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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

Ram Dhan Yadav, Chomu Jaipur vs. ITO, WD 7(3), Jaipur

In the result, both the appeals of the assessee are allowed

ITA 366/JPR/2023[2007-2008]Status: DisposedITAT Jaipur20 Feb 2024AY 2007-2008

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Rajesh Soni (C.A.)For Respondent: Shri Anoop Singh (Addl.CIT)
Section 143(3)Section 144Section 147Section 148Section 69B

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

Reliance Corporation, Mumbai vs. Dy. CIT Central Circle - 1, Thane

In the result, all the three appeals of the assessee are allowed

ITA 2725/MUM/2023[2013-14]Status: DisposedITAT Mumbai20 Feb 2024AY 2013-14

Bench: Shri B.R. Baskaran (Am) & Shri Sandeep Singh Karhail (Jm)

Section 147Section 68

submitting all the documents in order to prove the identity of the creditors, creditworthiness of the creditors and genuineness of the transactions. The Assessing Officer did not find any defect or deficiency in the documents so filed by the assessee. The Assessing Officer, in all the three years under consideration ... assessee u/s 68 of the Act, i.e., the assessee is required to prove three main ingredients, viz., the identity of the creditor, the genuineness of the transactions and the credit worthiness of the creditor. If the assessee discharges the initial burden, then the burden would shift to the shoulders

Reliance Corporation, Mumbai vs. Dy. CIT Central Circle - 1, Thane

In the result, all the three appeals of the assessee are allowed

ITA 2724/MUM/2023[2011-12]Status: DisposedITAT Mumbai20 Feb 2024AY 2011-12

Bench: Shri B.R. Baskaran (Am) & Shri Sandeep Singh Karhail (Jm)

Section 147Section 68

submitting all the documents in order to prove the identity of the creditors, creditworthiness of the creditors and genuineness of the transactions. The Assessing Officer did not find any defect or deficiency in the documents so filed by the assessee. The Assessing Officer, in all the three years under consideration ... assessee u/s 68 of the Act, i.e., the assessee is required to prove three main ingredients, viz., the identity of the creditor, the genuineness of the transactions and the credit worthiness of the creditor. If the assessee discharges the initial burden, then the burden would shift to the shoulders

Reliance Corporation, Mumbai vs. Dy. CIT, Central Circle - 1, Thane

ITA 2723/MUM/2023[2014-15]Status: DisposedITAT Mumbai20 Feb 2024AY 2014-15

Bench: Shri B.R. Baskaran (Am) & Shri Sandeep Singh Karhail (Jm)

Section 147Section 68

submitting all the documents in order to prove the identity of the creditors, creditworthiness of the creditors and genuineness of the transactions. The Assessing Officer did not find any defect or deficiency in the documents so filed by the assessee. The Assessing Officer, in all the three years under consideration ... assessee u/s 68 of the Act, i.e., the assessee is required to prove three main ingredients, viz., the identity of the creditor, the genuineness of the transactions and the credit worthiness of the creditor. If the assessee discharges the initial burden, then the burden would shift to the shoulders

Chirag Tejprakash Dangi, Mumbai vs. Income Tax Officer, Ward 26(1)(5), Mumbai

ITA 3256/MUM/2022[2014-15]Status: DisposedITAT Mumbai20 Feb 2024AY 2014-15

Bench: Justice (Retd.) C.V. Bhadang () & Shri B.R. Baskaran (Am)

Section 10(38)Section 131Section 148Section 68Section 69C

this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached

Baba Iron Industries Pvt. Ltd., Kolkata vs. ITO, Ward-9(1), Kolkata.

