Burdenof Proof
Transcript of Burdenof Proof
-
8/6/2019 Burdenof Proof
1/165
Burden of Proof
-
8/6/2019 Burdenof Proof
2/165
Burden of proof
What is meant by saying that the
Evidence Act is not applicableto the proceedings under the
Income-tax Act is that therigour of the rules of evidence
contained in Evidence Act isnot
-
8/6/2019 Burdenof Proof
3/165
Burden of proof
..applicable, but that does not
mean that if the taxingauthorities are desirous of
that Act in proceedings
before them, they are notprevented from doing so.
-
8/6/2019 Burdenof Proof
4/165
Burden of proof
If a fact has to be proved, theperson whose interest it is to
prove it, should adduce
,slight, upon which a
Court could find thefact
-
8/6/2019 Burdenof Proof
5/165
Burden of proof
As the facts decide the
taxability /non taxability ofthe amount /person-in-
, ,burden should discharged by
the party claiming taxabilityor otherwise .
-
8/6/2019 Burdenof Proof
6/165
Burden of proofDoctrine - party who desires to move the
Court must prove facts -is subject to two
exceptions-
i)He is not required to prove such facts
as are es eciall within the
knowledge of the other party.
ii)He is not required to prove the allegations
in respect of which there is any
presumption oflaw or of fact.
-
8/6/2019 Burdenof Proof
7/165
Burden of proof
*The burden of proof lies
on the party substantiallyasserting it not upon the
par y w o en es .It is diffucult to prove a
negative.
-
8/6/2019 Burdenof Proof
8/165
Burden of proof
So, if a party in possession of
best evidence withholds it thecourt draws an adverse
n erence aga ns mNotwithstanding that the onus
of proof does not lie on him.
-
8/6/2019 Burdenof Proof
9/165
Burden of proof
In such cases party cannot rely
on abstract doctrine of onusof proof
Or
On the fact that he was not
called upon to produce it in
such a case.
-
8/6/2019 Burdenof Proof
10/165
Burden of proof
Similarly, the plaintiff can
not take advantage of theweakness of the defence.
The plaintiff case must
stand or fall upon theevidence adduced by him
-
8/6/2019 Burdenof Proof
11/165
Burden of proof
In issue regarding bonafide andgenuine /sham -bogus transaction,
the burden of proof would be onthe party alleging it to be
.
establishing mala fide is veryheavy on the person whoalleges it.
-
8/6/2019 Burdenof Proof
12/165
Burden of proof
Fraud ,like any other chargesof criminal offence, whethermade in Criminal or Civil
established beyond
reasonable doubt bythe person alleging it.
-
8/6/2019 Burdenof Proof
13/165
Burden of proofS.106.
When any fact is especiallywithin the knowledge of
any person, the burden ofproving that fact is upon
him.
-
8/6/2019 Burdenof Proof
14/165
Burden of proof
Facts*Property purchased by wife of
the assessee while he was abroad.*AO made addition.
r una e e e a on as e anot discharged his Burden. AO
should have proved with help of facts
and figures that the investment was
made by the assessee.
-
8/6/2019 Burdenof Proof
15/165
Burden of proof
In our judgment,the Tribunal went wrong in
the above direction and that too erroneously
changing the onus of proof...Certain facts
by their very nature can only be
known by a person and in regardthereto the burden can not be shiftedto Revenue (223 ITR 550: 142 Taxtion 602-Ker.)
-
8/6/2019 Burdenof Proof
16/165
Burden of proof
S.110 - When the question is
whether any person is owner ofanything of which he is shown
o e n possess on, e ur enof proving that he is not the
owner is on the person whoaffirms that he is not the owner.
-
8/6/2019 Burdenof Proof
17/165
Burden of proof
This is based on the wellknown rinci le that
possession is prima facie
proof of ownership.
-
8/6/2019 Burdenof Proof
18/165
All that section 110 of the
Evidence Act does is that itembodies a salutary principle
of common law jurisprudencewhich could be attracted to a
set of circumstances that
satisfy its condition.
-
8/6/2019 Burdenof Proof
19/165
Burden of proof
S.114 -The Court may presume theexistence of any fact which it
thinks likely to have happened,regard being had to the common
course of natural events, humanconduct and public and private
business, in their relation to thefacts of the particular case.
-
8/6/2019 Burdenof Proof
20/165
Burden of proof
Sections 104 to 113 direct
on whom burden of proofwill lie. No o tion is iven
to the court as to whether
it will presume the fact ornot.
-
8/6/2019 Burdenof Proof
21/165
Presumption
Sec.114 is a permissive and not a
mandatory section. Court mayrefuse to raise a presumption in
a par cu ar case a ougsuch a presumption might
have been properly raised inother cases.
-
8/6/2019 Burdenof Proof
22/165
PresumptionSec. permits the court to
raise a presumption with
as well as documentary
evidence.
-
8/6/2019 Burdenof Proof
23/165
Presumption
A presumption is not
evidence or proof. It mayshift the burden of proof,
and it may be rebutted notonly by evidence but also
by presumption of law or
fact.
-
8/6/2019 Burdenof Proof
24/165
A presumption is an inference of
fact drawn from other knownor proved facts. It is a rule of
aw un er w c courts areauthorized to draw a
particular inference from aparticular fact.
-
8/6/2019 Burdenof Proof
25/165
Presumption
Presumptions may be either of
law or fact, and when of lawmay be either conclusive or
re utta e ut w en o act arealways rebuttable. Mixed
presumption are those which arepartly of law and partly of fact.
