TaxTMI 
TaxTMI 
2026 (4) TMI 1868
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....r the assessee had discharged the statutory onus of proving the genuineness and credibility of such cash balance? 2. Whether the Ld. ITAT erred in law in holding that the Assessing Officer could not make an addition under section 68 when the books of account were not rejected, ignoring the settled legal principle that unexplained cash credits can be brought to tax independently of rejection of books? 3. Whether the Ld. ITAT was correct in law in overlooking the relevance of abnormal cash deposits during the demonetisation period and in failing to apply the test of human probabilities, surrounding circumstances, and past business trends while adjudicating the issue under section 68? 4. Whether the Ld. ITAT has misapplied the ratio of decisions relating to suspicion versus proof, by treating a case involving unexplained cash deposits during demonetisation as one of mere estimation or conjecture, rather than one involving statutory burden of proof under section 68?" 4. Primarily, the issue engaging the attention of this Court in the present appeal is with regard to whether Tribunal has acted in a proper manner in appreciating the evidence that was provide....
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....High Court in the case of Seth Gurmukh Singh v. CIT [1944] 12 393. In the instant case, the Tribunal violated certain fundamental rules of justice in reaching its conclusions. Firstly, it did not disclose to the assessee what information had been supplied to it by the departmental representative. Next, it did not give any opportunity to the assessee to rebut the material furnished to it by him, and lastly, it declined to take all the material that the assessee wanted to produce in support of its case. The result was that the assessee had not had a fair hearing. The estimate of the gross rate of profit on sales, both by the ITO and the Tribunal, was based on surmises, suspicions and conjectures. The Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills but did not show that statement to the assessee did not give him an opportunity to show that statement had no relevancy whatsoever to the case of the mill in question. It was not known whether the mills which had disclosed these rates were similarly situated and circumstanced. Not only did the Tribunal not show the information given by the representative of the department to th....
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....final result the appeal of the Department is dismissed." 6. Upon a perusal of the judgment of the Tribunal, it is crystal clear that the cash deposits by the petitioner during the period of demonetization were from the cash in hand that was available to the petitioner and was very much explained. 7. In light of the above, once the availability of the cash in hand was established and the Assessing Officer could not indicate anything to the contrary as to how that cash in hand was spent, the explanation of the assessee that the cash in hand was deposited in the banks could not have been rejected by the Assessing Officer. We are of the view that no substantial question of law arises in the present case, as there is no perversity in the findings of the Tribunal whatsoever. 8. The Hon'ble Apex Court has defined 'perversity' by tracing various earlier precedents in the case of Arulvelu v. State reported in (2009) 10 SCC 206 wherein the Supreme Court arrived at a conclusion, which is extracted hereinbelow: "24. The expression "perverse" has been dealt with in a number of cases. In Gaya Din v. Hanuman Prasad ((2001) 1 SCC 501] this Court observed that the expr....
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....ence but is altogether against the evidence." 9. Furthermore, the Hon'ble Supreme Court in the case of S.R. Tewari v. Union of India reported in (2013) 6 SCC 602 has laid down the attributes of perversity in the following manner:- "30. The findings of fact recorded by a court can be held to be perverse if the findings have been arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant/inadmissible material. The finding may also be said to be perverse if it is "against the weight of evidence", or if the finding so outrageously defies logic as to suffer from the vice of irrationality. If a decision is arrived at on the basis of no evidence or thoroughly unreliable evidence and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, the conclusions would not be treated as perverse and the findings would not be interfered with. (Vide Rajinder Kumar Kindra v. Delhi Admn. [(1984) 4 SCC 635: 1985 SCC (L&S) 131: AIR 1984 SC 1805], Kuldeep Singh v. Commr. of Police [(1999) 2 SCC 10: 1999 SCC (L&S) 429: AIR 1999 SC 677], Gamini Bala K....
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....vant and partly irrelevant, or bases its decision partly on conjectures, surmises and suspicions, and partly on evidence, then in such a situation clearly an issue of law arise.... .....It is well established that when a court of fact acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises," 16 . In CIT v. Daulat Ram Rawat Mull (1973) 87 ITR 349 it has been held that onus of proving what is apparent is not real is on the party who claims it to be so. There should be direct nexus between the conclusions of fact arrived at, or inferred, and the primary facts upon which the conclusion is based. When irrelevant consideration and extraneous materials form the substratum of an order, or the authority has proceeded in a wrong presumption which is erroneous in law, as in the present case, question of law arises and when the said contention is found to be correct, then the order is perverse. A factual decision is perverse when it ....