Section 131 of the Income Tax Act

Income-tax Act, 2025: s.246

Section 131 of the Income-tax Act, 1961 corresponds to section 246 (Power regarding discovery, production of evidence, etc) of the Income-tax Act, 2025.

Read section 246 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 131 is CIT v. Simit P. Sheth (356 ITR 451), cited in 1,465 of the 4,706 judgments on BharatTax that turn on this section.

Leading authorities on Section 131

CIT v. Simit P. Sheth
356 ITR 451 · 2013 · High Court
1,465
citing judgments

Additions for alleged bogus purchases should be restricted to the profit element, not the entire turnover. The profit element is often estimated at 12.5% of the purported bogus purchases.

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.

Raymond Woollen Mills Ltd. v. ITO
236 ITR 34 · 1999 · Supreme Court
862
citing judgments

For reassessment proceedings under Section 148, the Assessing Officer only needs prima facie material to have a reason to believe income has escaped assessment. Conclusive proof or evaluation of the sufficiency and correctness of such material is not required at the stage of issuing the notice.

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.

(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.

Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd.
342 ITR 169 · 2012 · High Court
658
citing judgments

To make an addition under Section 68 for unexplained cash credits, the Assessing Officer must conduct proper inquiry into the identity, genuineness, and creditworthiness of the creditor, especially concerning share application money. The assessee's initial discharge of burden by providing necessary details shifts the onus back to the AO for further investigation, including the source of source.

CIT v. S. Khader Khan Son
352 ITR 480 · 2013 · Supreme Court
581
citing judgments

Statements recorded during a survey under Section 133A do not have evidentiary value as Section 133A does not empower examination on oath. Consequently, additions to income cannot be made solely based on such uncorroborated statements without other credible evidence.

DCIT v. Rohini Builders
256 ITR 360 · 2002 · High Court
489
citing judgments

An assessee discharges the initial onus under Section 68 for cash credits by providing creditor details like PAN and addresses, proving creditworthiness via banking transactions, and demonstrating genuineness, especially when loans are repaid through cheques.

Sanjay Oilcake Industries v. CIT
316 ITR 274 · 2009 · High Court
460
citing judgments

In cases of alleged bogus or unverifiable purchases, rather than disallowing the entire purchase value, a reasonable profit element or a proportionate percentage of the purchases should be added back to the assessee's income.

CIT v. S. Khader Khan Son
300 ITR 157 · 2008 · High Court
452
citing judgments

A statement recorded under duress during a survey, if subsequently retracted, has no evidentiary value and cannot be the sole basis for an income-tax assessment; the assessment should instead rely on audited accounts.

Judgments on Section 131

Adhunik Akshat Udyog Pvt. Ltd., Dumka vs. ACIT, Circle-3(1), Deoghar

In the result, the appeal of the assessee is allowed

ITA 163/RAN/2025[12-13]Status: DisposedITAT Ranchi10 Oct 2025

Bench: Shri Sonjoy Sarma & Shri Ratnesh Nandan Sahayi.T.A. No.163/Ran/2025 Assessment Year: 2012-13 Adhunik Akshat Udyog Pvt. Ltd……………............................……….……Appellant Industrial Area, Babupur, Muffasil Thana Dumka, Jharkhand – 814101. [Pan: Aabca4896Q] Vs. Acit, Circle-3(1), Deoghar…...…..….…..….........……........……...…..…..Respondent Appearances By: Shri Sushil Pransukha, Ar, Appeared On Behalf Of The Appellant. Shri Khubchand T. Pandya, Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : August 28, 2025 Date Of Pronouncing The Order : October 10, 2025 Order Per Sonjoy Sarma: This Appeal By The Assessee Is Directed Against The Order Of The Nfac, Delhi [“Cit(A)”] Dated 11.03.2025 Under Section 250 Of The Income-Tax Act, 1961 (The “Act”) For The Assessment Year 2012–13. 2. Facts Of The Case Are That The Assessee Company Filed Its Return Of Income For Ay 2012–13 Declaring Total Income Of ₹2,57,551. The Case Was Reopened Under Section 147 On The Ground That The Assessee Had Raised Share Capital & Share Premium From Certain Entities, Whose Financial Capacity & Genuineness Of Investment Remained Unexplained. During Assessment, The Ao Noted That The Assessee Had Introduced Share Capital Of ₹37,50,000 From The Following Four Private Limited Companies:

Section 131Section 147Section 250Section 68

Golden Goenka Commerce Pvt. Ltd., Kolkata vs. ACIT Circle-2(1), Jamshedpur

In the result, the appeal filed by the assessee stands allowed

ITA 11/RAN/2024[2011-12]Status: DisposedITAT Ranchi10 Oct 2025AY 2011-12

Bench: Shri Sonjoy Sarma & Shri Ratnesh Nandan Sahayi.T.A. No.11/Ran/2024 Assessment Year: 2011-12 Golden Goenka Commerce Pvt. Ltd. (Earlier Known As Rajgaj Traders Pvt. Ltd.)............................……….……Appellant 25A, S.P Mukherjee Road, 4Th Floor, Bhawanipore, Kol-25, [Pan: Aabcr7503F] Vs. Acit, Circle-2(1), Jamshedpur..…..….…..….........……........……...…..…..Respondent Appearances By: Shri Devesh Poddar, Ar, Appeared On Behalf Of The Appellant. Shri Kumar Pranab, Cit- Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : September 4, 2025 Date Of Pronouncing The Order : October 10, 2025 Order Per Sonjoy Sarma: This Appeal By The Assessee Is Directed Against The Order Of The Learned Commissioner Of Income Tax (Appeals) [“Cit(A)”], Dated 21.12.2018, Arising Out Of Assessment Framed Under Section 147 Read With Section 143(3) Of The Income-Tax Act, 1961 (The “Act”) For The Assessment Year 2011–12. 2. The Assessee Has Raised Multiple Grounds, The Sum & Substance Of Which Is That The Learned Cit(A) Erred In Upholding The Addition Of ₹4,73,00,000 Made By The Assessing Officer (“Ao”) Under Section 68 Of The Act Towards Share Capital & Share Premium, Ignoring The Documentary Evidences Placed On Record & Without Conducting Any Independent Enquiry. 3. Brief Facts Of The Case Are That The Assessee Company Filed Its Return Of Income For The Assessment Year 2011–12 Declaring Total Income Of ₹16,67,088. Subsequently, The Case Of The Assessee Was Reopened

Section 131Section 143(3)Section 147Section 148Section 68