-
8/6/2019 Burdenof Proof
26/165
Presumption
Rules of presumption are
deduced from enlightened
human knowledge and
from the connection, relation
and consideration offacts andcircumstances.
-
8/6/2019 Burdenof Proof
27/165
Presumption
May presume leaves it
to the discretion of the
presumption according
to the circumstances of
the case.(287 ITR 209- SC)
-
8/6/2019 Burdenof Proof
28/165
Presumption
Shall presume leaves no option
with the court not to make the
presumption. The court is
until evidence is given to
disprove it. In this sense such
presumption is also rebuttable.
-
8/6/2019 Burdenof Proof
29/165
Presumption
Conclusive proof gives an artificial
probative effect by the law to
certain facts. No evidence is
allowed to be roduced with a
view to combatting that effect.In this sense, this is an
irrebuttable presumption.
-
8/6/2019 Burdenof Proof
30/165
Presumption
Sumati Dayal(214 ITR 801:1995 AIR SC 2109:
125 CTR 124: 80 Taxman89:125Taxation 446)
Assessee claimed to have won
of which ten winnings were
from jackpots and threewere from treble events.
-
8/6/2019 Burdenof Proof
31/165
Presumption
(Enlightened human knowledge
and experience principle).A jackpot is a stake of five
events in a single day and onecan believe a regular and
experienced punter clearing ajackpot occasionally.
-
8/6/2019 Burdenof Proof
32/165
Presumptionbut the claim of the assessee of
having won a number of jackpots in
three or four seasons not merely atone place but at three different
centres- Madras, Bangalore andHyderabad appeared, prima facie, to
be wild and contrary to statisticaltheories and experience of
frequencies and probabilities. .
-
8/6/2019 Burdenof Proof
33/165
Presumption
. settlement Commission after
considering the surrounding
circumstances and applying the
test of human robabilities had
rightly concluded that the
appellant's claim about the amount
being her winnings from races was
not genuine.
-
8/6/2019 Burdenof Proof
34/165
Presumption
Sec.132 (4A) raises apresumption
that documents found during
search belong to the person
.
Sec.292C provides for
presumption as to assets, booksof account, etc., found during
search/survey operations.
-
8/6/2019 Burdenof Proof
35/165
Presumption
(321 ITR 254) ..there was apresumption
that the contents of the document were
true, as the document was seized fromthe premises in the control of the
assessee and the document belonged to
the assessee. ..Thepresumption
ought to have been rebuttedby the assessee.
-
8/6/2019 Burdenof Proof
36/165
Presumption. assessee at the first available
opportunity did not deny the
existence of the document nor did theassessee at any subsequent stage of
appeal or before the court deny thedocument. The only contention raised
was that the transaction was notgiven effect to.
-
8/6/2019 Burdenof Proof
37/165
Presumption
Sec.278E provides that for
prosecution of the offence under
the Act which requires a
part of the accused, the court
shall presume the existence of
such mental state.(254 ITR 388-Del.N K Jain)
-
8/6/2019 Burdenof Proof
38/165
PresumptionThe rule of evidence thus stands
changed by the above section. In the
prosecution for an offence under the
Act it is for the accused to
prove his defence, which hecan do by cross-examining the
prosecution witnesses or by
leading defence evidence.
-
8/6/2019 Burdenof Proof
39/165
Presumption
magistrate was conscious of
the fact that the presumptionunder section 278E of the Act
operate an t ere ore, at t atprima facie stage, the court
had to presume the culpablemental state of the accused.
(290 ITR 55 Mad J.Jaylalita-276 CC)
-
8/6/2019 Burdenof Proof
40/165
Presumption
Contention raised by the assessee - byfiling returns within the time prescribed
in the notice u/s.148 he was exoneratedfrom prosecution under section 276CC
f r n filin h r rn i hin h
statutory due date Sec.139(1) of the Actwas not tenable. (327.226 Mad)
In view of the presumption undersection 278E of the Act of
culpable mental state.
-
8/6/2019 Burdenof Proof
41/165
Presumption
.the burden was on the assessee to
show that there was no wilful
default. The absence of such
the assessee as a defence and it
was for the trial court to decide
the issue at the stage of
conclusion of trial.
-
8/6/2019 Burdenof Proof
42/165
Presumption
During a survey operation at the
business premises of theassessee excess stock was
oun . e rea e estockas undisclosed
investment of the assesseeand made an addition..
P i
-
8/6/2019 Burdenof Proof
43/165
Presumption
.CIT(A) deleted the addition on
the ground that the evidence
submitted by the assessee was
neither roved b the Assessin
Officer to be false or bogus
nor genuineness of the
transactions doubted.
-
8/6/2019 Burdenof Proof
44/165
Burden of proof
It was held that a
presumption taking the
the books was not
justified.(319 ITR 396)
-
8/6/2019 Burdenof Proof
45/165
Presumption
322.ITR 309 -
There is no resum tion
that the delay in
approaching the courtis always deliberate.
P ti
-
8/6/2019 Burdenof Proof
46/165
Presumption
19 ITR 228 AAR -A non-resident
Co.agreed to an Indian company a
non-exclusive perpetual irrevocable
ri ht to use the know-how as well as
to transfer the ownership in treadand sidewall designs and patterns
required for the manufacture of
radial tyres for a lump sum .
