Introduction

The burden of proof is placed either on the assessee or the revenue under a number of
provisions in the Income Tax Act that deal with classifying a receipt as income or with claims
for exemption and deduction. The burden to establish or refute a fact varies between the
assessee and revenue throughout the discharge of this responsibility in the taxation
proceedings. The term "onus" refers to this fluctuating duty during the discharge of the
burden of proof. The onus of proof could be legal or factual. Either a full or partial discharge
is possible. Additionally, the burden placed on a party (entitlement or Revenue) may differ
between provisions.1
Research methodology
The research methodology which is used in this research is that we have analysis various
judgements of the various courts of India to understand the Indian judicial position regarding
the burden of proof.
Research aim and objective
The aims and the objectives of this research is to under stand what is the position of India
regarding the burden of proof in the income tax proceedings in India.
Research questions
The research question here in the research is that, who has the burden of proof in the income
tax proceedings?
Hypothesis
Our research hypothesis is that the burden of proof in the income tax proceedings is on the
tax authorities.
Scope and limitations
The limitation of this research is that there not many articles or articles available relating to
the burden of proof in the Indian jurisdiction. Although, there is much content available on
the international arena
MAIN BODY
The burden of proof
It consists of the phrases "burden" and "evidence," respectively. A truth is proved, disproven,
or not proven by a body of factual evidence, and the burden is a legal responsibility or
liability. According to section 3 of the Indian Evidence Act, a truth is proven if the court
finds it to be true or finds its existence to be so likely that, given the particulars of the case, a
wise person would be advised to act on the assumption that it is true. 2 A fact is considered
disproved if the court holds that it does exist or finds that it is so likely that it cannot exist that
a reasonable person would be advised to proceed as though it did not. If a fact cannot be
proven or refuted, it is considered to be unproven.

1
Kapil Goel, Evidentiary value & burden to prove under Tax Law, Tax Guru.
2
Section 3, Indian Evidence Act, 1872
Proof
Evidence has an effect on proof. The proof could be written or verbal. The evidence of
witnesses constitutes oral evidence. The person who has firsthand knowledge of a fact is
considered a witness to it. His temperament, relationship, friendship, or hostility may have an
impact on his testimony. Evidence may also include the parties' testimony or confessions.
Evidence in documents might be either primary or secondary. Original, direct testimony and
documents are the main types of evidence. In some cases, photocopies of secondary evidence
may be allowed as testimony. Evidence can also include affidavits, conversations, and letters.
The level of proof may vary from one proceeding to another. Preponderance of the evidence
may be adequate in civil cases, while proof beyond a reasonable doubt is necessary in
criminal cases. Statutory rules may provide that a court "may presume," "must presume," or
"accept it as conclusive proof" of the existence of a fact if certain evidence is present.
Onus
The burden to satisfy the statutory burden placed on the party is interlocutory discharge of
obligation during the course of submitting proof. For instance, the assessee may present
evidence to the AO to support a claim; the onus then shifts to the AO to refute the claim by
gathering evidence to the contrary. The onus then moves back to the collector to either
support its initial evidence or refute the evidence gathered by the AO when contrary evidence
is presented on the record subsequently confronted to the assessee. As a result, the onus
fluctuates as the weight is discharged. When a statute places the burden of evidence on the
assessment, the assessee is first required to fulfil that duty. However, if a provision places the
burden of proving here on Revenue, the AO must first fulfil that burden. The burden of
evidence is said to have been satisfied the first party when the initial burden is satisfied by the
person upon whom the statute has placed it (for example, the assessee), and no opposing
evidence has been gathered or faced by the second party (for example, the AO) (by the
assessee). The onus could be factual or legal. Arguments, reasoning, judicial precedent, or the
understanding of the Statute all serve to satisfy the legal obligation. The party who seeks to
take benefits of a legal position bears the burden of proof. Evidence is always required to
satisfy factual burden.
Burden of proof u/s 69B
The main requirements for applying section 69B are I the assessee should be discovered to be
the owner of bullion, jewellery, or other precious items that are greater than what is listed in
the books. (ii) The assessee fails to explain the discrepancy or the explanation is deemed
insufficient. Therefore, it is the revenue's initial burden to demonstrate that I the assessee is
the owner of specific bullion, jewellery, etc. Such bullion and jewellery are additional to what
is listed in the books (ii). After that, it will be the assessee's responsibility to provide an
explanation for the excess. For instance, where no additional materials, such as money,
bullion, jewellery, or documents, were discovered during the search and the addition was
made solely based on the director's allegations, the addition was removed.3
Burden of proof u/s 37(1)

