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“human probabilities”

Judicial DoctrinesSection 68Section 682,056 judgments

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

Leading authorities on human probabilities

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.

PCIT v. Swati Bajaj
139 Taxmann.com 352 · 2022 · High Court
443
citing judgments

Tax authorities are entitled to examine surrounding circumstances and apply the test of human probabilities to determine the genuineness of long-term capital gains arising from the sale of manipulated penny stock, even if prima facie documents appear to support the transaction.

Nemi Chand Kothari v. CIT
330 ITR 1 · 2011 · Supreme Court
73
citing judgments

An appellate order is perverse and unsustainable if it deletes an addition made under Section 40A(3) of the Income-tax Act by admitting additional evidence without providing the Assessing Officer an opportunity to examine or rebut it, thereby violating principles of natural justice.

PCIT v. NDR Promoters Ltd.
410 ITR 379 · 2019 · High Court
70
citing judgments

The assessee has the onus to prove the identity, creditworthiness, and genuineness of share capital and share premium subscribers under Section 68; merely providing documentation is insufficient if transactions are found to be sham, justifying additions.

CIT v. Sree Meenakshi Mills Rs. 73.5
63 ITR 609 · 1967 · Supreme Court
59
citing judgments

The tax authorities can look beyond the legal form of a transaction and disregard the corporate entity if it is used for tax evasion or to create a smoke screen. The assessee bears the burden of proving the identity, creditworthiness, and genuineness of transactions, and the true nature of a transaction is determined based on surrounding circumstances and human probabilities, not requiring proof beyond reasonable doubt.

426 (Rajasthan) 14. Woodword Governors India v. CIT
253 ITR 745 · 2002 · High Court
45
citing judgments

Reasonable cause, in the context of human action, is defined as a probable cause that would compel an ordinarily prudent person, acting on an honest and reasonably grounded belief, to conclude their action was appropriate.

Balbir Chand Maini v. CIT
12 Taxmann.com 276 · 2011 · High Court
45
citing judgments

When an assessee fails to establish the genuineness of long-term capital gain from share transactions, especially when share prices are artificially inflated, the sale proceeds can be added as unexplained cash credit under section 68. The 'human probability test' is a valid tool to assess the veracity of such transactions.

Judgments citing human probabilities

Prashant Prakash Nilawar, Pune vs. ACIT Circle-6(1), Nariman Point Mumbai

In the result, the appeal of the Revenue, being ITA

ITA 2318/MUM/2025[2022-23]Status: DisposedITAT Mumbai28 Oct 2025AY 2022-23
For Appellant: 1.1. On the facts and circumstances of the case and in law
Section 69ASection 69BSection 69C

that no prudent person maintains such detailed handwritten notings of expenses already recorded in books. Thus, the reasoning of the CIT(A) defied normal human probabilities and ignored the evidentiary presumption that attaches to seized documents found during search. 16. Per contra, Shri Nishit Gandhi, learned counsel for the assessee ... contemporaneous records, that presumption stands fully discharged. 33. In our view, it is wholly illogical to disregard documentary reconciliation and rely instead upon conjectural ―human probabilities‖. The doctrine of probabilities is a judicial aid to inference, not a substitute for proof. It can supplement evidence, not supplant it. In this

Vinod Jain, Bangalore vs. DCIT, Central Circle-2(2), Bangalore

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

ITA 505/BANG/2025[2019-20]Status: DisposedITAT Bangalore27 Oct 2025AY 2019-20

Bench: Shri Laxmi Prasad Sahu & Shri Soundararajan K.Assessment Year : 2019-20

For Appellant: Shri Prashanth G.S, CAFor Respondent: Shri Ashwin D Gowda, Addl. CIT-DR
Section 142(1)Section 143(2)Section 69Section 69A

treating the entire cash of Rs 26,59,685 found during the course of search as unexplained income on the ground of preponderance and human probabilities. 4. That the learned lower authorities erred in law and on facts in not giving the credit of 20,00,000 cash seized

Sehgal Path Lab, Andheri West vs. ITO, Circle 17(1), Kautilya Bhavan

In the result, assessee’s appeal is allowed

ITA 4830/MUM/2025[2017-18]Status: DisposedITAT Mumbai27 Oct 2025AY 2017-18

Bench: Shri Pawan Singh & Smt.Renu Jauhrisehgal Path Lab Vs. Ito, Circle 17(1) 103, Yashodhan It Sehgal Circle 17(1), Path Lab, Azad Nagar, S.O, Kautilya Bhavan, Mumbai-400053. Bandra Kurla Complex, Mumbai-400051. "थायी लेखा सं./जीआइआर सं./Pan/Gir No:Abxfs0461M Appellant .. Respondent

