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Facts
A search was conducted on M/s. MG Charitable Trust, of which the assessee was a trustee. The assessee accepted to offer cash collected and jewellery as additional income. During assessment, salary deposits and other credits in the assessee's bank account were treated as unexplained. The assessee's explanation that deposits were salary for A.Y. 2015-16 was rejected by the AO.
Held
The Tribunal held that the assessee failed to provide proper explanations or evidence for the cash credits and salary deposits, even during appeal proceedings. The lower authorities' findings were confirmed due to the lack of substantiation from the assessee.
Key Issues
Whether the additions made by the AO under the head 'income from salary' and as unexplained investments are justified, given the assessee's failure to provide satisfactory explanations and evidence.
Sections Cited
17, 56, 234A, 234B, 234C, 69, 132(4), 153C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of Ld.CIT(A)-15, Bengaluru dated 28/01/2025 in respect of the A.Y. 2015-16 and raised the following grounds . Relevant Sl.No. section (s) of Issue Ground of Appeal IT/ Act The learned assessing Section 17 officer is not correct in 1. Salary adding a sum of Rs. 8,60,046 as salary Rs. 8,60,046 The learned assessing officer has failed to understand the fact that the appellant has Salary 2 17 produced bank statements pertaining to credit of salary and addition is made merely on the basis of suspicion The learned assessing Unexplained officer is wrong in adding credit to the a sum of Rs. 14,82,500 3 56 bank account being credits/ deposits in the bank account of the appellant The learned assessing officer has failed to consider the fact that the appellant had provided complete and satisfactory Unexplained explanation for the credits credit in the 4 56 to the bank account and bank account the same was logical. Inspire of the explanation provided, the learned assessing officer mechanically made the addition. The learned assessing officer is not correct in adding Rs. 2,49,505 being Unexplained insurance premium paid 5 56 expenditure as unexplained credit, since the appellant had sufficient income to make the payment. The learned assessing officer is not justified in law in charging interest 234A, B Calculation of 6 under Section 234A, 234B AND C interest and 234C of the Act and further they are not as per the law The appellant craves leave 7 17,56 others to add, alter, amend, substitute or delete any of the grounds at the time of hearing of the appeal.
2. The brief facts of the case are that the assessee had not filed his return of income. Subsequently, search was conducted in the case of M/s. MG Charitable Trust on 17/02/2021 in which the assessee is one of the trustee. The assessee’s residential premises was also searched and cash, gold jewellery and silver articles were found and a part of the said items were seized by the authorities. The revenue also found some evidence that the trust was collecting cash from the students for admission to medical colleges but the said cash receipt was not entered into in the books of accounts maintained by the trust. The assessee vide his statement given u/s. 132(4) of the Act had accepted that he had collected cash from the students without the knowledge of the other trustees and accepted to offer the said cash receipts as additional income in his hands. Similarly, the assessee also could not explain the source for the acquiring the gold jewellery and accepted to offer the said value as additional income for the A.Y. 2021-22. Based on the receipt of the records from the assessing officer of the searched party, notice u/s. 153C was issued. The assessee pursuant to the said notice had filed his return of income on 14/09/2022 declaring an income of Rs. 3 Lakhs under the head income from other sources. At the time of assessment proceedings, the bank account statements of the assessee was verified and found that the assessee had received salary from M/s. MG Charitable Trust as the Director, Admission. The assessee submitted that the cash deposit are the salaries pertaining to the A.Y. 2015- 16 which was offered in the return of income filed for the A.Y. 2018-19. The AO not accepted the submissions on the ground that the salary has to be taxed based on accrual basis and not based on receipt basis and also the appointment letter issued by M/s. MG Charitable Trust to the assessee is dated 02/04/2017 and therefore the explanation that the deposits are the salaries relating to the A.Y. 2015-16 was not accepted by the AO. Therefore the AO had subjected the said salary income by making the addition.
3. Similarly, the assessee found that the assessee had credits of Rs. 14,82,500/- for which the assessee submitted that these are all transfer credits but not explained the source for the said credits. Subsequently, the assessee requested to treat this credit as salary from M/s. MG Charitable Trust. The AO verified the bank statements and found that the said credits are not from M/s. MG Charitable Trust and therefore treated the said credits as unexplained investments u/s. 69 of the Act. Similarly, the AO had disallowed the payment of premium to LIC on the ground that the said payment was not made from the bank account of the assessee. The assessee had not objected for taxing the said amount and therefore the said payment was treated as unexplained investment u/s. 69 of the Act.
As against the said order, the assessee filed an appeal before the Ld.CIT(A)-15, Bengaluru. The Ld.CIT(A) had confirmed the addition made under the head income from salary and also the addition made u/s. 69 of the Act since the assessee had not offered any explanations. Insofar as the payment of LIC premium, the Ld.CIT(A) had allowed the ground.
As against the order confirming the additions by the Ld.CIT(A), the present appeal has been filed before this Tribunal.
The matter was listed for hearing on 09/06/2025 but none appeared for the assessee and therefore the appeal was adjourned to 11/06/2025. Even on 11/06/2025, none appeared for the assessee and therefore having no other way, we are deciding the appeal based on the documents available on the grounds raised by the assessee.
The Ld.DR relied on the order of the lower authorities and prayed to dismiss the appeal.
We have heard the arguments of the Ld.DR and also perused the assessment order as well as the order of the Ld.CIT(A). The AO had made the additions under the head income from salary as well as unexplained investment u/s. 69 of the Act based on the entries found place in the bank statement of the assessee. Before the AO also, the assessee had not substantiated his claim and therefore the AO had treated the said credits under the heads income from salary. Similarly, the other credits of Rs. 14,82,500/- was also treated as unexplained investments since the assessee had not submitted any evidence for the source of the said cash deposits.
The Ld.CIT(A) also considered the issue and gave a finding that no explanations were furnished by the assessee and the Ld.CIT(A) also considered the assessee’s acceptance for making this addition before the AO and confirmed the said addition under the head income from salary. Similarly, the addition of Rs. 14,82,500/-, on account of disallowance of income under the head income from other sources u/s. 69 of the Act, the Ld.CIT(A) had observed that the assessee had no explanation to offer for the said credits even during the appeal proceedings. Therefore both the additions were confirmed by the Ld.CIT(A) only for the reason that the assessee had not properly explained the cash credits and in fact accepted the income from salary in the assessment proceedings.
Even before us, except the grounds raised by the assessee, the assessee had not submitted any documents or explanations about the cash deposits made into his bank account. Insofar as the income from salary, at the time of assessment itself, the AO sought for an explanation for the said credits for which the assessee accepted that these are all salary and it should be assessed under the head income from salary. To take a contrary view, the assessee had not submitted any other explanations or evidences before us and therefore we have no other option except to confirm the findings given by the lower authorities. Insofar as the other addition of Rs. 14,82,500/- and also the assessee had simply raised the ground without any materials or explanations and therefore we do not find any merit in the ground raised by the assessee insofar as this addition is also concerned.
We, therefore dismiss the grounds raised by the assessee.
Order pronounced in the open court on 09th September, 2025.