3
Section 69(B), Income Tax Act, 1961.
The initial burden of proof for an expenditure against income rests with the assessee, who
also has the additional responsibility of demonstrating that the expenditure was made
specifically and only for business purposes. After this burden is lifted, the onus of proving
that the expenditure was I a capital expenditure, (ii) a person investment of the collector, or
(iii) a fictitious expenditure will fall to the AO. Once the AO has failed to establish that a
given expenditure was fraudulent, personal, or capital, it must be approved.4
Burden of proof u/s 41(1)
When an assessee receives compensation in cash or another form for a loss, expense, or
advantage related to a trading liability that was permitted in a prior year, the compensation or
advantage will be considered income from a company. The initial duty under Section 41(1)
resides with the AO to demonstrate that perhaps the claim of receiving money or a benefit in
exchange for a loss, expense, or trading responsibility was legitimate in a previous year. For
instance, if revenue could not prove that the surplus provisions for bad and dubious debts
written back in the profit and loss account that was allowed as a deduction in prior years
under section 36(1) (viia) actually amounted to income as defined by section 41, no
additional could be made (1).5
Burden of proof u/s 69A
The main requirements for applying section 69A are I the assessee should be discovered to be
the owner of bullion, jewellery, or other valuable items that are not listed on the books. (ii)
The assessee does not provide an explanation for these investments or assets, or their
explanation is not deemed enough. Therefore, it is the revenue's initial burden to demonstrate
that I the assessee is the owner of specific bullion, jewellery, etc. Such bullion and jewellery
are not listed in the books (ii). After then, it will be the assessee's responsibility to explain
these investments and assets. For instance, if the assessee's father filed a VDIS certification
claiming that the money discovered in the 23 checking accounts belonged to him after the
search, he is responsible for proving to whom he has sold products and received payments.
The onus of establishing that funds belong to the assessee does not lie with the revenue.6
Burden of proof to claim exemption u/s 10
The onus is upon the assessee to demonstrate that a particular receipt is exempt under Section
10 whether the assessee asserts or the AO establishes that it constitutes income. For instance,
it is completely the responsibility of the assessee to demonstrate that the operations
performed on agricultural land resulted in the receipt of the income.7
Burden of proof u/s 69
The main prerequisites for applying section 69 are I investments made by the assessee that
aren't reflected in the books. (ii) The assessee provides no justification for the investment or
the justification is deemed insufficient. As a result, it is the revenue's responsibility to
demonstrate that the assessee has made an investment. (ii) Such an investment is not noted in
the financial records. After that, it will be the assessee's responsibility to explain the

4
Section 37(1), Income Tax Act, 1961.
5
Section 41(1) Income Tax Act, 1961.
6
Section 69 A, Income Tax Act, 1961.
7
Section 10, Income Tax Act, 1961.
investment. For instance, the onus is on the revenue to demonstrate that an investment has
actually been made when the project report indicated expected spending.
Burden of proof in case of statement of witnesses
The onus is on the taxpayer to present the deponent before the AO when he is a lenders who
has verified the lending. There is no obligation on the part of the AO to force a lender who
refuses to testify before him to do so. The onus is on the AO to demand the lender's presence
so that the assessee can conduct cross-examination in the event that the lender becomes
antagonistic and denies lending in a statement that is recorded by that of the AO behind the
assessee's back. The AO is not always required to require the deponent's attendance for the
assessee's cross-examination. The burden of the AO to require the witness' presence for the
assessee's cross-examination is only present to the extent that the AO intends to use the
witness' testimony against the assessee.

Cases Relevant to the topic

The court wisely decided in the matter of M/s. Bhuwalka Steel Industries Ltd. & Another vs.
UOI that there is a distinct difference between a legal fiction and a presumption. Here
between fiction and indeed the legal presumption, the following contrast is frequently made:
A presupposition (if conclusive or rebuttable) implies something that may or may not be true,
whereas a fabrication assumes something that is known to be untrue. The rebuttable
presumption is considered as strengthening, in a sense, this distinction because it presupposes
a truth that is likely to be true.8
The Supreme Court has ruled in the case of Sati Oil Udyog that the revenue has the
obligation to demonstrate that the assessee has attempted to evade tax. This burden might
well be disposed by the earnings by instituting facts and circumstances that would allow one
to reasonably conclude that the assessee has attempted to evade tax that is lawfully due by it.9
In the case of Hindustan Ferodo Ltd. v. Collector of Central Excise, Bombay, it was decided
that the Revenue had the burden of proving that the aforementioned rings fell under Item 22F.
This point is not in dispute before us and cannot be. Revenue did not present any proof. The
burden was not lifted. Therefore, even if the Tribunal had been correct to reject the evidence
presented on behalf of both the respondents, the appeal ought to have been granted.10
In Hukam Chand Etc. v. Union of India & Others, the Supreme Court ruled that the
fundamental principle is that, unlike the Sovereign Legislature, which has the ability to enact
laws that take effect retroactively, authorities with the authority to create subordinate
legislation must act within those boundaries and are not permitted to overstep them. The
primary distinction between statute laws and subordinate legislation is that a deferential law-
making body is constrained by the words of its authorising or derived authority, and that
court of law, generally speaking, will just not consider giving effect to the rules made in this