P ti
-
8/6/2019 Burdenof Proof
47/165
Presumption
The documents which were sent
through courier were received in
India. The delivery of the documentswas conditional on Indian Company
presenting certain documents to thecourier. Indian Company derived the
right under the agreement only on
the date that they were received in
India
P ti
-
8/6/2019 Burdenof Proof
48/165
Presumption . the transfer was not complete
till then. In the absence of any
material, the reasonableresum tion to be drawn was
that the delivery of variousdocuments which was an integral
part of the agreement signed inIndia would take place in India.
P ti
-
8/6/2019 Burdenof Proof
49/165
Presumption
If there were funds available both
interest-free and overdraft and/or
loans taken, then apresumptionarises -investments would be out of
the interest-free funds generated oravailable with the company, if the
interest-free funds were sufficientto meet the investments.
Presumption
-
8/6/2019 Burdenof Proof
50/165
Presumption
When an assessee produces hisbooks of account before AO
in support of a return, there
in his favour that the
books have not beenfabricated.
Presumption
-
8/6/2019 Burdenof Proof
51/165
Presumption
Thispresumption is an
application of the general
presumption which the law
every kind, including crime,
fraud, forgery, dishonestyand fabrication.
Presumption
-
8/6/2019 Burdenof Proof
52/165
Presumption
But when the AO puts in issuebefore the assessee about
truth of an entry in the
,
Section 106 of the Evidence
Act commences to operate
Presumption
-
8/6/2019 Burdenof Proof
53/165
Presumption
and the transaction underreference being a fact
peculiarly and solely within the
onus of proving the
correctness of the entryshifts to the assessee.
Presumption
-
8/6/2019 Burdenof Proof
54/165
Presumption
If presumption of accuracy is attached to
balance sheet and profit and loss account
and not to auditors certificate, then mereproduction of auditors certificate will not
.
to correctness of balance
sheet and profit and loss
account is on company.
Section 69
-
8/6/2019 Burdenof Proof
55/165
Section 69
Sec.69 is a deeming
provision and it cannot beextended to the penalty
proceedings. AO can notpresume that there is a
concealment.
Section 69
-
8/6/2019 Burdenof Proof
56/165
Section 69
There must be an
independent finding.Mere rejection of
explanation would not bea ground for levying
penalty. (327ITR 477 Mad. Proprty purchased jointly )
Section 69
-
8/6/2019 Burdenof Proof
57/165
Section 69
If assessee refuses to
produce account booksregarding remittances
from foreign branchespresumption is that
remittances are out of
profits
Section 69
-
8/6/2019 Burdenof Proof
58/165
Section 69
The question of burden of
proof cannot be made to
depend exclusively upon the
ac o a cre en ry n ename of the assessee or in the
name of a third party
-
8/6/2019 Burdenof Proof
59/165
Burden of A O Receipts items
covered by Charging Sectionsof taxation laws i.e. Receipt
under consideration is
Revenue is to be provedby Revenue.(125.713 SC T T Transfer matter) (241.363 Mad.bank stt.matter)
-
8/6/2019 Burdenof Proof
60/165
Two S C cases of Excise Matters Article /Thing
to taxed,if Goods.
Crude PVC(Bhor Industries-184.129)&
ar cu ar s arc ucoseare goods in market has to
be proved by AO. (185.87)
-
8/6/2019 Burdenof Proof
61/165
The onus lies on the Revenue
to bring on record, cogentmaterial/evidence to
establish that the trust/charitable institution is hit
by the provisions of section
13.
-
8/6/2019 Burdenof Proof
62/165
Department has to be specificabout the name of the
beneficiary and had thereafter
establish that such a person
fell in the category ofprohibited persons.
(279.89-All.Kamla Town matter)
-
8/6/2019 Burdenof Proof
63/165
Burden is noton the assessee toprove that the debt has gone bad
and the deduction can be claimedin the ear it is written off in the
books of account as irrecoverable.If AO wants to disallow it he has
to arrive at a conclusion that thedecision was not bona fide. (Oman Int.)
-
8/6/2019 Burdenof Proof
64/165
To invoke Sec.40A(2)(a)AO
has to prove thatexpenditure is be excessive
or unreasonable havingregard to the fair market value
of the goods, services orfacilities ..
Burden of proof-Assessee
-
8/6/2019 Burdenof Proof
65/165
p
The burden of proving that aparticular income has its
origin in a capital source lies
upon e assessee, or swithin his particular
knowledge to know that fact.
Burden of proof
-
8/6/2019 Burdenof Proof
66/165
p
If he claims that the income isfrom a specified capital
source and fails to prove it, it
Income-tax Officer to prove
that the income is fromrevenue sources.
Burden of proof
-
8/6/2019 Burdenof Proof
67/165
p
If he accepts that the income isfrom a revenue source but
seeks to claim exemption the
bring it within the four
corners of the exemption.
Burden of proof
-
8/6/2019 Burdenof Proof
68/165
p
As per established law -it is
for the assessee to provethat the incoming receipt
is exempt from taxation.(1 ITR 182 All.-Intt.Narayandas Mohanlal ,
2 ITR 121 Ran.-Bengali Urban
5 ITR 307 Lahore /Security income /Amritsar Produce Exchange.)
Burden of proof
-
8/6/2019 Burdenof Proof
69/165
In order to claim an exemption inrespect of agricultural income, it
is the assessee who has to place
enabling him to come to the
conclusion that the it is
Agricultural income.
