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“genuineness of the transaction”

Cash Credits & Unexplained ItemsSection 68Section 685,938 judgments

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

Leading authorities on genuineness of the transaction

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. Orissa Corporation Pvt. Ltd.
159 ITR 78 · 1986 · Supreme Court
897
citing judgments

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.

CIT v. Lovely Exports (P) Ltd.
216 CTR 195 · 2008 · Supreme Court
854
citing judgments

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.

McDowell & Co. Ltd. v. CTO
154 ITR 148 · 1985 · Supreme Court
741
citing judgments

The Supreme Court held that while legitimate tax planning is permissible, transactions structured as a "colourable device" or "subterfuge" solely to avoid tax are impermissible. It mandates a judicial shift to look beyond the form to the substance of a transaction, allowing the lifting of the corporate veil in tax evasion arrangements.

(Central)-1 v. NRA Iron & Steel (P) Ltd.
103 Taxmann.com 48 · 2019 · Supreme Court
696
citing judgments

When assessing cash credits, share capital, or loans, the assessee bears the onus to prove the identity, creditworthiness, and genuineness of transactions. This burden is not discharged merely by documentary evidence if field inquiries reveal accommodation entries or dealings with paper/shell companies.

Kale Khan Mohammad Hanif v. CIT
50 ITR 1 · 1963 · Supreme Court
581
citing judgments

The assessee bears the onus of proving the source and nature of any sum of money or receipt found to have been received by them. If the assessee fails to satisfactorily explain the receipt, the Income-tax Officer is entitled to treat it as taxable income.

Umacharan Shaw & Bros. v. CIT
37 ITR 271 · 1959 · Supreme Court
567
citing judgments

An income tax assessment or addition cannot be sustained solely on the basis of suspicion, surmises, or conjectures, as strong suspicion does not amount to proof. The revenue authorities must rely on concrete evidence and material to frame an assessment.

Judgments citing genuineness of the transaction

DCIT-CC-4(2), Mumbai vs. Hilton Infrastructure, Mumbai

ITA 3532/MUM/2023[2013-14]Status: DisposedITAT Mumbai07 Jun 2024AY 2013-14

Bench: Shri Br Baskaran, Am & Shri Aby T. Varkey, Jm आयकर अपील सं/ I.T. A. No. 3456/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2013-14) & आयकर अपील सं/ I.T. A. No. 3455/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2014-15) & आयकर अपील सं/ I.T. A. No. 3454/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2015-16) & आयकर अपील सं/ I.T. A. No. 3453/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2016-17) & आयकर अपील सं/ I.T. A. No. 3452/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2017-18) & आयकर अपील सं/ I.T. A. No. 3451/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2019-20) & आयकर अपील सं/ I.T. A. No. 3450/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2020-21) & आयकर अपील सं/ I.T. A. No. 3449/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2021-22)

For Appellant: Shri Mani Jain, FCAFor Respondent: Smt Sanyogita Nag
Section 132Section 143(2)Section 153A

analyzed each of these lenders and held that the assessee was unable to discharge the creditworthiness of the lenders and the genuineness of the transactions and therefore, treated the interest paid on the unsecured loans which received from these parties in earlier years to be unexplained expenditure and added

DCIT-CC-4(2), Mumbai vs. Rubberwala Realty, Mumbai

In the result, all the appeals of the assessee for AYs 2015-16 to

ITA 3531/MUM/2023[2018-19]Status: DisposedITAT Mumbai07 Jun 2024AY 2018-19

Bench: We Advert To The Grounds Taken In The Cross Appeals, It Would First Be Relevant To Cull Out The Basic Facts Of The Case & Effect Of Law In Brief In Respect Of Certain Ays. Search U/S 132 Of The Income Tax Act, 1961 (Hereinafter Referred To As "The Act") Was Conducted Against The Rubberwala Group, On 17-03-2021 Thereby Triggering Section 153A Of The Act. Prior To The Date Of Search, The Income-Tax Assessments For Ays 2015-16 To 2019-20 Were Either Completed U/S 143(1)/143(3) Of The Act And/Or The Time Limit For Issue Of Notice U/S 143(2) Of The Act Had Expired. Accordingly, The Income-Tax 3

For Respondent: Shri Sanyogita Nagpal, CIT
Section 132Section 133(6)Section 143(1)Section 143(2)Section 153ASection 68Section 69C

No.3443 & Ors/Mum/2023 A.Ys. 2015-16 to 2021-22 Rubberwala Realty are, (i) identity of the creditor; (ii) their creditworthiness and (iii) Genuineness of the transaction. 4.9 In view of the above position of law, let us now examine the facts of the case. From the assessment order, it is noted ... noted that the source of the loan had been established in as much as the identity of the lender, his creditworthiness and genuineness of the transaction was substantiated by the assessee as per the requirement of law. Moreover, in our considered view, if the AO suspected his financial ability

