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The Bombay High Court in (2021] 432 ITR 152 (Bom) applied the adverse case ruling in SUMATI DAYAL v. CIT [1995] 214 ITR 801 (SC) to the advantage of the assessee by stating that the explanations in the context of section 68 of the Income-tax Act have to be considered in the light of human probabilities and the explanations cannot be unreasonably rejected.
In this case facts, the AO’s dissatisfaction with the explanation furnished by the assessee was on the sole basis that two entities did not respond to the notices or otherwise appear and confirm the purpose for which the payments were made. What therefore the AO ignored was :
a. that the payments were made to these two entities by cheques;
b. that the assessee had offered an explanation as to why the two entities or their proprietors could not give any statement in the proceedings;
c. That the quantum of profits which the assessee had derived out of the purchases from those parties is demonstrated in this case.

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