For Appellant: Shri Piyush Chhajed –CA &For Respondent: Shri Swapnil Choudhary- Sr. AR
Section 143(3)Section 250Section 68

cash shortages. As observed by the Hon'ble Supreme Court in the case of Sumati Dayal v. CIT (214 ITR 801), the doctrine of human probabilities must be applied. It is improbable that the appellant's cash collections surged precisely during the period when the public had limited access

DCIT CC-8(2), Mumbai vs. Niru Dhiren Shah, Mumbai

In the result, the appeal of the Revenue is dismissed

ITA 4294/MUM/2025[2022-23]Status: DisposedITAT Mumbai27 Oct 2025AY 2022-23

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankardeputy Commissioner Of Income V/S. Niru Dhiren Shah Tax, Central Circle – 8(2) बनाम 3Rd Floor, Flat No. 35, Jolly Room No. 658, 6Th Floor, Maker Apartment, No. 3 Aayakar Bhavan, M.K. Road, 119, Cuffe Parade, Colaba, Churchgate, Mumbai –400020, Mumbai – 400 005, Maharashtra Maharashtra स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aanps7632R Appellant/अपीलार्थी .. Respondent/प्रतिवादी

For Appellant: Dr. K. Shivaram, Sr. Adv. & Ms. Neelam JadhavFor Respondent: Shri Leyaqat Ali Aafaqui, (Sr.AR)
Section 132Section 143(3)Section 69Section 69A

Durga Prasad More [1971] 82 ITR 540 (SC) which held that tax authorities must apply the test of human probabilities. Digital evidence recovered during search has inherent evidentiary value, especially when corroborated. The ld.CIT(A) erred in deeming it valueless merely because it was from a “connected person” (buyer

Anjali Gupta, Gurgaon vs. ITO Ward -1(2), Gurgaon

In the result, appeal of the assessee is allowed

ITA 3605/DEL/2019[2015-16]Status: DisposedITAT Delhi27 Oct 2025AY 2015-16

Bench: Shri Anubhav Sharma & Shri Amitabh Shukla, Accountnat Member [Assessment Year: 2015-16] Ms. Anjali Gupta, Ito, Ward-1(2), A-84, Summit, Dlf City-5, Gurgaon, Sector-56, Gurgaon, Vs Haryana Pan-Aaipg5132F Appellant Respondent Assessee By Shri Vijay Kumar Singla, Ca Revenue By Ms. Harpreet Kaur Hansra, Sr. Dr Date Of Hearing 28.07.2025 Date Of Pronouncement 27.10.2025

Section 10(38)Section 115BSection 143(3)Section 68

investor who has entered in investment fray to make quick profit. Even the Assessing Officer has applied the presumptions and concept of human probabilities to make the additions without their being any material against the assessee. We observe that the Hon’ble Bombay High Court in the case ... respectfully follow the ratio of the above decisions. In this case also, the Assessing Officer and Ld. CIT(A) has applied the concept of human probabilities and held the Hon’ble Bombay High Court in the case of Ziauddin A Siddique (supra). Therefore, there is no material with

M/S Rarity Agencies Limited, Kolkata vs. ITO, Ward 9(1), Kolkata

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

ITA 2341/KOL/2024[2015-16]Status: DisposedITAT Kolkata21 Oct 2025AY 2015-16

Bench: Shri Sonjoy Sarma & Shri Rakesh Mishra

Section 10(38)Section 143(3)Section 250Section 68

recessive. Taking note of the said legal principle, the Assessing Officer pointed out that considering the surrounding circumstances and applying the test of human probabilities coupled with the report of the Directorate of Investigation which was discussed in the assessment order, it was concluded that the assessee had been

Subhash Chand Choraria, Guwahati vs. The Assistant Commissioner of Income Tax, Circle - 2, Guwahati