ITA 925/KOL/2023[2012-13]Status: DisposedITAT Kolkata19 Feb 2024AY 2012-13

Bench: Sri Rajpal Yadav & Dr. Manish Borad

Section 143(3)Section 144Section 144BSection 249Section 253Section 254Section 263Section 3Section 5

During the course scrutiny, the assessee was asked to furnish documentary evidences to prove identity, creditworthiness of the share applicants as well as genuineness of the transactions with respect to share money received from the above investors. In response to the query, the assessee submitted application for allotment of shares ... such type of explanation which could satisfy the AO, the assessee should fulfil three ingredients viz. (a) identity of the share applicants, (b) genuineness of the transaction, and (c) credit-worthiness of share applicants. As far as construction of section 68 and to understand its meaning is concerned, there

Varindavan Fabrics Private Limited, Panipat vs. Income Tax Officer, Ward-5, Panipat

In the result, the appeal of the assessee is allowed

ITA 3227/DEL/2023[2017-18]Status: DisposedITAT Delhi19 Feb 2024AY 2017-18

Bench: Sh. Saktijit Dey & Sh. M. Balaganeshassessment Year: 2017-18 Vrindavan Fabrics Private Ito Limited, Delhi Sanoli Bye Vs Ward – 5 Panipat Pass, Huda Sector-29 Panipat 132103 Pan No.Aaccv7480N (Appellant) (Respondent) Appellant By Sh. Amit Kaushik, Advocate Respondent By Sh. Vivek Vardhan, Sr. Dr Date Of Hearing: 07/02/2024 Date Of Pronouncement: 19/02/2024 Order Per Saktijit Dey,Vp: This Is An Appeal By The Assessee Against The Order Dated 07.11.2023 Passed By National Faceless Appeal Centre (Nfac), Delhi For The Assessment Year 2017-18. 2. The Dispute In The Present Appeal Is Confined To Addition Of An Amount Of Rs.46,03,682/- U/S. 68 Of The Income Tax Act, 1961. 3. Briefly Stated The Facts Are, The Assessee Is A Resident Corporate Entity. For The Assessment Year Under Dispute, The Assessee Filed Its Return Of Income On 07.10.2017 Declaring Total Income Of Rs. 5,10,270/-. In Course Of Assessment Proceedings The Assessing Officer (Ao) Called Upon The Assessee To Furnish The Details Of Sundry Creditors & Trade Payables With Their Address, Pan Numbers Etc. Alleging That The Assessee Furnished The Details On 19.12.2019 I.E. At The Fag End Of The Year, Which Made Impossible Any Enquiry To Be Carried Out Regarding The Genuineness Of The Trade Payables, The Ao Added Back Trade Payables / Closing Balances In Respect Of Seven Parties Aggregating To Rs.46,03,682/-, By Treating It As Unexplained Cash Credit U/S. 68 Of The Act. Though, The Assessee Contested The Aforesaid Addition Before Learned Commissioner Appeals, However, The Addition Was Sustained.

Section 68

name, addresses, PAN, confirmations, bank statements etc. 9. Not even a semblance of enquiry has been made by the AO to ascertain the genuineness of the transaction with the parties. Unfortunately, though, all the materials were available before learned First Appellate Authority, he also did not make any attempt ... contrary he simply went by the observations of the AO. When the assessee has furnished all supporting evidences to prove the genuineness of the transaction relating to the purchases made, in our view, no addition u/s. 68 of the Act can made merely on the basis of conjectures and surmises

M/S Tjr Properties Pvt. Ltd., Chandigarh vs. ACIT, CC-2, Chandigarh

In the result, the Appeal is partly allowed

ITA 4/CHANDI/2023[2015-16]Status: DisposedITAT Chandigarh16 Feb 2024AY 2015-16

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

For Appellant: Sh. Rohit Goyal, CA &For Respondent: Smt. Kusum, CIT-DR
Section 132Section 132(1)Section 143(3)Section 153ASection 153A(1)(b)Section 153DSection 68

Thus, it required to examine the identity and creditworthiness of the persons from who's amounts have been received and genuineness of the transactions on merit considering each credit separately. The AO has not discussed each and cred separately on merits in the assessment order before drawing the inference that

Dreamtech Constructions Pvt. Ltd., New Delhi vs. DCIT Circle-7(1), New Delhi

In the result, Appeal filed by the assessee in ITA No

ITA 91/DEL/2021[2012-13]Status: DisposedITAT Delhi16 Feb 2024AY 2012-13

Bench: or at the time of hearing of the appeal.”