DCIT-CC-4(2), Mumbai vs. Rubberwala Housing and Infrastructure Limited, Mumbai

In the result, all the appeals of the assessee stands allowed and

ITA 3508/MUM/2023[2015-16]Status: DisposedITAT Mumbai07 Jun 2024AY 2015-16

Bench: Shri Br Baskaran, Am & Shri Aby T Varkey, Jm आयकर अपील सं/ I.T. A. No. 3448/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2015-16) & आयकर अपील सं/ I.T. A. No. 3447/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2016-17) & आयकर अपील सं/ I.T. A. No. 3446/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2017-18) & आयकर अपील सं/ I.T. A. No. 3445/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2018-19) & आयकर अपील सं/ I.T. A. No. 3444/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2019-20) & आयकर अपील सं/ I.T. A. No. 3459/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2020-21) & आयकर अपील सं/ I.T. A. No. 3432/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2021-22) Rubberwala Housing & Infrastructure Ltd. Ground Floor, Rubberwala House, Dr. A Nair Road, Agripada, Mumbai-400011. बनाम / Vs. Dcit, Central Circle-4(2) 19Th Floor, Air India Building, Nariman Point, Mumbai-400021. आयकर अपील सं/ I.T. A. No. 3508/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2015-16) & आयकर अपील सं/ I.T. A. No. 3505/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2016-17) & आयकर अपील सं/ I.T. A. No. 3504/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2017-18) & आयकर अपील सं/ I.T. A. No. 3549/Mum/2023 (निर्धारण वर्ष / Assessment Year: 2018-19) & आयकर अपील सं/ I.T. A. No. 3503/Mum/2023

For Appellant: Shri Mani Jain FCAFor Respondent: Smt Sanyogita Nagpal
Section 132Section 143(1)Section 143(2)Section 153ASection 68Section 69C

analyzed each of these lenders and held that the assessee was unable to discharge the creditworthiness of the lenders and the genuineness of the transactions and therefore, treated the unsecured loans received from these parties as unexplained cash credits and added the same u/s 68 of the Act. Since ... three things necessary to obviate attracting Section 68 of the Act which are, (i) identity of the creditor; (ii) their creditworthiness and (iii) Genuineness of the transaction. 4.18 In view of the above position of law, let us now examine the facts of the case. From the assessment order

DCIT-CC-4(2), Mumbai vs. Rubberwala Housing and Infrastructure Limited, Mumbai

ITA 3505/MUM/2023[2016-17]Status: DisposedITAT Mumbai07 Jun 2024AY 2016-17

Bench: Shri Br Baskaran, Am & Shri Aby T Varkey, Jm आयकर अपील सं/ I.T. A. No. 3448/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2015-16) & आयकर अपील सं/ I.T. A. No. 3447/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2016-17) & आयकर अपील सं/ I.T. A. No. 3446/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2017-18) & आयकर अपील सं/ I.T. A. No. 3445/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2018-19) & आयकर अपील सं/ I.T. A. No. 3444/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2019-20) & आयकर अपील सं/ I.T. A. No. 3459/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2020-21) & आयकर अपील सं/ I.T. A. No. 3432/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2021-22)

For Appellant: Shri Mani Jain FCAFor Respondent: Smt Sanyogita Nagpal, CIT
Section 132Section 143(1)Section 143(2)Section 153ASection 68Section 69ASection 69C

analyzed each of these lenders and held that the assessee was unable to discharge the creditworthiness of the lenders and the genuineness of the transactions and therefore, treated the unsecured loans received from these parties as unexplained cash credits and added the same

DCIT-CC-4(2), Mumbai vs. Rubberwala Housing and Infrastructure Limited, Mumbai

ITA 3504/MUM/2023[2017-18]Status: DisposedITAT Mumbai07 Jun 2024AY 2017-18

Bench: Shri Br Baskaran, Am & Shri Aby T Varkey, Jm आयकर अपील सं/ I.T. A. No. 3448/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2015-16) & आयकर अपील सं/ I.T. A. No. 3447/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2016-17) & आयकर अपील सं/ I.T. A. No. 3446/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2017-18) & आयकर अपील सं/ I.T. A. No. 3445/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2018-19) & आयकर अपील सं/ I.T. A. No. 3444/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2019-20) & आयकर अपील सं/ I.T. A. No. 3459/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2020-21) & आयकर अपील सं/ I.T. A. No. 3432/Mum/2023 (ननधधारण वर्ा / Assessment Year: 2021-22)

For Appellant: Shri Mani Jain FCAFor Respondent: Smt Sanyogita Nagpal, CIT
Section 132Section 143(1)Section 143(2)Section 153ASection 68Section 69ASection 69C

analyzed each of these lenders and held that the assessee was unable to discharge the creditworthiness of the lenders and the genuineness of the transactions and therefore, treated the unsecured loans received from these parties as unexplained cash credits and added the same