Burden of proof
-
8/6/2019 Burdenof Proof
70/165
p
29 ITR 529 (SC)- ..it was not for the IT
authorities to prove that it was not
agricultural income, and that the HighCourt therefore erroneousl laced the
burden of proofon the Department*35 ITR 312(SC)- It is for the assessee to
prove that the income sought to betaxed is agricultural income ( tree-matter*)
(R Vankataswamy- cows- pasture milk- income = 29.529)
Burden of proof
-
8/6/2019 Burdenof Proof
71/165
When the assessee is claims
exemption, burden is onhim to roduce relevant
materials and to claimexemption
[w.r.t.sec.10(22)] (296 .492 Ker- Charitable intitute? )
Burden of proof
-
8/6/2019 Burdenof Proof
72/165
Exemption claim u/s. 5(1)(xiv) of G T Act was
made by the assessee. SC held Where
an assessee claims an-
Act, the burden of proving
facts which entitle him to theexemption lies on him. (74.328)
Burden of proof
-
8/6/2019 Burdenof Proof
73/165
In absence of non-furnishing of
particulars by the assessee to
claim the benefit u/s. 80-O, the
c a m cou no e ,
because burden to prove
entitlement of exemption ison the assessee . (323.151 kar-Wipro)
-
8/6/2019 Burdenof Proof
74/165
If a Co-op.soc.claims that it isentitled to deduction u/s.
80P(2) (a) onus is on it to
the society has a direct or
proximate nexus or connectionwith the business of the
society.
-
8/6/2019 Burdenof Proof
75/165
The burden is on the
assessee, which is seekingto claim benefit of
exemption to show that itis covered by the said
exemption. (245.616-AP )
Burden of proof
-
8/6/2019 Burdenof Proof
76/165
When an assessee claims that a
particular expenditure is for
the purpose of business, the
ur en o es a s pr ma
facie lies on the assessee to
place on record the material insupport of this claim.
Burden of proof
-
8/6/2019 Burdenof Proof
77/165
Sec.37 deals with the questionrelating to the allowability of the
expenditure incurred for the
.
of proof is upon the assessee to
prove each of the following
ingredients -
Burden of proof
-
8/6/2019 Burdenof Proof
78/165
(a) the item of expenditure
must not be of the nature
described under sections 30 to
o e c ; e em o
expenditure must not be in the
nature of capital or personalexpenses of the assessee ;
Burden of proof
-
8/6/2019 Burdenof Proof
79/165
(c) the expenditure must be laidout wholly and exclusively for
the purpose of business or.
to satisfy any of these tests, theexpenditure claimed is not
allowable. ( 256 ITR 134 Bom- Ramanand Sagar)
Burden of proof
-
8/6/2019 Burdenof Proof
80/165
Assessee engaged in the business of
printing and publishing of
newspapers and periodicals
-
the object to grant relief andaid to persons affected by
natural calamities.
Burden of proof
-
8/6/2019 Burdenof Proof
81/165
Assessee contributed Rs.26.94 lakhs to the trust and
the amount was spent in
rehabilitating the victims of
the earthquake.
Burden of proof
-
8/6/2019 Burdenof Proof
82/165
burden is entirely on the assessee toestablish that the amount laid out
or expended by the assessee waswholly or exclusively used for the
purpose of its business..The merefact that indirectly the assessee
earned goodwill of the victims and
the general public.
Burden of proof
-
8/6/2019 Burdenof Proof
83/165
did not mean that theexpenditure incurred by the
assessee was wholly or.
The contribution made by theassessee would not allowable
under section 37(1).(80G was allowed-284.69 ker.Malayam Manorama)
Burden of proof
-
8/6/2019 Burdenof Proof
84/165
Mere payment by itself would notentitle the assessee to deduction of
expenditure unless the same wasroved to be aid for commercial
considerations. The burden
of proof is alwaysupon the assessee
Burden of proof
-
8/6/2019 Burdenof Proof
85/165
..it is for the taxpayer to establishby evidence that a particular
allowance is justified. It is notfor the AO to inde endentl
collect evidence and prove thatthe deduction claimed by the
assessee is baseless.
Burden of proof
-
8/6/2019 Burdenof Proof
86/165
Assessee has to prove that incurredexpenditure is for commercial
cosideration.In Transport
HC upheld the decision of the AOto disallow the payment made on
a/c. of Secret commission. (256.701)
Burden of proof
B d i l h
-
8/6/2019 Burdenof Proof
87/165
Burden is always on the assessee to
produce relevant documents to
prove embezzlement-the date on
expenses vouchers,circumstances underwhich he detectes the embezzlement,
letter of termination and date of filing of
police complaint etc.
Burden of proof
A th t bl t b t ti t
-
8/6/2019 Burdenof Proof
88/165
As the assessee was not able to substantiatethat sending a person for training abroad
was for the benefit of the business of the
assessee, so expenditure not deductible (328.290)
that expenditure on education of
director's son / foreign travel of
wife of director/medical expense
has nexus with assessee's business.
Burden of proof
-
8/6/2019 Burdenof Proof
89/165
Regarding purchases made by
the assessee from the persons
falling under the category
under section 40A(2)(b) theburden is upon the assessee to
establish that the price paid byit is not excessive or.
Burden of proof
bl I f lli
-
8/6/2019 Burdenof Proof
90/165
unreasonable. In cases fallingunder section 40A(2)(b) it is
the duty of the assessee to
prove an sc arge s ur en
by leading proper evidence
subject to cross-examinationby the Department.(261.258-Bom. Satrunjay- Average cost price of rough diamomds)
Burden of proof
A h l i
-
8/6/2019 Burdenof Proof
91/165
An assessee who claims
depreciation has to satisfy the
Revenue, that he is entitled for
grant o eprec at on on temsclaimed by it. The burden of
proof is on the assessee.