Section 143(3)Section 68

first appellate proceedings before the CIT(A), the assessee also filed additional evidence in support of the Assessee’s claim to substantiate the genuineness and the transaction and prove the identity of the parties made in respect of share application/premium money and the unsecured loans ... held that once the assessee discharges its onus to prove the creditworthiness of the investor companies and the genuineness of the transaction, the onus will shift on the Department to refute the assertion made by the Assessee. In the present case, the Lower Authorities have not brought anything on record

Dreamtech Constructions Pvt Ltd., Delhi vs. DCIT Circle-10(1), New Delhi

In the result, Appeal filed by the assessee in ITA No

ITA 90/DEL/2021[2011-12]Status: DisposedITAT Delhi16 Feb 2024AY 2011-12

Bench: or at the time of hearing of the appeal.”

Section 143(3)Section 68

first appellate proceedings before the CIT(A), the assessee also filed additional evidence in support of the Assessee’s claim to substantiate the genuineness and the transaction and prove the identity of the parties made in respect of share application/premium money and the unsecured loans ... held that once the assessee discharges its onus to prove the creditworthiness of the investor companies and the genuineness of the transaction, the onus will shift on the Department to refute the assertion made by the Assessee. In the present case, the Lower Authorities have not brought anything on record

Bhoomia Buttons Pvt Ltd, New Delhi vs. ACIT Circle-4(2), New Delhi

In the result, the appeal is dismissed

ITA 6150/DEL/2019[2010-11]Status: DisposedITAT Delhi16 Feb 2024AY 2010-11

Bench: Shri G.S. Pannu, Vice- & Shri Challa Nagendra Prasadassessment Year: 2010-11

Section 115JSection 143(3)Section 147Section 148Section 68

received from M/s. Attractive Finlay (P) Ltd. as genuine. No 4 evidences were produced before us to prove the identity and creditworthiness and genuineness of the transaction. 6. In the circumstances, we do not see any infirmity in the order passed by the learned CIT (Appeals) in sustaining the addition

Sangath Infrastructure Pvt. Ltd, Ahmedabad vs. The DCIT, Circle-4(1)(1), Ahmedabad

In the result, the appeal of the assessee is dismissed

ITA 292/AHD/2021[2013-14]Status: DisposedITAT Ahmedabad15 Feb 2024AY 2013-14

Bench: Smt. Annapurna Gupta & Shri Siddhartha Nautiyal

For Appellant: Shri S. N. Divatia, AdvocateFor Respondent: Shri Sushil Kumar Katiar, Sr. D.R
Section 115JSection 142(1)Section 143(3)Section 250Section 263Section 40(3)Section 40ASection 40A(3)

anti-tax-evasion measure. By requiring payments to be made by an account payee instrument, it is possible to verify the genuineness of the transaction thereby mitigating the risk of evasion. Courts have also held that the statutory limit in section 40A(3) applies to payment made to a party

Vijendra, Dholpur vs. ITO Ward-4, Bharatpur

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

ITA 743/JPR/2023[2011-12]Status: DisposedITAT Jaipur15 Feb 2024AY 2011-12

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Rahul Pandiya, AdvFor Respondent: Mrs. Monisha Choudhary, Addl CIT-DR
Section 139(1)Section 144Section 147Section 148

appellant only submitted the written submission in the form of 'Statement of Facts' but did not give any documentary evidence to prove the genuineness of the transactions. 4 SHRI VIJENDR VS ITO, WARD 4, BHARATPUR 4.4 Therefore, in view of the above discussed facts, it is clear that the case

Shri Praveen Gupta, Gurgaon vs. ACIT, Meerut

In the result, the appeal of the assessee is dismissed

ITA 3189/DEL/2017[2012-13]Status: DisposedITAT Delhi15 Feb 2024AY 2012-13

Bench: Shri Amit Shukla & Shri M. Balaganeshshri Praveen Gupta, Vs. Acit, D-101, First Floor, Tower Circle-2, No. D, Caitriona Meerut Residential Apartment Complex, Ambience Island, Gurgoan-22001 (Appellant) (Respondent) Pan: Acjpg4777H Assessee By : None Revenue By: Shri Vivek Vardha, Sr. Dr Date Of Hearing 12/02/2024 Date Of Pronouncement 15/02/2024