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

ITA 63/GTY/2024[2017-18]Status: DisposedITAT Guwahati16 Oct 2025AY 2017-18

Bench: Shri Manomohan Das & Shri Rakesh Mishra

Section 115BSection 143(2)Section 143(3)Section 250Section 69A

entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. The Chairman of the Settlement Commission, in his dissenting opinion, had laid emphasis I.T.A. No.: 63/GTY/2024 Assessment Year: 2017-18 Subhash Chand Choraria ... available which are quite cheap. This was a superficial approach to the problem. The matter had to be considered in the light of human probabilities. The Chairman of the Settlement Commission had emphasised that the appellant did possess the winning ticket which was surrendered to the race club

Alka Khandaka, Jaipur vs. Income Tax Officer Ward 1(2), Jaipur

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

ITA 1014/JPR/2025[2017-2018]Status: DisposedITAT Jaipur16 Oct 2025AY 2017-2018

Bench: DR. S. SEETHALAKSHMI (Judicial Member)

For Appellant: Sh. Sauravh Harsh, AdvFor Respondent: Mrs. Anita Rinesh, JCIT
Section 131Section 142(1)Section 143(2)Section 143(3)Section 44ASection 68

here that the Hon'ble Supreme Court in the case of Commissioner of Income-Tax vs. Durga Prasad More (214 ITR 801) held that human probability and circumstantial evidence has to be kept in mind to decide the genuineness of the transactions. The Hon'ble court observed that "Science ... evidence placed before a Court or Tribunal, Therefore the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ as to the reliability of a piece of evidence. But in that sphere the decision of the final fact finding

Ranjeet Singh, Lucknow vs. D/ACIT-4, Lucknow

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

ITA 331/LKW/2024[2017-18]Status: DisposedITAT Lucknow16 Oct 2025AY 2017-18

Bench: Sh. Kul Bharat & Sh. Nikhil Choudharya.Y. 2017-18 Ranjeet Singh, Vs. The Dcit / Acit-4, 459, Ameer Nagar, Aishbagh, Lucknow-226001 Lucknow-226004 Pan: Afsps0877G (Appellant) (Respondent) Assessee By: Sh. Rakesh Garg, Advocate Revenue By: Sh. Amit Kumar, Dr Date Of Hearing: 23.07.2025 Date Of Pronouncement: 16.10.2025 O R D E R Per Nikhil Choudhary, A.M.: This Is An Appeal Filed By The Assessee Against The Orders Of The Ld. Cit(A), Nfac Dated 22.03.2024, Wherein The Ld. Cit(A) Has Dismissed The Appeals Of The Assessee Against The Orders Of The Ld. Assessing Officer Passed On 21.12.2019. The Grounds Of Appeal Are As Under: - “01. Because The Cit(A) Has Erred On Facts & In Law In Upholding An Addition Of Rs.31,90,000/- Being Cash Deposited In Bank During Demonetization Period As Unexplained, The Same Is Contrary To Facts, Bad In Law, Be Deleted. 02. Because The Entire Cash Deposited In Bank Is Part Of The Sale Proceeds & Realization Of Debts, The Addition Made Is Purely On Suspicions & Surmises, Such Addition Is Contrary To Facts, Bad In Law, Be Deleted. 03. Because There Being No Change In The Method Of Accounting Regularly Followed By The Assessee & The Same Having Being Consistently Accepted, The Books Of Account Having Not Been Rejected, The Stock Tally Not Disputed, The Accounts Being Tax Audited, There Was No Reason For The Ao To Disbelieve The Cash Deposited In The Bank Treating The Same As Unexplained, The Addition Of Rs.31,90,000/- Upheld By The Cit(A) Be Deleted. 04. Because The Amount Of Rs.31,90,000/- Being Cash Deposited In Bank Being Part Of Sale Proceeds & Cash Receipts Already Charged To Revenue For The Purposes Of Computation Of Income, Separate Addition Of The Same Has Resulted Into Double Taxation, Not Permitted By Law, The Addition Made Be Deleted.

For Appellant: Sh. Rakesh Garg, AdvocateFor Respondent: Sh. Amit Kumar, DR
Section 142(1)Section 144Section 272A(1)(d)

September and October, 2016, contrary to its previous record and she therefore, held that the pattern of the assessee was against the test of human probabilities, as laid down by the Hon’ble Supreme Court in the case of Durga Prasad More vs. CIT 82 ITR 540 and Sumati Dayal

Income Tax Officer, Jaipur vs. Kalawati Sharma, Jaipur

In the result, the appeal of the revenue is dismissed

ITA 566/JPR/2024[2014-15]Status: DisposedITAT Jaipur15 Oct 2025AY 2014-15

Bench: Dr. S. Seethalakshmi & Shri Gagan Goyalincome Tax Officer, Jaipur ...... Appellant Vs.