Burden of proof
F t T ti f l d
-
8/6/2019 Burdenof Proof
92/165
Facts- Transaction of sale and
immediate lease of heavy
machinery to vendor.
o reg strat on o sa e
No identification of machinery
Lessor claiming full depreciation(266ITR 178 KAR)
Burden of proof
B d i t th t
-
8/6/2019 Burdenof Proof
93/165
Burden is noton the assessee toprove that the debt has gone bad
and the deduction can be claimed
books of account as irrecoverable.IfAO wants to disallow it he has to
arrive at a conclusion that thedecision was not bona fide.
Burden of proof
As against the purchase price disclosed by the
-
8/6/2019 Burdenof Proof
94/165
As against the purchase price disclosed by theassessee in a sale deed ,if AO intends to adopt
the purchase price according to stamp duty
paid and to hold that the assessee must havepaid over and above the purchase price
disclosed in the sale deed - ur en s on
him to prove that valuation done
by State agency for the purpose of
stamp duty is the real sale
consideration .
Burden of proof
AO was obliged to bring on record positive
-
8/6/2019 Burdenof Proof
95/165
AO was obliged to bring on record positiveevidence supporting the price assessed by
the State Government for the purpose ofstamp duty. In the absence of any
legally acceptable evidence the
valuation done for the purpose of
Sec.50C would not represent the
actual consideration passed on to
the seller. (323 ITR 510 P & H)
Burden of proof
Difference between market value and
-
8/6/2019 Burdenof Proof
96/165
Difference between market value andconsideration declared not sufficient
to make an addition.Assessee mustbe shown to have received more than
what is declared or disclosed by himas consideratio. Burden of proof lies
on Department. (131 ITR 597 SC
about Sec.52(2)- deleted Section)
Burden of proof
There is no presumption in
-
8/6/2019 Burdenof Proof
97/165
There is no presumption inlaw that an amount standing
in the name of the wife
onus of proof in such a case
will not be on the
assessee....
Burden of proof
but will be on the AO to show
-
8/6/2019 Burdenof Proof
98/165
but will be on the AO to showby at least some material that
the amount standing in the'
does not belong to her but
belongs to the assessee.
Burden of proof
Onus is on the Co to prove that
-
8/6/2019 Burdenof Proof
99/165
Onus is on the Co.to prove thatit derives 51% or more of its
income from production /
thus is an Industrial Company-
entitled for lower tax-rate.(The burden to
prove that the assessee is such a company is on the assessee itself. 258.106
Mad.)
Burden of proof
since the assessee had not placed
-
8/6/2019 Burdenof Proof
100/165
..since the assessee had not placedbefore the taxing authorities a
detailed description of the process...and the assessee had not
established that its activitiesamounted to processes involving
production or manufacture, the
assessee was not an industrial
company. (252 ITR 658 SC)
Burden of proof
Onus of proving that assessee is
-
8/6/2019 Burdenof Proof
101/165
Onus of proving that assessee isresident of India lies upon the
department. But, once his
admitted, the onus shifts to himto prove that he was
NRI/NOR,if he claims such
status . (300-231 sc)
Burden of proof
Documents furnished to
-
8/6/2019 Burdenof Proof
102/165
Documents furnished tobanks or other agencies or
statement recorded in some
o er connec on can no
form basis for addition or
treating an amount arevenue.
recipt Without corroborative
-
8/6/2019 Burdenof Proof
103/165
recipt.Without corroborative
evidences it is rebuttable
presumption.AO has to prove
t at rece pt n quest on was
from unexplained
sources.(241 ITR 363- Mad)
Burden of proof
But,When an assessee who is
-
8/6/2019 Burdenof Proof
104/165
But,When an assessee who isrequired to explain a sum
credited in his books as capital,offers an ex lanation which is
false and unbelievable, there isnothing in law which casts the
burden of proof on the AO
Burden of proof
or the appellate authority to
-
8/6/2019 Burdenof Proof
105/165
..or the appellate authority toprove by positive evidence
that the sum represents
ncome assessa e to tax.
is not prevented from basing
his conclusion oncircumstantial evidence.
Burden of proof
AO ,not the assessee,has to prove
-
8/6/2019 Burdenof Proof
106/165
AO ,not the assessee,has to prove
that Single and isolated
transaction is Adventure in the
. n a am a emen
Ltd. matter AO had proved thatdisputed amount was revenue
receipt,so his stand was upheld evenby the SC. (105 ITR 633)
Cash Credit/ Unexplained moey/inv/exp
Statutory provision (Sec 68
-
8/6/2019 Burdenof Proof
107/165
Statutory provision (Sec.68
to 69 C)are merelyclarificatory in nature,
these sections embodyrules of evidence which are
even otherwise quite clear.
Cash Credit/ Unexplained moey/inv/exp
Sec.68 is recognition of provisions of Evi.ActS 106
-
8/6/2019 Burdenof Proof
108/165
g pSec.106.
.and the assessee offers noexplanation about the nature and
source thereof or the explanationoffered by him is not, in the
opinion of the Assessing Officer,satisfactory..
Cash Credit/ Unexplained moey/inv/exp
Entries in the books is
-
8/6/2019 Burdenof Proof
109/165
Entries in the books isconsidered prima facie
evidence against the assessee.
positive evidence to provegeneuiness of the entries
appearing in the Books of theassessee.