For Appellant: NoneFor Respondent: Shri Vivek Vardha, Sr. DR
Section 143(3)Section 37Section 68

income. Further, liability is created is also not paid in the year under consideration and even paid in subsequent year in cash. Genuineness of the transaction is also under suspicion. Considering the all facts and circumstances, I hereby confirm the action of assessing disallowing the expenses ... dated 27.03.2015. In final reply of the assessee, he submitted that assessee has proved their identity and genuineness of the transaction and as already submitted that, as regards creditworthiness the onus lies on the department as held by various higher courts and the judgment. Reply of the assessee is considered

Pramod Kumar Garg, New Delhi vs. ITO, Ward -2(3)(5), Hapur

In the result, the appeal of the assessee is allowed

ITA 2018/DEL/2022[2013-14]Status: DisposedITAT Delhi14 Feb 2024AY 2013-14

Bench: N.K. Billaiya & Ms. Astha Chandraasstt. Year: 2013-14

For Appellant: Shri Sandeep Sapra, AdvocateFor Respondent: Shri Vivek Vardhan, Sr. DR
Section 143(3)Section 269Section 269SSection 271D

section 269SS was to ensure that the taxpayer is not allowed to give false explanation for his unaccounted money. In Assessee's case, genuineness of the transaction is not in dispute as the loan of Rs. 2,00,000/- as on 31/03/2013 stands accepted by the AO. In other words

ACIT Circle-7(1), New Delhi vs. Deeksha Holding Ltd, New Delhi

In the result, the appeal of the revenue is dismissed

ITA 9/DEL/2020[2016-17]Status: DisposedITAT Delhi13 Feb 2024AY 2016-17

Bench: Sh. N. K. Billaiya & Ms. Astha Chandraassessment Year: 2016-17 Acit Vs. M/S. Deeksha Holding Ltd. Circle – 7 (1) 26-27, Ground Floor, World New Delhi Trade Centre, Barakhamba Line, New Delhi-110001 Pan No.Aaacd1703G (Appellant) (Respondent) Appellant By Sh. T. James Singson, Cit Dr Respondent By Sh. U.N. Marwah, Ca Sh. Praveen Goel, Advocate Date Of Hearing: 28/11/2023 Date Of Pronouncement: 13/02/2024 Order Per N. K. Billaiya, Am:

Section 14ASection 68

made by the AO on account of unexplained sum credited to the books of account of the assessee, by ignoring the fact that genuineness of the transaction as well as immediate sources of funds was not proved with cogent evidences" 2. "On the facts and in the circumstances ... time till 31.08.2018 when it was mutually agreed to cancel the agreement and returned Rs. 10 crores without interest. The AO doubted the genuineness of the transaction and formed a belief that Jayant Nanda is not a non resident and made the addition of Rs. 10 crores

Rameshwar Shaw, Howrah vs. ITO, 48(3), Kolkata.

In the result, the appeal filed by the assessee bearing

ITA 841/KOL/2023[2013-14]Status: DisposedITAT Kolkata12 Feb 2024AY 2013-14

Bench: Shri Rajesh Kumar & Shri Anikesh Banerjeei.T.A. No. 841/Kol/2023 Assessment Year: 2013-2014 Rameshwar Shaw,....................................Appellant 12/5, Musalmanpara Lane, Banta, Howrah-711101 [Pan: Amaps0893D] -Vs.- Income Tax Officer,.................................Respondent Ward-48(3), Kolkata, 3, Government Place (West), Kolkata-700001 Appearances By: Shri Debabrata Ghosh, A.R., Appeared On Behalf Of The Assessee Shrip.P. Barman, Addl. Cit, Appeared On Behalf Of The Revenue Date Of Concluding The Hearing : February 12, 2024 Date Of Pronouncing The Order : February 12, 2024

