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

Sunil Govind Naik, Mumbai vs. DCIT-41(4)(1), Mumbai

In the result, the ground No

ITA 316/MUM/2026[2020-21]Status: DisposedITAT Mumbai03 Aug 2026AY 2020-21

Bench: Shri Pawan Singh & Shri Girish Agrawal(Physical Hearing) Sunil Govind Naik, Dcit – 41(4)(1), Mumbai Flat No. 3703, Tower C, Oberoi Vs Room No. 852, Kautilya Bhavan, Exquisite, Goregaon East, S.O., Bandra Kurla Complex, Mumbai – 400063. Mumbai – 400051. [Pan: Aagpn4363H] Appellant / Assessee Respondent / Revenue Assessee By Shri Vimal Punmiya, Ca Revenue By Shri Surendra Mohan,Sr. Dr. Date Of Hearing 05.05.2026 Date Of Pronouncement 03.08.2026 Order Under Section 254(1) Of Income Tax Act Per Pawan Singh; 1. This Appeal By Assessee Is Directed Against The Order Of Ld. Cit(A)/ Nfac Dated 01.12.2025 For Assessment Year (Ay) 2020-21. The Assessee Has Raised Following Grounds Of Appeal: “1. The Nfac Erred In Law & On Facts By Confirming The Addition Of Rs. 1,27,39,461/- As Bogus Long Term Capital Loss, Disregarding That The Shares Were Purchased Through Banking Channels, Held In A Demat Account, Purchased & Sold On A Recognized Stock Exchange (Bse/Nse) Through A Recognised Registered Broker. The Transactions Were Supported By Documentary Evidence (Contract Notes, Demat Statements, Bank Entries). 2. The Nfac Failed To Appreciate That The Assessing Officer (Ao) Relied Solely On General Investigations By The Directorate Of Investigation Without Specific Evidence Linking The Appellant To Any Manipulation Or Wrong Doing & Without Allowing Cross-Examination Of Third Parties (E.G. Shri Alok Agarwal), Thereby Violating Principles Of Natural Justice. 3. The Nfac Erred In Law In Confirming The Addition Of Rs. 1,27,39,461/- Under Section 68 R.W.S. 115Bbe As Unexplained Cash Credits, Despite The Fact That The Appellant Having Discharged The Burden Of Proof As Per Law & Without Pointing Out Any Defect In The Evidences Submitted. Sunil Govind Naik

Section 234ASection 254(1)Section 271ASection 68Section 69C