Cash Credit/ Unexplained moey/inv/exp
Considering circumstantial evidence he candecide the matter In a case Del HC observed
-
8/6/2019 Burdenof Proof
110/165
decide the matter. In a case Del HC observed
The defence of trade credit set up by the
assessee was against normal
supplier/commission agent/fruitvendor would give money four to nine
months in advance for supply ofvegetables.
Cash Credit/ Unexplained moey/inv/exp
A delicate balance must be
-
8/6/2019 Burdenof Proof
111/165
A delicate balance must be
maintained while walking the
tightrope of sections 68 and 69
of the Act. The burden of proofcan seldom be discharged to
the hilt by the assessee
Cash Credit/ Unexplained moey/inv/exp
if the AO harbours doubts of the
-
8/6/2019 Burdenof Proof
112/165
if the AO harbours doubts of the
legitimacy about any transaction,
he is empowered, to carry out
oroug nves ga ons. u e
fails to unearth any wrong or
illegal dealings, he cannot adhere
to his suspicions.
Cash Credit/ Unexplained moey/inv/exp
Credibility of the explanation
-
8/6/2019 Burdenof Proof
113/165
y pis given preference over
materiality of proof in
credit ,as such cases have tobe decided on preponderance
of probability.
Cash Credit/ Unexplained moey/inv/exp
Canadian Co. lending money to ani C i i
-
8/6/2019 Burdenof Proof
114/165
g yIndian Co. without security and
intt.Transaction was treated as cashdeposit up to ITAT.Authoritiesgnore e e er o e ana an
Co. admitting that it had advancedloan.SC upheld HC order deleting
the addition. Prima facie burden wasproved. (230.580)
Cash Credit/ Unexplained moey/inv/exp
Mere filing of confirmatory letters (187.96) orpayment by a/c payee cheque (200 465)or
-
8/6/2019 Burdenof Proof
115/165
payment by a/c. payee cheque (200.465)or
furnishing details of the creditor(256.331)is not
sufficient to prove the basic ingredients of
credit 327.178
-totality of the transaction istaken in to consideration
while deciding the onus.
Cash Credit/ Unexplained moey/inv/exp
Similarly in matters of gifts all threeb i diti h ld b
-
8/6/2019 Burdenof Proof
116/165
basic pre-conditions should be
fulfilled.In case of Yashpal (310.75)circumstances to prove love anda ec on were m ss ng onus no
proved) - but in the case of Sureshkumar kakkar (324.231) gift from
mother to a son was found to begenuine (onus discharged)
Cash Credit/ Unexplained moey/inv/exp
With regard to the creditworthiness, theassessee had been able to discharge the
-
8/6/2019 Burdenof Proof
117/165
assessee had been able to discharge the
onus cast upon him by furnishing the
bank statement of his mother (donor) as
mother confirming the gifts. Once theassessee had discharged the primary
onus, which was cast upon the assessee, it
was incumbent upon the AO to prove on
the basis of cogent evidence.
Cash Credit/ Unexplained moey/inv/exp
.that the transaction was not genuine. Therewas no such evidence Conjectures and
-
8/6/2019 Burdenof Proof
118/165
was no such evidence. Conjectures andassumptions could not take the place of proof,
once the assessee had discharged the primaryburden which had been cast upon him.
. en e en y an e capac y
were proved beyond doubt and thesource of the gifts was the mother,
there was no question of making theaddition under section 68 of the Act.
Cash Credit/ Unexplained moey/inv/exp
Established law regarding Public Issues ofthe Cos *Share application money to be
-
8/6/2019 Burdenof Proof
119/165
the Cos.*Share application money to be
received by way ofaccount payee cheques
and through normal banking channels.
* Relevant details of the address or PAN
identity of the subscriber to be furnished
to AO along with copies of the
shareholders register, share applicationforms, share transfer register, etc.,
Cash Credit/ Unexplained moey/inv/exp
*Shares to be actually allotted*AO ld not b j tifi d i d i
-
8/6/2019 Burdenof Proof
120/165
*AO would not be justified in drawing an
adverse inference only because thesubscriber fails or neglects to respond to
its notices
*Onus would not stand discharged if the
subscriber denies /repudiates transaction
nor should the AO take such repudiationat face value against the assessee
Cash Credit/ Unexplained moey/inv/exp
*If the AO has any doubt about the identity ofthe share applicants, he should be summoned
-
8/6/2019 Burdenof Proof
121/165
*Co.concerned cannot be expected to know
every detail pertaining to the identity as wellas financial worth of each of its subscribers.
*Co.must, however, maintain and makeavailable to the AO for his perusal, all
the information contained in the
statutory share application documents.(329.271,299.268)
Cash Credit/ Unexplained moey/inv/exp
Once above conditions fulfilled Co.cannotbe held responsible to prove whether
-
8/6/2019 Burdenof Proof
122/165
be held responsible to prove whether
applicant himself invested the money orsome other person had made investment
in his name. Burden then shifts to
the AO to establish that such
investment has come from the
assessee-company itself.
Cash Credit/ Unexplained moey/inv/exp
Sec.68 uses word books of an it f t th
-
8/6/2019 Burdenof Proof
123/165
assessee -it refers to the
assessee whose books show thecre en ry. ere en r es are
found in the books of a firm
and the assessment is that of
an individual Sec. 68 will not
apply.
Cash Credit/ Unexplained moey/inv/exp
Income from undisclosed sources, ifcredited in the books of the
-
8/6/2019 Burdenof Proof
124/165
credited in the books of theassessee, is liable to be assessedu/s. 68,but if such income fromun sc ose sources, oug
invested has not been recorded inhis books of account, such
investment is liable to be assessedu/s. 69.