For Appellant: Mr. P. C. Parwal, C.A, Ld. ARFor Respondent: Mr. Kamlesh Kumar Meena, Addl. CIT
Section 10(38)Section 133ASection 250Section 69C

when the shares were held by the assessee. The share price movement & the profit earned by the beneficiaries ITO vs. Kalawati Sharma were beyond human probabilities. The AO, thereafter, at pages 6 to 15 discussed the financial results and held that the rise in the price could not be related ... Kalawati Sharma be bogus has to be strictly discharged by adducing legal evidence held that the modus operandi, generalisation, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee unless specific evidence is brought on record to controvert the validity and correctness

Jasmer Singh, Naraingarh, Ambala vs. ITO, Ward-2, Ambala

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

ITA 967/CHANDI/2025[2017-18]Status: DisposedITAT Chandigarh15 Oct 2025AY 2017-18

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

For Appellant: Shri Ankit Dhiman, AdvocateFor Respondent: Shri Vivek Vardhan, Addl. CIT, Sr. DR
Section 115BSection 142(1)Section 144Section 249(4)(b)Section 69A

month-old withdrawal  was implausible is justified and supported by the decision in Sumati Dayal v. CIT (214 ITR 801, SC) which emphasizes on human probabilities. 8. We have carefully considered the rival submissions and perused the material on record including the orders of the lower authorities

Income Tax Officer, Ward 2(1), Chandigarh vs. Hari Krishan Gupta, Chandigarh

In the result, the appeal of the Revenue is dismissed

ITA 837/CHANDI/2025[2017-18]Status: DisposedITAT Chandigarh15 Oct 2025AY 2017-18

Bench: Or At The Time Of Hearing Of Appeal.

For Appellant: Shri Harry Rikhy, AdvocateFor Respondent: Shri Vivek Vardhan, Addl. CIT, Sr. DR
Section 115BSection 147Section 250Section 68

supporting evidence. The explanation offered—that the cash represented festival season sales duly recorded in the books—was rejected by applying the theory of human probability. Relying on Sumati Dayal v. CIT (214 ITR 801) and Durga Prasad More (82 ITR 540), the AO held that no prudent person would ... hearing the Ld. DR, supporting the order of the Assessing Officer, submitted that the AO had rightly invoked section 68 and the test of human probabilities. He relied upon the following paragraph of the assessment order, which, according to him, fully justified the addition: “In response to the final show

Pravin Khetaram Purohit, Mumbai vs. DCIT, Central Circle (4)2, Mumbai

In the result, all the appeals filed by the assessee\nstands allowed

ITA 4744/MUM/2025[2020-21]Status: DisposedITAT Mumbai15 Oct 2025AY 2020-21
Section 143(3)Section 153CSection 250Section 69

also for earlier assessment\nyears, i.e., A.Y. 2017-18 and A.Y. 2018-19. This is factually\ninconsistent and contrary to human probabilities. It is\ninconceivable that the assessee could have made cash\npayments in earlier years for a shop that was booked only in\nA.Y. 2020-21. Therefore, the allegation

Pravin Khetaram Purohit, Mumbai vs. DCIT Central Circle 4(2), Mumbai

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

ITA 4743/MUM/2025[2018-19]Status: DisposedITAT Mumbai15 Oct 2025AY 2018-19

Bench: Hon’Ble Shri Sandeep Gosain & Hon’Ble Shri Girish Agrawal

Section 143(3)Section 153CSection 250Section 69

also for earlier assessment years, i.e., A.Y. 2017-18 and A.Y. 2018-19. This is factually inconsistent and contrary to human probabilities. It is inconceivable that the assessee could have made cash payments in earlier years for a shop that was booked only in A.Y. 2020-21. Therefore, the allegation

Pravin Khetaram Purohit, Mumbai vs. DCIT, Central Circle 4(2), Mubmai

In the result, all the appeals filed by the assessee\nstands allowed

ITA 4742/MUM/2025[2017-18]Status: DisposedITAT Mumbai15 Oct 2025AY 2017-18
Section 143(3)Section 153CSection 250Section 69

also for earlier assessment\nyears, i.e., A.Y. 2017-18 and A.Y. 2018-19. This is factually\ninconsistent and contrary to human probabilities. It is\ninconceivable that the assessee could have made cash\npayments in earlier years for a shop that was booked only in\nA.Y. 2020-21. Therefore, the allegation

