Reaffirming the onus‐shifting principle under Section 68 and invalidating yield‐based assessments under Section 145; upholds existing precedents as binding authority for subordinate courts
Summary
| Category | Data |
|---|---|
| Case Name | TAXC/29/2022 of THE DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL), Vs M/S ABHISHEK STEEL INDUSTRIES LTD. |
| CNR | CGHC010190702022 |
| Date of Registration | 19-07-2022 |
| Decision Date | 01-09-2025 |
| Disposal Nature | DISMISSED |
| Judgment Author | Hon’ble Shri Justice Sanjay K. Agrawal |
| Concurring or Dissenting Judges | Hon’ble Shri Justice Sanjay Kumar Jaiswal (concurring) |
| Court | High Court of Chhattisgarh at Bilaspur |
| Bench | Division Bench |
| Precedent Value | Binding on subordinate courts of Chhattisgarh |
| Overrules / Affirms | Affirms existing precedents |
| Type of Law | Tax Law (Income Tax Act, 1961) |
| Questions of Law |
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| Ratio Decidendi |
Once an assessee discharges the primary onus under Section 68 by establishing identity, creditworthiness and genuineness of share application money with documentary evidence, the burden shifts to Revenue to bring independent incriminating material—mere conjecture cannot sustain an addition. Likewise, under Section 145(3), rejection of books or estimating unaccounted production must rest on tangible material; pure guesswork violates settled law (Dhakeswari Cotton Mills). |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon |
|
| Facts as Summarised by the Court | The assessee, a steel manufacturer, was searched under Section 132 on 21-06-2011, assessed under Section 153A/143(3) for AY 2009-10. AO added ₹ 1.05 cr as unexplained share application money (Sec 68) and ₹ 7.36 cr as unaccounted production/sales based on a presumed 89% yield. CIT(A) and ITAT deleted both additions. |
| Citations | 2025:CGHC:44585-DB; TaxC No.29/2022; NAFR |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Chhattisgarh High Court’s jurisdiction |
| Persuasive For | Other High Courts and tribunals dealing with Sec 68 and Sec 145 disputes |
| Follows | Lovely Exports (2008), Chain House International (2019), Dhakeswari Cotton Mills (1954) |
What’s New / What Lawyers Should Note
- Reaffirms that once identity, receipt and genuineness of share capital are proved under Section 68, additions cannot stand without independent incriminating material.
- Confirms the Revenue must carry the burden to disprove documentary evidence, not the assessee.
- Reinforces that yield‐based additions under Section 145(3) require tangible evidence—pure conjecture or suspicion is impermissible.
- Provides a binding Division Bench authority to challenge Sec 68 and Sec 145 additions founded on guesswork.
Summary of Legal Reasoning
-
Section 68 onus‐shifting
- Assessee produced ITRs, audit reports, bank statements, MOA/AOA, board minutes and investor assessments.
- CIT(A) and ITAT held identity, receipt and creditworthiness established—no incriminating material linking funds to undisclosed income.
- Relied on Lovely Exports (SC) and Chain House (MP High Court & SC) to clarify burden shift.
-
Section 145(3) and Section 153A scope
- AO estimated unaccounted production/sales by assuming an 89% yield without material support.
- Court applied Dhakeswari Cotton Mills: AO cannot assess on bare suspicion or guesswork; must have material evidence.
- Concurrent deletion of additions upheld as fact‐based, neither perverse nor contrary to record.
-
Consequence on Question 3
- Renders academic since Questions 1 and 2 decided against Revenue.
Arguments by the Parties
Petitioner (Revenue)
- CIT(A)/ITAT erred by deleting lawful additions made by AO under Sections 68, 145(3) and 153A.
- Authorities acted perverse to record; additions supported by audit suspicions and assumed yield.
Respondent (Assessee)
- Fully discharged onus under Section 68 with comprehensive documentary evidence.
- No independent material supports link between share capital and undisclosed income.
- Production yield estimate was not backed by any tangible evidence; books could not be rejected.
Factual Background
- M/s Abhishek Steel Industries Ltd. was searched under Section 132 on 21-06-2011.
- AO completed assessment for AY 2009-10 under Sections 153A/143(3) on 27-03-2014.
- Additions: ₹ 1.05 cr under Section 68 (unexplained share application money) and ₹ 7.36 cr under Section 145 (unaccounted production/sales at 89% assumed yield).
- CIT(A) deleted both additions on merits; ITAT affirmed.
- Revenue’s appeal under Section 260A dismissed by Division Bench.
Statutory Analysis
- Section 68: Deals with unexplained cash credits; initial onus on assessee to prove identity, receipt and source; thereafter burden shifts to Revenue to disprove.
- Section 145(3): Governs income determination where accounts rejected; AO must have material to justify departure from declared figures—cannot rely on mere surmise.
- Section 153A: Empowers reassessment post‐search, but does not enlarge AO’s power to add without evidence.
Dissenting / Concurring Opinion Summary
No dissent; single reasoning by both Hon’ble Justices Agrawal and Jaiswal in full concurrence.
Procedural Innovations
None identified; reliance on established onus‐shifting and evidentiary standards.
Alert Indicators
- ✔ Precedent Followed – Affirms Lovely Exports, Chain House and Dhakeswari Cotton Mills principles.
Citations
- High Court: 2025:CGHC:44585-DB; TaxC No.29/2022; NAFR
- Supreme Court: [2008] 216 CTR 195 (Lovely Exports); (1954) 2 SCC 602 (Dhakeswari Cotton Mills)
- High Court / SC on Chain House: [2019] 408 ITR 561 (MP); [2019] 262 Taxman 207 (SC)
- Related HC decision: Tax Case No.30/2022, decided 20-08-2025 (Abhishek Steel Industries Ltd.)