Case analysis · 2026-09-17 · By CA Arun Mehta
CIT v. Durga Prasad More: Why the Apparent Is Real Until It Is Not
CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) requires the apparent to be treated as the real until there is reason to believe that it is not. That starting point cuts both ways.
CIT v. Durga Prasad More, (1971) 82 ITR 540 (SC), holds that tax authorities must judge the evidence before them on the test of human probabilities, and are to treat the apparent as the real until there is reason to believe that it is not. They may rely on circumstantial evidence and on the preponderance of probabilities in deciding whether a transaction is genuine.
Is it still good law
It is. An analysis of the judgments on BharatTax.net shows it relied on in 1,579 of them, the most recent on 21 April 2026, more than half a century after it was decided.
The half that is usually quoted, and the half that is not
It is almost always the department that cites this case, for the entitlement to look past documents. It is cited for that purpose alongside Sumati Dayal v. CIT, (1995) 214 ITR 801 (SC), and the two are frequently run together in a single sentence of an assessment order.
But the rule has a starting point, and the starting point favours the assessee: the apparent is to be treated as the real until there is reason to believe otherwise. The reason has to come from somewhere. It is the officer who must find the circumstance that makes the apparent improbable, and the Tribunal does check whether that has happened.
How it is being applied
The doctrine reaches well past cash credits, because it is a rule about how evidence is weighed.
- Consistency. In a Mumbai appeal decided on 21 April 2026 concerning a bank, the Tribunal held that although res judicata does not strictly apply to income-tax proceedings, consistency and certainty in tax administration require that the Revenue not arbitrarily take a contrary stand where the facts and the law are unchanged.
- Reassessment on borrowed satisfaction. In a Delhi appeal decided on 8 April 2026, reassessment proceedings were held void ab initio, among other reasons because they rested solely on an investigation report without independent application of mind, and in breach of natural justice. An inference has to be the officer's own.
- Measuring the addition. In a Visakhapatnam appeal decided on 17 April 2026, the Tribunal held that where turnover was not admitted, only the profit element is taxable rather than the entire amount.
When it will not help
It is not authority for rejecting an explanation the officer simply finds unattractive, and it is not a substitute for material. Where the assessee's records are contemporaneous and internally consistent, benches have deleted additions outright, as in the Delhi appeal of 20 March 2026 on cash deposits recorded as business receipts in audited books.
Nor does it fix the quantum. Where an explanation is partly made out, partial relief is the common outcome rather than deletion or confirmation in full.
Related provisions
Section 68 and section 69A for the additions themselves; section 147 and section 148 where the point arises in a reassessment. The companion decision is discussed in our note on Sumati Dayal.
Citation figures come from an analysis of 292,668 judgments on BharatTax.net; CIT v. Durga Prasad More is relied on in 1,579 of them.
General information from reported decisions, not advice on a particular matter.
Questions this answers
- What does CIT v. Durga Prasad More decide?
- That tax authorities must judge the evidence before them on the test of human probabilities, treating the apparent as the real until there is reason to believe that it is not, and may rely on circumstantial evidence and the preponderance of probabilities.
- Is CIT v. Durga Prasad More still relied on?
- Yes. An analysis of 292,668 judgments on BharatTax.net shows it relied on in 1,579 of them, the most recent on 21 April 2026, more than half a century after it was decided.
- Does CIT v. Durga Prasad More only help the department?
- No. Its starting point favours the assessee, because the apparent is treated as the real until there is reason to believe otherwise. It is the assessing officer who must find the circumstance that makes the apparent improbable.
More practice notes
- GSTR-9 and GSTR-9C for FY 2025-26: Who Must File, and Why a Late 9C Is a Late Annual ReturnGSTR-9C is now a self-certified statement, not an audit, and the Board treats the annual return as incomplete until it is filed. That makes a late 9C a late annual return for the purpose of the late fee.
- GSTR-2B and GSTR-3B: What the Law Lets You Claim, and the 30 November Cut-offSince 1 January 2022 the credit a recipient may take is the credit his GSTR-2B shows. The statute and the rule say so in terms, and the year-end adds two dates that fall in the next three weeks.
- Tax Audit: Section 44AB Gives Way to Section 63, and the Penalty Becomes a FeeThe limits did not move when the Income-tax Act, 2025 replaced section 44AB with section 63. The consequence of default did, and the change matters more than the limits.
Holding one of these yourself?
Every assessment turns on its own record. A note like this one tells you what the tribunals have accepted; it cannot tell you whether your papers carry it. Bring the notice in before the reply is drafted, not after.
Notice Assessment Session — 30 minutes, ₹5,000 + gst. A defence outline: the points to take, the documents to assemble, and the date each step falls due.