SC Judgment on Whether apparent can be considered as real?

Sumati Dayal Vs. CIT (Supreme Court)

Explore the Supreme Court judgment in the case of Sumati Dayal vs. CIT (Commissioner of Income Tax) and understand whether the apparent can be considered as real. The judgment emphasizes the application of the test of human probabilities and surrounding circumstances in taxation matters. Learn about the key findings of the court, the relevance of the case in assessing income, and the caution against the indiscriminate application of the judgment in various scenarios.

Whether the apparent can be considered as real? As laid down by this Court, apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities arc entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities.

Test of human probabilities and surrounding circumstances not to be applied in every case without doing groundwork on the file of the AO. In the below referred case the test of human probabilities and surrounding circumstances was applied by AO and confirmed by the Hon’ble SC where the case of the assessee was apparent but not real. This test was applied with utmost care and taking sworn statement of the Assessee. Without Groundwork on the file test cannot be applied.

“Supreme Court of India

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