Cash Credit/ Unexplained moey/inv/exp
Like cash credits sources ofinvestments are to be proved by
-
8/6/2019 Burdenof Proof
125/165
investments are to be proved by
the assessee. But,once provedprima facie-burden of proof willshift to Revenue. It can bedischarged by the AO byestablishing facts and
circumstances .
-
8/6/2019 Burdenof Proof
126/165
Cash Credit/ Unexplained moey/inv/exp
Provisions of section 69A can be
-
8/6/2019 Burdenof Proof
127/165
applied if an assessee is found
to be owner of any money,
bullion, jewellery or other
valuable article, and same had
not been recorded in the booksof account
Cash Credit/ Unexplained moey/inv/exp
In order to find out whetherthe assessee is the owner of
-
8/6/2019 Burdenof Proof
128/165
the assessee is the owner of
the money in terms of sectione pr nc p e o common
law jurisprudence in section
110 of the Evidence Act can beapplied. (292.682 SC)
Cash Credit/ Unexplained moey/inv/exp
So when assessee was found to be in possessionof loose slips it was held that the provisions of
ti 69A f th A t t li bl
-
8/6/2019 Burdenof Proof
129/165
section 69A of the Act were not applicable.
(294.78) The assessee had dulyex lained that these were rou h
calculations and the assesseesexplanation had not beenrebutted by any materialevidence.
Cash Credit/ Unexplained moey/inv/exp
But,when an assessee is found inpossession of currency, it is for him
-
8/6/2019 Burdenof Proof
130/165
possession of currency, it is for him
to prove that he is not the owner of
Revenue to prove that theassessee is the owner of the
currency found in hispossession.
Cash Credit/ Unexplained moey/inv/exp
Assessee admitted the possessionof the money but denied the
-
8/6/2019 Burdenof Proof
131/165
of the money but denied the
ownership of it .In light of. .
presumption of IT Act Delhi HCheld that provisions of Sec.69
were applicable(285.256)
Cash Credit/ Unexplained moey/inv/exp
Scope and ambit of section 69Band Sec.69C are altogether
-
8/6/2019 Burdenof Proof
132/165
and Sec.69C are altogether
different. The connotation to
Sec.69B has to be in thecontext of investment made in
some property or any othertype of
Cash Credit/ Unexplained moey/inv/exp
..investment and it could notbe business expenditure. The
-
8/6/2019 Burdenof Proof
133/165
be business expenditure. The
word investment contained in
investment in bullion,jewellery or other valuable
articles, etc
Cash Credit/ Unexplained moey/inv/exp
For the purpose of Sec. 69 and 69B it is notnecessary that the books of account have
-
8/6/2019 Burdenof Proof
134/165
to be rejected expressly or that it is to be,
in express terms, recorded that the books
explanation is not satisfactory. It has to begathered from the order whether AO was
satisfied with the explanation or had
found that the books were not reliable. It
is not the technical terms..
Cash Credit/ Unexplained moey/inv/exp
which must appear in the order. It is thesubstance of the order that the AO was notsatisfied with the explanation which is
-
8/6/2019 Burdenof Proof
135/165
satisfied with the explanation which is
relevant. Where accounts are not reflected inthe account books, they can be explained by, .
opportunity to explain. If in the opinion ofthe AO the explanation is notsatisfactory, the income can be added.
The phraseology of Sec.69 creates a legalfiction.
Section 69B
In order to invoke theprovisions of Sec.69B the
-
8/6/2019 Burdenof Proof
136/165
p
burden is on the Revenue to
exceeds the investments shownin the books of account of the
assessee. (261.664)
Section 69B
Merely on the basis of the fairmarket value and valuation
-
8/6/2019 Burdenof Proof
137/165
market value and valuation
report no addition can be made. ,
sufficient material on record somereasonable inference can be
drawn and addition can be madeas unexplained investment.
Section 69B
After obtaining VR notice was given theassessee to take value of the plot as perVR and comparable cases Assessee did
-
8/6/2019 Burdenof Proof
138/165
VR and comparable cases. Assessee did
not give any reason as how she couldurchase the ro ert for rou hl half
the prevalent market rate. In absence of
that the only inference was that theshe had made unexplained investment.
Addition made u/s.69B was upheldby Raj HC.(226.344)
Section 69B
Statement made by Counsel forassessee in a civil suit about
-
8/6/2019 Burdenof Proof
139/165
aparticular investment is not
upon AO. Difference between theamount reflected in books and
claimed in court is not assessableas unexplained investment (261.664)
Section 69B
Addition was made u/s. 69B onaccount of difference between the
-
8/6/2019 Burdenof Proof
140/165
closing stock furnished in astatement to the bank for availin of
credit facility and that shown in thebooks of a/cs. Assessee prima facie
proved that the statement submitted
by it to the bank was on estimate
basis and that the..
Section 69B
value of the stock was inflated toavail of greater credit from the
-
8/6/2019 Burdenof Proof
141/165
bank.AO could not rebut the standtaken by the assessee nor could he
produce evidence of unexplained
investment.Addition deleted by
Tribunal was upheld by the
Guj.HC.(323.341)
Section 69B
A O found that a ticket of the CSE from ShriA.K.Dey was purchased for Rs. 50,000 bythe assessee. AO took the value of the ticket
-
8/6/2019 Burdenof Proof
142/165
the assessee. AO took the value of the ticket
at Rs. 11.5 lakhs and added income of Rs. 11lakhs as unexplained investment to theincome of the assessee.Payment was made t
the CSE through normal banking channels.
