LOKASEVANIRATHA D KONGADIYAPPA MEMORIAL EDUCATION SOCIETY ,BANGALORE vs. INCOME TAX OFFICER, (EXEMPTIONS) WARD-1 , BANGALORE

The Ld. Assessing Officer examined the reply furnished by the Assessee wherein the Assessee submitted that an amount of Rs. 25,95,445/- has been received as a voluntary contribution by degree College and Rs. 45,95,000/- has also been received as a voluntary -2261/Bang/2025 Page 3 of 7 contribution in the society. The Ld. Assessing Officer was of the view that as the Assessee has not furnished the sources of such voluntary contribution such as identity of the donor etc., the amount of Rs. 71,90,445/– was required to be added as income u/s. 68 of the Income Tax Act and therefore a show cause notice was issued. The Assessee did not respond to the notices and therefore the addition of the above sum was made. Further as the Assessee has not filed its return of income u/s. 139 (1) of the Act but has filed its return of income only on 20.02.2023 declaring the total income at Rs. 39,62,200/-. The above income could not have been brought to tax had notice u/s. 148 of the act had not been issued to the Assessee and therefore the total income was computed at Rs. 1,11,52,645/- as per the Assessment Order dated 17.03.2023.

The Assessee aggrieved with the Assessment Order preferred an Appeal before the Ld. CIT(A) who disposed of the Appeal of the Assessee by Appellate Order dated 15.09.2025. In Appeal before the Ld. CIT(A), it was submitted that the voluntary contribution is received by the Assessee in cash which is the fees and the addition already offered in the return of income would result into double addition if the addition made by the Ld. Assessing Officer are sustained. However, before the CIT(A),Assessee was given many opportunities, but the Assessee has failed to prove that the amount of voluntary contribution received in cash during the year has already been offered to tax. In the end, the Ld. CIT(A) confirmed the action of the Ld. Assessing Officer and Appeal of the Assessee was dismissed.

The facts for Assessment Year 2018 – 19 are also similar wherein the Assessee offered the income as on 13.01.2023 at Rs. 9,68,890/- in response to a notice u/s. 148 of the Act dated 31.03.2022. On perusal of the details furnished by the Assessee, the Ld. Assessing -2261/Bang/2025 Page 4 of 7 Officer also on examination of the bank accounts etc., found that the Assessee has deposited cash of Rs. 1,87,12,224/- in various bank accounts. The Ld. Assessing Officer found that as per the reply given by the Assessee an amount of Rs. 25,49,559/- has been received as a voluntary contribution by degree College, Rs. 53,25,200/- has been received as a voluntary contribution and sum of Rs. 4,71,011/- has been received as a donation. Further Rs.14,59,000/- is received for B.Ed. College. It is the claim of the Assessee that the voluntary contributions are received in cash. As the Assessee could not give the details of the same the Ld. Assessing Officer made an addition of Rs. 98,04,770/- u/s. 68 of the Act. Further, the Assessee has shown the interest income of Rs. 25,97,182/- showing the bank interest at Rs. 9,73,185/-. Thus, there is a difference of ₹ 16,23,997/- of the bank interest was added to the total income of the assessee. Consequently, the total income of the assessee was computed at Rs. 1,23,97,657/-.

Assessee preferred an Appeal before the Ld. CIT(A) which also reached the similar fate, and the Appeal of the Assessee was dismissed.

Therefore, the Assessee is in appeal before us for both these Assessment Years.

The Ld. Authorised Representative submitted that the Ld. Assessing Officer has made an addition of the cash received by the Assessee from various students as income u/s. 68 of the Income Tax Act which has already been offered as Fees receipt by the assessee while filing the return of income though in response to a notice u/s. 148 of the Income Tax Act. It was submitted that when such income has already been offered by the Assessee while computing the total income, the addition made by the Ld. Assessing Officer once again of the same income will result into a double taxation. It was further the claim of Page 5 of 7 the Ld. Authorised Representative that in case of a trust the provisions of section 68 of the Income Tax Act could not have been applied when the Assessee has shown that income already as credit to the income and expenditure account. With respect to the non- appearance before the Ld. CIT(A), the Ld. Authorised Representative submitted that Assessee wanted sometime and applied for the adjournment. However, such adjournment was not granted by the Ld. CIT(A), and the Appeal of the Assessee was dismissed without discussing the merits of the case. He submits that when the fees has been received from the various students which are recorded in the books of accounts of the Assessee Trust, there is reason that the finding of the Ld. CIT(A) in paragraph No. 4.2 that the Assessee has failed to divulge the name and identity of the donors of the voluntary contribution can be stated to be wrong appreciations of the fact. Thus, the orders of the learned lower authorities are not sustainable.

The Ld. Departmental Representative vehemently supported the orders of the Ld. lower authorities and submitted that when the Ld. CIT(A) has dismissed the Appeal of the Assessee for not submitting the details, there is no infirmity in the orders of the Ld. lower authorities. It was further submitted that the Assessee has failed to furnish the amount of voluntary contribution received in cash.

We have carefully considered the rival contention and perused the orders of the Ld. lower authorities. The brief facts of the case stated shows that the Assessee is running several educational institutions, and the cash is deposited in the bank account of the Assessee on account of receipt of fees from students. The voluntary contributions received by the several institutes of the Assessee were also received in cash. This cash was deposited in the bank account of the Assessee. There is no dispute that Assessee is also receiving fees from the students as well as the voluntary contributions from others or Page 6 of 7 students. However, when the Assessee has deposited fees received from students in cash, naturally the same has also been included in the income and expenditure account of the Assessee on income side. Therefore, once again making an addition of the same income which has already been disclosed as income under the income and expenditure account as income u/s. 68 of the Income Tax Act would necessarily amount to double taxation. However, the Assessee is also required to explain the nature and source of the amount deposited in the bank account in cash, whether it is fees or voluntary contribution from others. If the Assessee fails to offer the name of the person who deposited money with the Assessee either as a voluntary contribution or the students who paid fees to the institute, the addition would naturally be as unexplained income of the Assessee. Therefore, first it needs to be decided that the cash received by the Assessee and deposited into the bank account is whether the voluntary contribution received or the fees from students. If the fee from the student is received in cash, the Assessee is duty-bound to explain before the Ld. lower authorities about the name and the study details of such students. However, if such contribution is received as a voluntary contribution from the various persons, it is the duty of the Assessee to show that how the Assessee can say that such voluntary contributions are not chargeable to tax or if chargeable to tax where in the income and expenditure account they have been offered as income. Further it is the duty of the Assessee to show from whom the Assessee has received such voluntary contribution in cash. The Ld. CIT(A) has granted an opportunity to the Assessee to explain. However, the Assessee sought an adjournment. Though the ld. CIT (A) has dismissed the appeal of the assessee in absence of details, so ideally, we should restore the issue back to the file of the ld. CIT (A). But here the issue involved is verification of amount of cash deposited by the assessee in its bank accounts vis a vis taxability of the same; to avoid multiplicity of Page 7 of 7 proceedings of remand etc., we restore the issue to the file of the ld. AO as there is also part failure on the part of assessee in submitting the details.

In view of the above facts, we find that the Assessee may also be given one more opportunity to explain before the Ld.AO about the details of the cash receipts either as a voluntary contribution or as fees from students. In view of the above facts, we restore both these Appeals back to the file of the Ld.AO with a direction to the Assessee to give the details of donors, students etc., who deposited cash with the Assessee. Ld.AO may examine the same and decide the issue on merits of the case.

In the result both the Appeals are restored back to the file of the Ld. AO and are allowed for statistical purposes.