Section 69C of the Income Tax Act

Income-tax Act, 2025: s.105

Section 69C of the Income-tax Act, 1961 corresponds to section 105 (Unexplained expenditure) of the Income-tax Act, 2025.

Read section 105 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 69C is Sumati Dayal v. CIT (214 ITR 801), cited in 1,967 of the 8,217 judgments on BharatTax that turn on this section.

Leading authorities on Section 69C

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. 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.

Kishanchand Chellaram v. CIT
125 ITR 713 · 1980 · Supreme Court
962
citing judgments

An assessee is entitled to be confronted with evidence used against them and to an opportunity for cross-examination, especially when that evidence is from a third party or a retracted statement. Failure to provide such an opportunity violates the principles of natural justice.

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.

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.

CIT v. Daulat Ram Rawatmull
87 ITR 349 · 1973 · Supreme Court
525
citing judgments

The onus to prove that an apparent transaction or explanation is not real lies with the person who claims it to be so. If an assessee provides a plausible explanation for a transaction, the revenue must establish that the apparent transaction is not genuine.

CIT v. P. Mohanakala
291 ITR 278 · 2007 · Supreme Court
525
citing judgments

The Supreme Court emphasized that in the absence of concrete rebuttal by the assessee, circumstantial evidence holds significant weight, applying the doctrine of preponderance of probability, particularly when assessing undisclosed income or unexplained cash credits.

Parashuram Pottery Works Co. Ltd. v. ITO
106 ITR 1 · 1977 · Supreme Court
486
citing judgments

The principle of finality dictates that stale issues should not be reactivated, and lapse of time brings repose to judicial and quasi-judicial controversies. A Commissioner cannot substitute their judgment for the Assessing Officer's unless the assessment order is legally erroneous, not merely less elaborate, thus limiting revisionary powers under Section 263.

Judgments on Section 69C

Utkarsh Rai, Kolkata vs. ITO, Ward-43(1), Kol, Kolkata

ITA 1277/KOL/2023[2020-21]Status: DisposedITAT Kolkata09 Aug 2024AY 2020-21

Bench: Shri Sanjay Garg & Shri Rakesh Mishrai.T.A. No.1277/Kol/2023 Assessment Years: 2020-21 Utkarsh Rai……………………………....................…...……………....Appellant C/O S.N. Ghosh & Associates, Advocates 2, Garstin Place, 2Nd Floor, Suite No.203, Off Hare Street, Kol-1. [Pan:Altpr9779F] Vs. Ito, Ward-43(1), Kolkata…….……………............................…..…..... Respondent Appearances By: Shri Somnath Ghosh, Ar & Abhay K. Fulfagar, Fca, Appeared On Behalf Of The Assessee. Shri Abhijit Kundu, Cit-Dr, Appeared On Behalf Of The Revenue. Date Of Concluding The Hearing : August 08, 2024 Date Of Pronouncing The Order : August 09, 2024 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 29.09.2023 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. The Assessee In This Appeal Has Agitated Against The Confirmation Of Addition By The Ld. Cit(A) Of Rs.85,13,92,096/-, Which Has Been Made By The Assessing Officer U/S 69C Of The Act On Account Of Bogus Purchases. 3. The Brief Facts Of The Case Are That The Assessee Is An Individual & Is Engaged In The Business Of Dealing In Bullion Through Its Proprietorship Concern Namely M/S Shewpujan Rai Indrasen Rai & Grandsons. During The Assessment Proceedings, The Assessing Officer Observed That The Assessee Had Shown Purchase Of Bullion Of

Section 250Section 69C