Delhi HC(290.245) -Burden of proving
the fact of unexplained investmentwas on the AO.If he had any
Section 69C
doubt in regard to the bona fides of theassessee, nothing prevented him from
exercising his powers under the Act and
-
8/6/2019 Burdenof Proof
143/165
exercising his powers under the Act and
summoning the record of the Calcutta
.
appear before him and produce relevantrecord in regard to the receipt. The bare
reading of the order of the AO shows that his
conclusion was not based on any
record or books of a/cs.
Section 69C
For invoking Sec.69C A.O.should prove that assessee has
-
8/6/2019 Burdenof Proof
144/165
p
incurred some expenditure and
by the assessee about thesource of expenditure is not
satisfactory.
Section 69C
So, when there was nothing toshow that expenditure was in
-
8/6/2019 Burdenof Proof
145/165
fact incurred by the assesseeand AO did not brin an thin
on record in this regard ,addition made under 69C wasdeleted by Delhi HC. (Items
such as..
Section 69C
dinner, gift, projector, slideprojector, advertisements in
-
8/6/2019 Burdenof Proof
146/165
newspapers, magazines andhoardin s Ex ewere otted
down in pencilnditure relatedto advertisements innewspapers was also notverified by the AO. (311.175 )
Section 69C
It is not the reasonableness ofthe expenditure that requires
-
8/6/2019 Burdenof Proof
147/165
p q
satisfactory explanation. It is
expenditure, which needs tobe satisfactorily explained
u/s.69 C
Section 69C
AO for the purpose ofgettinghimself satisfied about the
-
8/6/2019 Burdenof Proof
148/165
purported unexplained
69C can not not invokethe powers under section
142A. (319.276 -Del.)
Deduction claim
-
8/6/2019 Burdenof Proof
149/165
Service of Notices
Wherever service of a notice isessential or critical, Sec.27 of
-
8/6/2019 Burdenof Proof
150/165
the General Clauses Act, 1897
to the effect that if a letter isproperly addressed, it must be
deemed to have been served.
Service of Notices
It is the established lawabout the service of
-
8/6/2019 Burdenof Proof
151/165
about the service of
notices that the initial
onus of service is on theperson who alleges
service.
Service of Notices
Proper service of notices is thefirst condition before demanding
-
8/6/2019 Burdenof Proof
152/165
tax or seeking compliance fromthe assessee.So,when an affidavitis filed by him stating that notice
was not served on him,burden ison AO to prove service of
notice within time.
Service of Notices
A notice was claimed to had been
dispatched on October 30, 2002.As
per further cliam thereafter it was
-
8/6/2019 Burdenof Proof
153/165
per further cliam thereafter it was
redirected to the Noida address of
the assessee. ere was not ng on
record to show on which date thisnotice was received at the given
address of the assessee and onwhich date it was redirected..
Service of Notices
There was nopresumption underthe law that any notice sent by
-
8/6/2019 Burdenof Proof
154/165
speed post must have been
24 hours. More-over, there wasnothing on record to show at
whose instance the notice wasredirected and sent.
Penalty
For delay in filing returnsburden is on assessee to show
-
8/6/2019 Burdenof Proof
155/165
that there was sufficient cause. ,
should he file a belated return,to show reasonable cause for
the delay.
Penalty
An order imposing a penalty is theresult of quasi-criminal proceedings
-
8/6/2019 Burdenof Proof
156/165
and the burden lies on the
disputed amount representsincome and that the assessee hasconcealed the particulars of hisincome /
Penalty
has furnished inaccurateparticulars. Burden of proof in
-
8/6/2019 Burdenof Proof
157/165
a penalty proceeding variesfrom that involved in an
assessment proceedings. Inpenalty proceeding AO is bound
to consider the matter afresh.
Penalty
Expl.5 to Sec.271(1)(c) deals withpenalty arising out of search
operations. When the assessee does
-
8/6/2019 Burdenof Proof
158/165
operations. When the assessee does
not disclose the income and offer
payment of tax in the course of
search the assessee is deemed to
have concealed particulars ofincome. (323 ITR 529 ker)
Penalty
Return due on June 30, 1990 and searchcarried out in Feb.,1990.The assessee not
only failed to disclose the income in the
-
8/6/2019 Burdenof Proof
159/165
course of search but also offered an
belonged to another person whichwas not established by
him.
Penalty
In the circumstances,concealment of income was
-
8/6/2019 Burdenof Proof
160/165
proved by operation of the
Expl.5 Sec.271(1)(c)
Consequently, the assessee
was liable for penalty .
Benami Transactions
There is no formula or acidtest uniformly applicable to
-
8/6/2019 Burdenof Proof
161/165
decide benami transactions,the question depends
predominantly upon the
intention of ....
Benami Transactions
...the person who pays thepurchase money. In such
-
8/6/2019 Burdenof Proof
162/165
p y
matters burden of roof is
on the person who assertsthat it is a benami
transaction.
Benami Transactions
However, if it is proved that thepurchase money came
-
8/6/2019 Burdenof Proof
163/165
from a person other thanthe recorded owner(ostensible owner) there can
be a factual presumption atleast in certain cases.
Benami Transactions
.depending on the facts, thatthe purchase was for the
-
8/6/2019 Burdenof Proof
164/165
benefit of the person whosupp e t e purc ase money.
This is, of course, a
rebuttable presumption.
-
8/6/2019 Burdenof Proof
165/165
THANKS