DY. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CIRCLE, PUNE, SWARGATE, PUNE vs. SHREE CHANAKYA EDUCATION SOCIETY, AUNDH ,PUNE

Facts

The assessee, a charitable trust, filed a return declaring Nil income. Information was received regarding bogus purchase bills amounting to Rs. 1,84,99,795/-. The AO reopened the assessment and made an addition of Rs. 1,85,00,000/- under Section 68, treating the purchases as unexplained credit.

Held

The Tribunal held that the statement of Joginder Pal Gupta, who allegedly provided the bogus entries, clearly stated that he started providing such entries from January 2018. Since the purchases in question were made in the financial year 2013-14, and no contrary evidence was produced by the AO, the addition was not justified. Furthermore, the assessee had excess application of funds, indicating no intention to evade tax.

Key Issues

Whether the addition made by the AO on account of alleged bogus purchases is sustainable when the evidence of the provider of such entries suggests they commenced operations much later than the period of the transactions in question, and whether the assessee's charitable status and excess application of funds negate any intent to evade tax.