Income Tax Officer, Delhi vs. Mohd Rizwan, Delhi

ITA 3535/DEL/2025[2021-22]Status: DisposedITAT Delhi15 Oct 2025AY 2021-22

Bench: Shri S. Rifaur Rahman & Shri Yogesh Kumar U.S.Income Tax Officer, Delhi. (Appellant)

For Appellant: NoneFor Respondent: Shri Abhijeet Kumar, Sr. DR
Section 144Section 80C

reproduced below – “12. This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities. The Chairman of the Settlement Commission has emphasised that the appellant did possess the winning ticket which was surrendered to the Race Club

Sunil Kumar Agarwal, Jaipur vs. Assistant Commissioner of Income Tax, Central Circle-2, Jaipur

ITA 521/JPR/2025[2020-21]Status: DisposedITAT Jaipur14 Oct 2025AY 2020-21

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI, \nvk;dj vihy la-@ITA Nos.513 & 519 to 521/JP/2025\nfu/k Zkj.k o\"kZ@Assessment Years : 2016-17 & 2018-19 to 2020-21\n\nSunil Kumar Agarwal\n395, Narnoli Mansion, Outside\nSanganeri Gate, Jaipur\ncuke\nVs.\nACIT,\nCentral Circle-2,\nJaipur\nLFkk;h y s[kk l a-@thvkb Zvkj la-@PAN/GIR No.: ABRPA9601M\nvihykFkhZ@Appellant i zR;Fkh Z@Respondent\n\nvk;dj vihy la-@ITSS No. 03/JP/2025\nfu/k Zkj.k o\"kZ@Assessment Year : 2015-16\

For Appellant: Shri S. L. Poddar, AdvFor Respondent: Mrs. Anita Rinesh, JCIT, Sr-DR
Section 132Section 139Section 153ASection 234B

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Sunil Kumar Agarwal, Jaipur vs. ACIT, Cen. Cir-2, Jaipur

In the result the appeal of the assessee in ITA no

ITA 513/JPR/2025[2016-17]Status: DisposedITAT Jaipur14 Oct 2025AY 2016-17
For Appellant: Shri S. L. Poddar, AdvFor Respondent: Mrs. Anita Rinesh, JCIT, Sr-DR
Section 132Section 139Section 153ASection 234B

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh

Deputy Commissioner of Income Tax, Central Circle-1, Ludhiana vs. M/S Home Construction Co., Ludhiana

In the result, the appeal of the Revenue is dismissed

ITA 351/CHANDI/2025[2020-21]Status: DisposedITAT Chandigarh14 Oct 2025AY 2020-21
For Appellant: \nShri Sudhir Sehgal, AdocateFor Respondent: \nSmt. Tarundeep Kaur, CIT, DR
Section 147Section 65B

Revenue supported the\nassessment order. He contended that the seized digital data clearly indicated\nreceipt of on-money, and the theory of human probabilities, as laid down by\nthe Hon'ble Supreme Court in Sumati Dayal v. CIT (214 ITR 801, SC), must be\napplied ... opinion, the case law of Sumati Dayal (supra) cited by\nthe Revenue has no application in the absence of incriminating evidence; the\ntheory of human probabilities cannot override binding legal principles requiring\nproof and existence of incriminating material for the year under consideration.\nIn view of the above, we find

Pramila Agarwal, Jaipur vs. The Income Tax Officer Ward-2(5), Jaipur

In the result, the appeal of the assessee is allowed

ITA 531/JPR/2025[2011-12]Status: DisposedITAT Jaipur10 Oct 2025AY 2011-12
For Appellant: Shri Tarun Mittal, C.AFor Respondent: Shri Gorav Avasthi, JCIT
Section 147Section 148Section 68

nassessee in any manner.\n\nThe ld. AO has made the said transaction as non-genuine relying upon various\njudgements on “preponderance of human probabilities”. In this regard, it is submitted\nthat such cases cannot at all be relied upon to draw adverse inference in the case of\nassessee ... settled principle of natural justice and is bad in law.\n\nMoreover the AO has referred other cases to the effect that test of human probabilities\nis to be applied in certain cases. However facts of these cited cases are quite different\nthan that of instant case of assessee