8
M/s. Bhuwalka Steel Industries Ltd. & Another vs UOI, (2017) 5 SCC 598.
9
Sati Oil Udyog in decision reported, (2015) 276 CTR 14.
10
Hindustan Ferodo Ltd. vs. Collector of Central Excise, Bombay, 1997(89) ELT 16(SC)
manner unless customers are happy that all requirements precedent to the rules' validity have
been met.11
The question in State of Kerala v. K.T. Shaduli Grocery Dealer Etc. is what is the content of
the provision that requires the Sales Tax Officer to provide and grants the assessee a
corresponding right to be provided, a reasonable opportunity "to demonstrate the correctness
or completeness of such return," the court held. Naturally, "to prove" now refers to proving
the accuracy or fullness of the return using any legal means. The legal standard for
confirming a fact is the production of evidence, which includes oral testimony from
witnesses. As a result, the chance to demonstrate the accuracy or sufficiency of the return
would inevitably come with the right to question witnesses, which would also include the
right to confront the Sales Tax Officer's witnesses.12
The Supreme Court of India held in the matter of L.I.C of India & Anr v. Ram Pal Singh
Bisen that the plaintiff's burden of proof is not reversed or discharged by the defendant's
inability to establish the defence.13 Additionally, it was decided on July 17, 2012, in the case
of Union of India v. Ibrahim Uddin & Anr, that the court must not overlook the fact that the
burden of proof rests with the party making the factual allegation. Furthermore, a three-judge
bench of the Supreme Court stated the following in A. Raghavamma and Others v. A.
Chenchamma and Others when defining the terms "burden of proof" and "onus of proof":
"There is an indispensable distinction among both burden of evidence and onus of proof - the
the burden of proof continues to lie upon such person who has to verify a fact and that it
never changes, but the increasing emphasis of proof shifts. In this scenario, it is
unquestionably the plaintiff's responsibility to prove the adoption and division facts. The
impact of something like the burden of evidence is unaffected by the aforementioned
circumstances. Such factors, taking into account the specifics of a case, could change the
burden of proof. The examination of evidence involves a constant shifting of the onus.14
A jurisdictional fact is a fact that must exist before a court, tribunal, or authority can exercise
jurisdiction over a particular matter, according to the ruling in the case of Arun Kumar v.
Union of India. A jurisdictional fact is one whose existence or nonexistence depends on the
authority, tribunal, or court's jurisdiction. The ability of an administrative agency to act is
based on this fact. The court, authority, or order cannot act if the territorial fact is absent. A
writ of appellate may be used to challenge an order if a court or other authority incorrectly
believes that such a fact exists. The guiding concept is that no authority can grant itself
jurisdiction that it does not already have, even if one wrongly assumes that such a reality of
jurisdiction exists.15
Analysis
After examining the burden of evidence notion, this section of the article expands on how it
applies to key provisions of the income tax legislation. It has been noted on several occasions
that tax administration, in particular, does not value and respect the "burden of evidence,"
which is typically placed on the tax payer. Part of the credit goes to clauses like section 96(2)

11
Hukam Chand Etc. v. Union of India & Others, AIR 1972 SC 2427.
12
State of Kerala v. K.T. Shaduli Grocery Dealer Etc: (1977) 2 SCC 777.
13
L.I.C of India & Anr v. Ram Pal Singh Bisen, (2010) 4 SCC 491.
14
A. Raghavamma and Another v. A. Chenchamma and Another, AIR 1964 SC 136.
15
Arun Kumar V. Union of India. 2006 (9) TMI 115.
of the Income Tax Act (in GAAR), which states that (2) An configuration is presumed unless
it is repeatedly proven to the otherhand by the assessee, that it has been entered into or carried
out for the foremost objective of obtaining a tax savings, if the primary objective of a step
through, or a part of, the configuration is to achieve a tax benefit, regardless of the fact that
now the main purpose of the total configuration is not to obtain. 16 Additionally, clauses like
section 50C, section 43CA, and section 56 have the same impact because they presuppose
that circular rate should be the transaction's minimal value at the outset when it comes to
immovable property. It is frequently neglected when implementing such law that the
fundamental and underlying facts required to apply such presumptions etc. must first be
established dehors assumptions. Like, there must be a proven arrangements and tax benefit
before using section 96(2); only then can another assumption exist.17
Conclusion & Suggestion
According to the general rule of burden of proof, the burden of proof rests with the side who
would lose if no evidence were presented to the court. By providing evidence, which when
taken together forms a preponderance of evidence in favour of both the party (let's say the
assessee), the burden is discharged. The burden now transfers to the opposing party (let's say
the AO) to refute such evidence by assembling evidence to the contrary, demonstrating that
the assessee's evidence is false, or demonstrating that the intended result is improbable.
Bibliography
1. Kapil Goel, Evidentiary value & burden to prove under Tax Law, Tax Guru.
2. Indian Evidence Act, 1872
3. Income Tax Act, 1961.
4. D. C. Agarwal, Burden of proof in Proceedings under Income tax Act, TAxMann.
5. Indian Case Laws.

16
section 96(2) of Income Tax Act, 1961.
17
D. C. Agarwal, Burden of proof in Proceedings under Income tax Act, TAxMann.