.Agarwalla, Ca राजस्व की ओर से /Revenue By : Shri Charan Dass, Sr.Dr सुनवाई की तारीख / Date Of Hearing : 28/11/2023 घोषणा की तारीख/Date Of Pronouncement : 28/11/2023 आदेश / O R D E R Per Bench : This Is An Appeal Filed By The Assessee Against The Order Of The Ld. Cit(A), National Faceless Appeal Centre (Nfac), Delhi, Dated 20.06.2023, Passed In Itba/Nfac/S/250/2023-24/1053823281(1), For The Assessment Year 2013-2014. 2. It Was Submitted By The Ld. Ar That The Appeal Filed By The Assessee Against The Assessment Order Has Been Disposed Off By The Ld. Cit(A) Without Hearing The Assessee. It Was The Prayer That The Assessee May Be Granted Another Opportunity Of Being Heard. 3. In Reply, Ld. Sr. Dr Submitted That The Assessee Had Been Granted Sufficient Opportunities By The Ld. Cit(A) & The Assessee Has Not Produced The Evidence Before The Ld. Cit(A). Consequently, The Ld. Cit(A)

For Appellant: Shri S.K.Agarwalla, CAFor Respondent: Shri Charan Dass, Sr.DR

appeal. Further, the entire chain of circumstances around the purported transaction has been examined by the AO. On the touchstone of preponderance of probability, the entire sequence of transactions fails the test of preponderance of probability. When, the banking facility was available at doorstep in the modern society, the necessity

Jitendra Udaylal Jain, Mumbai vs. National Faceless Assessment Centre, Delhi

In the result, appeals filed by the assessee is allowed

ITA 2042/MUM/2023[2012-2013]Status: DisposedITAT Mumbai24 Nov 2023AY 2012-2013

Bench: Shri Narender Kumar Choudhry, Hon’Ble & Shri S. Rifaur Rahman, Hon'Blejitendra Udaylal Jain V. National Faceless Assessment Centre(Nfac) C/O. M/S. Alankar Jewellers Shop Delhi No.1 Municipal Building R.A. Kidwai Road, Wadala Mumbai- 400037 Pan: Aabpj5480E (Appellant) (Respondent) Assessee Represented By : Shri. Vimal Punmiya Department Represented By : Shri. Ujjawal Kumar Chavan

Section 10(38)Section 131Section 143(2)Section 148Section 250

entertain an erroneous opinion touching any point material to the result of such proceeding is said "to fabricate false evidence". The test of preponderance of probability is definitely clear as envisage in case of Suman Dayal v DCIT(1995]214ITR 801 (SC) and in case of CIT v Durga Parasad

Mohan Thakurdas Gurnani, Navi Mumbai vs. Dy CIT -CC-5(2), Mumbai

The appeal of the assessee is partly allowed for assessment year 2014 – 15 also

ITA 718/MUM/2021[2016-17]Status: DisposedITAT Mumbai17 Nov 2023AY 2016-17

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Shri Pradip Kapasi CAFor Respondent: Shri Mahesh Akhade CIT DR

Section 10Section 132Section 139Section 143Section 153A

said what inquiry ld AO is required to carry of fake and non-genuine evidences. He submits that all the evidences, statements, preponderance of probabilities, failure to discharges onus; everything is against the assessee in this case. t) He submitted that the bogus long-term capital gain transactions are also