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Facts
The assessee failed to appear for the hearing and did not provide sufficient documentation to explain credit entries in their bank account. The assessee also failed to provide proper documentation for corpus donations and unsecured loans.
Held
The Tribunal held that the assessee failed to discharge the onus under Section 68 and Section 115BBC of the Income Tax Act. The CIT(A)'s order confirming the addition made by the AO was found to be well-reasoned.
Key Issues
Whether the assessee discharged the onus to explain the nature and source of credit entries, corpus donations, and unsecured loans, and whether such unexplained credits/donations are taxable.
Sections Cited
68, 115BBC, 46A
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सुनवाई की तारीख/Date of Hearing : 29/05/2025 उदघोषणा की तारीख/Date of Pronouncement : 03/06/2025 आदेश/Order PER LALIET KUMAR, J.M: These are a group of appeals filed by the assessee raising identical questions of law and fact before us. Therefore, for the sake of convenience and to avoid repetition, we are taking as the lead appeal and reproducing the facts, grounds raised
, and the order passed by the Ld. CIT(A)Karnal, for completeness.
2. The case was listed for hearing on 29/5/2025 , when the matter was called, there was no appearance from the side of the assessee. It is noted from the record that earlier Mr. Tej Mohan, Advocate, was appearing on behalf of the assessee. However, no adjournment request or explanation for non-appearance has been filed. The conduct of the assessee indicates a lack of interest in prosecuting the appeal. However, considering non- appearance on behalf of the assessee on many earlier occasions and the nature of the issues involved, we proceed to decide the appeal on merits as well.
During the appellate proceedings before the CIT(A), the assessee filed an application under Rule 46A of the Income Tax Rules, 1962, for admission of additional evidence relating to corpus donations and unsecured loans. The Ld. CIT(A) forwarded the additional evidence to the Assessing Officer for a remand report. The AO submitted a report dated 22 October 2018, which was provided to the assessee, and the assessee filed a rejoinder. The relevant findings of the Ld. CIT(A) from paragraphs 7.4 to 7.8 of the appellate order are reproduced below: “7.4 During the course of appellate proceedings, the appellant was required to explain the nature of credit entries reflected in the bank account and also furnish supporting documents to establish the source of such deposits. However, since no compliance was made by the appellant, notices were issued to the appellant to file requisite evidence and to justify the source of deposits. Eventually, an application under Rule 46A was filed along with supporting documents explaining the nature of credits and also certain confirmations and affidavits. 7.5 The application of the assessee under Rule 46A was forwarded to the AO for examination and comments. The AO furnished a remand report dated 22.10.2018 in which it was mentioned that although certain documents were filed, they were general in nature and did not establish the nexus between the deposits in the bank and the disclosed sources. The AO concluded that the assessee failed to discharge the burden of proving the identity and creditworthiness of the alleged depositors and the genuineness of the transactions. 7.6 The remand report of the AO was provided to the appellant. In response, the appellant submitted a rejoinder wherein he reiterated the submissions made earlier and asserted that the deposits were either out of his agriculture income or were loans received from relatives and friends. However, except for affidavits and copies of certain documents, no bank statements or PAN details of the depositors were furnished. 7.7 In view of the above, the explanation furnished by the assessee cannot be accepted in the absence of corroborative evidence such as the financial capacity of the depositors, confirmation with bank details, and any reliable supporting material. Mere affidavits or self-serving confirmations without independent verifiability cannot be taken as sufficient compliance of section 68. 7.8 Therefore, I am inclined to agree with the Assessing Officer that the assessee has failed to discharge the onus cast upon him under section 68 of the Act. Accordingly, the addition made by the AO on account of unexplained cash credits in the bank account is confirmed.”
The Ld. DR submitted that the assessee is a habitual defaulter who has consistently failed to appear during the course of the assessment/appellate proceedings. It was further submitted that, by the provisions of the Advocates Act,1961, once the Ld. AR informed the assessee that for the withdrawal of the power of attorney, it was incumbent upon the assessee to make alternative arrangements to pursue the matter diligently.
The Ld. DR also submitted that, even on merits, the Ld. CIT(A) has rightly adjudicated the issue after considering all relevant facts, including the application under Rule 46A, the remand report of the Assessing Officer, and the rejoinder filed by the assessee. It was therefore prayed that no interference is warranted with the well-reasoned order passed by the Ld. CIT(A), and the appeal filed by the assessee may kindly be dismissed.
We have considered the rival contentions of the parties and reviewed the material available on the record. We find that the assessee failed to establish the identity, creditworthiness, and genuineness of the alleged donors and lenders. According to settled law, the onus under Section 68 lies with the assessee to provide a satisfactory explanation regarding the nature and source of any credit found in its books. It is settled that mere furnishing of confirmation or general explanations without credible supporting evidence is not sufficient to discharge the burden.
In respect of corpus donations, we note that the assessee has not submitted proper documentation evidencing the identity of the donors. In terms of section 115BBC of the Act, anonymous donations received by a charitable or religious trust are chargeable to tax at the rate of 30%. Even if such donations are styled as “corpus donations”, the assessee must still establish the identity of donors unless falling within the exceptions prescribed. We may reproduce the relevant section 115BBC , which is as under:-
Section 115BBC – Anonymous donations received by certain entities (1) Where— (a) the total income of a person includes any income by way of any anonymous donation; and (b) the person is—
(i) any trust or institution referred to in section 11; or (ii) any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) of clause (23C) of section 10; or (iii) any hospital or other institution referred to in sub-clause (iiiae) or sub- clause (via) of clause (23C) of section 10, then, the income-tax payable shall be the aggregate of— (i) the amount of income-tax calculated at the rate of thirty per cent on the aggregate of anonymous donations received in excess of the higher of the following, namely:— (A) five per cent of the total donations received by the assessee; or (B) one lakh rupees; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the aggregate of anonymous donations received as referred to in clause (i). (2) For the purposes of this section, "anonymous donation" means any voluntary contribution referred to in section 2(24)(iia), where a person receiving such contribution does not maintain a record of— (i) the name and address of the person making such contribution; and (ii) such other particulars as may be prescribed.
In this case, the failure to provide PAN details, bank statements, or any form of verifiable documentation means the donation qualifies as anonymous under section 115BBC, and the addition is rightly sustained.
Regarding unsecured loans, the law requires the assessee to prove the identity of the lender, their creditworthiness, and the genuineness of the transaction. This three-fold requirement under section 68 was not satisfied. The affidavits and confirmations produced lacked bank statements or financial records of the lenders. Therefore, we concur with the Ld. CIT(A) in holding that the loans are unexplained and liable to be added under section 68. 10. Accordingly, we find no infirmity in the well reasoned order of the Ld. CIT(A), which is hereby confirmed. 11. In the result, the appeal filed by the assessee is dismissed both for non- prosecution and on merits.
Both the parties fairly submitted that the facts and circumstances of other two appeals i.e and 880/ Chd/2018 are exactly identical to the Appeal in ITA No. 879/Chd/2018 and similar contentions raised therein may be considered, therefore, our findings and directions given in ITA No. 879/Chd/2018 shall apply mutatis mutandis to these two appeals which are accordingly dismissed.
In the result, all the above appeals of the Assessee are dismissed.