Section 133(6)Section 143(2)Section 144Section 250

proceeding and also the notices wereissued by the ld. Assessing Officer to the different sundry creditors under section 133(6) to verify the genuineness of the transaction, which was not possible to comply within the time and after the time, the reply to the notices are complied. 5. During

M/S. Lifeline Medicare Hospitals Pvt Ltd, Mumbai vs. NFAC, Mumbai

In the result ground number 3 of the appeal is dismissed

ITA 74/MUM/2023[2013-14]Status: DisposedITAT Mumbai12 Feb 2024AY 2013-14

Bench: Shri Prashant Maharishi, Am & Shri Rahul Chaudhary, Jm The Income Tax Officer Vs. M/S Next Avenue Ventures Ward- 12(3)(1), Pvt. Ltd. Mumbai-400020 (Earlier Known As Kbj Ventures Pvt. Ltd.) 3Rd Floor, Raheja Chambers, Link Road Main Avenue, Santacruz (W), Mumbai-400 054 (Appellant) (Respondent) Pan No. Aagck8343R

For Appellant: Shri Satyaprakash Singh, ARFor Respondent: Shri S Srinivasu, CIT DR
Section 143Section 143(2)Section 143(3)Section 144Section 144BSection 68

only to establish three things necessary to obviate attraction of section 68 of the act such as identity, creditworthiness of the party and genuineness of the transaction which has been discharged by the assessee by submitting all the necessary documents during the course of appellate proceedings as well as remand ... that assessing officer has examined all these details and did not furnish any adverse comment with respect to creditworthiness of the parties or genuineness of the transaction. ITA No.2420/Mum/2023 & CO No. 74/Mum/2023 Next Avenue Ventures Pvt. Ltd; A.Y. 2018-19 029. Thus, when both the above additions are deleted

ITO 12(3)(1), Mumbai vs. Next Avenue Ventures Private Limited(Earlier Known As Kbj Ventures Private Limited), Mumbai

In the result ground number 3 of the appeal is dismissed

ITA 2420/MUM/2023[A.Y. 2018-19]Status: DisposedITAT Mumbai12 Feb 2024

Bench: Shri Prashant Maharishi, Am & Shri Rahul Chaudhary, Jm The Income Tax Officer Vs. M/S Next Avenue Ventures Ward- 12(3)(1), Pvt. Ltd. Mumbai-400020 (Earlier Known As Kbj Ventures Pvt. Ltd.) 3Rd Floor, Raheja Chambers, Link Road Main Avenue, Santacruz (W), Mumbai-400 054 (Appellant) (Respondent) Pan No. Aagck8343R

For Appellant: Shri Satyaprakash Singh, ARFor Respondent: Shri S Srinivasu, CIT DR
Section 143Section 143(2)Section 143(3)Section 144Section 144BSection 68

only to establish three things necessary to obviate attraction of section 68 of the act such as identity, creditworthiness of the party and genuineness of the transaction which has been discharged by the assessee by submitting all the necessary documents during the course of appellate proceedings as well as remand ... that assessing officer has examined all these details and did not furnish any adverse comment with respect to creditworthiness of the parties or genuineness of the transaction. ITA No.2420/Mum/2023 & CO No. 74/Mum/2023 Next Avenue Ventures Pvt. Ltd; A.Y. 2018-19 029. Thus, when both the above additions are deleted

Industrial Progressive India Ltd., Delhi vs. ACIT Circle-12(1), New Delhi

In the result, appeal of the assessee is dismissed

ITA 4538/DEL/2019[2014-15]Status: DisposedITAT Delhi09 Feb 2024AY 2014-15

Bench: G.S. Pannu, Hon’Ble & Sh. Anubhav Sharmaindustrial Progressive India Ltd., Vs. Acit 9-A, 2Nd Floor, Coronation Building, Circle 12(1), Chandni Chowk, Delhi. New Delhi. Pan No.Aaaci2861C (Appellant) (Respondent)

Section 68

crores made by the Assessing Officer u/s 68 of the Income Tax Act, 1961 for failure of the assessee company to prove the genuineness of the transaction and the creditworthiness of the loan creditor M/s Opus Holding Private Limited. On appreciating the orders, it comes up that except for providing