Section 106 of the Income Tax Act
The decision most relied on for Section 106 is Travencore Rubber & Tea Co. Ltd. v. CIT (325 ITR 422), cited in 72 of the 25 judgments on BharatTax that turn on this section.
Leading authorities on Section 106
Forfeited advance money received for the transfer of a capital asset is not taxable as revenue receipt. Such forfeiture pertains to a capital receipt directly related to the potential sale of a capital asset.
Capital gains arising from sham transactions, particularly those involving penny stocks designed to appear genuine, are not exempt under Section 10(38) but are taxable as unaccounted income brought into the books.
The Income-tax Appellate Tribunal performs a judicial function under the Indian Income-tax Act, invested with authority to finally determine all questions of fact. When deciding an appeal, the Tribunal must consider all material facts with due care, record findings on all contentions, and maintain a judicial balance between the revenue and taxpayer claims. The power to condone delay by enacting section 5 of the Limitation Act of 1963 enables courts, including the Tribunal, to do substantial justice, with "sufficient cause" being an elastic expression.
A District Valuation Officer (DVO) report, by itself, is not sufficient incriminating evidence to make additions for unexplained investments in a block assessment under Section 158BC. The revenue bears the primary burden of proof to establish undisclosed income, and a DVO opinion alone is also insufficient information for reopening an assessment under Section 147.
A Departmental Valuation Officer's (DVO) report, by itself, is not sufficient information to conclude understatement of consideration or make additions to income. The Revenue must discharge the burden of proving actual receipt of higher consideration, beyond merely relying on a DVO's opinion, especially in the absence of incriminating evidence.
The revenue bears the burden of proving that the assessee received amounts over and above the consideration stated in sale deeds; additions cannot be made on mere suspicion or presumption without evidence.
The assessee has the burden to justify the source of share subscription, including any premium raised, and to explain the source of the funds used for such subscription. A lack of inquiry by the Assessing Officer can be a ground for revision under Section 263.
A loose paper found during a search cannot be the sole basis for making an addition to income without corroborative material and evidence, especially if the Assessing Officer misinterprets figures without supporting evidence.
Mesne profits decreed by a court are taxable income in the hands of the decree holder in the relevant assessment year they are charged to income-tax.
For additions under Section 69B, the Assessing Officer bears the initial burden to prove an understatement of consideration in the assessee's books. Once undervaluation is established, the AO may use a reliable yardstick to measure the undisclosed investment if the assessee offers no satisfactory explanation.
