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Facts
The assessee deposited Rs. 54,50,000 cash in ICICI Bank on 12.11.2016, during the demonetization period. He claimed this cash was received back from various trusts as a return of bogus donations made earlier, for which he had claimed weighted deductions under Section 35AC. The assessee had attempted to declare this amount under the Income Disclosure Scheme (IDS) 2016, but his request was rejected due to procedural restrictions.
Held
The Income Tax Appellate Tribunal (ITAT) upheld the decision of the CIT(A), sustaining the addition of Rs. 54,50,000 as unexplained cash credit under Section 68 of the Act. The tribunal found the assessee's explanation for keeping such a large sum of cash for 3 to 8 years to be unreasonable and illogical, especially in the absence of documentary evidence from the trusts or proof of withdrawal of prior deductions. The assessee also failed to appear for the hearing before the ITAT.
Key Issues
1. Whether the cash deposit of Rs. 54,50,000 during demonetization, claimed as a return of bogus donations, constitutes unexplained cash credit under Section 68. 2. Whether the lower authorities erred in not providing a personal hearing to the appellant.
Sections Cited
Section 68 of the Income-tax Act, 1961, Section 35AC of the Income-tax Act, 1961, Section 250 of the Income-tax Act, 1961
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This appeal has been preferred by the assessee against order dated 30.11.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:
1. In the facts and circumstances of the case and in law, the Learned In the facts and circumstances of the case and in law, the Learned In the facts and circumstances of the case and in law, the Learned National Faceless Appeal Centre (NFAC), CIT National Faceless Appeal Centre (NFAC), CIT (Appeals), Mumbai has (Appeals), Mumbai has erred in passing the impugned order dated 30.11.2023 under section erred in passing the impugned order dated 30.11.2023 under section erred in passing the impugned order dated 30.11.2023 under section 250 of the Act without providing personal hearing to the appellant 250 of the Act without providing personal hearing to the appellant 250 of the Act without providing personal hearing to the appellant thereby grossly violating the principles of Natural Justice. thereby grossly violating the principles of Natural Justice. thereby grossly violating the principles of Natural Justice.
2. In the facts and circumstances of the In the facts and circumstances of the case and in law the Learned case and in law the Learned National Faceless Appeal Centre (NFAC), CIT (Appeals), Mumbai has National Faceless Appeal Centre (NFAC), CIT (Appeals), Mumbai has National Faceless Appeal Centre (NFAC), CIT (Appeals), Mumbai has erred in sustaining the addition of Rs. 54,50,000/ erred in sustaining the addition of Rs. 54,50,000/ erred in sustaining the addition of Rs. 54,50,000/- being cash deposits as unexplained cash credit under section 68 of the Act. deposits as unexplained cash credit under section 68 of the Act. deposits as unexplained cash credit under section 68 of the Act.
In the facts and circumstances of In the facts and circumstances of the case and in law the Learned the case and in law the Learned National Faceless Appeal Centre (NFAC), CIT (Appeals), Mumbai has National Faceless Appeal Centre (NFAC), CIT (Appeals), Mumbai has National Faceless Appeal Centre (NFAC), CIT (Appeals), Mumbai has erred in sustaining the addition of Rs. 54,50,000/ erred in sustaining the addition of Rs. 54,50,000/ erred in sustaining the addition of Rs. 54,50,000/- being cash deposits during demonetization period ignoring the fact that the said deposits during demonetization period ignoring the fact that the said deposits during demonetization period ignoring the fact that the said amount is already assesse amount is already assessed to tax in the assessment proceedings of d to tax in the assessment proceedings of the respective Assessment Years i.e. AY 2009 the respective Assessment Years i.e. AY 2009-10, AX 2010 10, AX 2010-11, AY 2013-14 and AY 2014 14 and AY 2014-15 thereby resulting in double taxation. 15 thereby resulting in double taxation.
Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed return of income on 30.1 return of income on 30.10.2017 declaring total income at 0.2017 declaring total income at Rs.1,18,70,890/-. The return of income filed by the assessee was . The return of income filed by the assessee was . The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the selected for scrutiny assessment and statutory notices under the selected for scrutiny assessment and statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied tax Act, 1961 (in short ‘the Act’) were issued and complied tax Act, 1961 (in short ‘the Act’) were issued and complied with. The Assessing Office with. The Assessing Officer on the basis of the information in r on the basis of the information in possession of the Income possession of the Income-tax Department asked the assessee to tax Department asked the assessee to explain source of cash deposit of R lain source of cash deposit of Rs.54,50,000/- in ICICI Bank Ltd. in ICICI Bank Ltd. on 12.11.2016 (i.e. during the demonetization period). The assessee on 12.11.2016 (i.e. during the demonetization period). The assessee on 12.11.2016 (i.e. during the demonetization period). The assessee explained that said c explained that said cash was generated on account of bogus ash was generated on account of bogus donations claimed u/s 35AC and 35AC(ii) of the Act, under which donations claimed u/s 35AC and 35AC(ii) of the Act donations claimed u/s 35AC and 35AC(ii) of the Act cash was received back cash was received back from Trusts, against the cheque issued against the cheque issued to them for donations. The assessee submitted that for donations. The assessee submitted that for donations. The assessee submitted that it wished to participate in Income Disclo participate in Income Disclosure Scheme (IDS), 2016 for declaring sure Scheme (IDS), 2016 for declaring the said cash received against cheques issued for donation as the said cash received against cheques issued for donation the said cash received against cheques issued for donation undisclosed income, , and therefore, the assessee filed such a therefore, the assessee filed such a request vide letter dated 30.09.2016 letter dated 30.09.2016 before concerned authorities before concerned authorities for IDS disclosure for assess for assessment years 2009-10, 2010 10, 2010-11, 2013-14 and 2014-15 but said 15 but said request of the assessee was rejected of the assessee was rejected by the concerned authorities concerned authorities due to procedural restriction due to procedural restrictions. The assessee contented that said letter dated 30.09.2016 shows that cash contented that said letter dated 30.09.2016 shows that cash contented that said letter dated 30.09.2016 shows that cash received against cheques is received against cheques issued for donation was available with the sued for donation was available with the assessee during demonetization period and same was deposited into assessee during demonetization period and same was deposited into assessee during demonetization period and same was deposited into bank. But, the Assessing Officer asked the assessee by way of show , the Assessing Officer asked the assessee by way of show , the Assessing Officer asked the assessee by way of show cause notice dated 01.12.2019 for substantiating the claim of cash cause notice dated 01.12.2019 for substantiating the claim of cash cause notice dated 01.12.2019 for substantiating the claim of cash received from various trusts in lieu of bogus donations by providing arious trusts in lieu of bogus donations by providing arious trusts in lieu of bogus donations by providing documentary evidence documentary evidences as against verbal claim, but the assessee , but the assessee failed in doing so. Accordingly, the Assessing Officer rejected the failed in doing so. Accordingly, the Assessing Officer rejected failed in doing so. Accordingly, the Assessing Officer rejected contention of the assessee and made addition u/s 68 of the Act contention of the assessee and made addition u/s 68 of the Act contention of the assessee and made addition u/s 68 of the Act following the decision of the Hon’ble Bombay High Court in the case ollowing the decision of the Hon’ble Bombay High Court in the case ollowing the decision of the Hon’ble Bombay High Court in the case of Shri Arunkumar J Muchhala v. CIT, [2017] 85 taxmann.com Shri Arunkumar J Muchhala v. CIT, [2017] 85 taxmann.com Shri Arunkumar J Muchhala v. CIT, [2017] 85 taxmann.com 306 (Bombay).
3. On further appeal, the Ld. CIT(A) also upheld the addition On further appeal, the Ld. CIT(A) also upheld the addition On further appeal, the Ld. CIT(A) also upheld the addition relying the decision of the Hon’ble Supreme Court in the case of relying the decision of the Hon’ble Supreme Court in relying the decision of the Hon’ble Supreme Court in Srilekha Banerjee v. CIT (1963) 49 ITR 112 (SC). The relevant Srilekha Banerjee v. CIT (1963) 49 ITR 112 (SC) Srilekha Banerjee v. CIT (1963) 49 ITR 112 (SC) finding of the Ld. CIT(A) is reproduced as under: finding of the Ld. CIT(A) is reproduced as under:
“4.4. Respectfully following the principles of law laid down by the apex 4.4. Respectfully following the principles of law laid down by the apex 4.4. Respectfully following the principles of law laid down by the apex court in the above cases, I consider the aspect of human pr court in the above cases, I consider the aspect of human pr court in the above cases, I consider the aspect of human probability. It cannot be untrue that when the assessee purportedly got lakhs of rupees cannot be untrue that when the assessee purportedly got lakhs of rupees cannot be untrue that when the assessee purportedly got lakhs of rupees in cash several years back, he definitely did not know that several years in cash several years back, he definitely did not know that several years in cash several years back, he definitely did not know that several years later there would come IDS or similar scheme where he could declare the later there would come IDS or similar scheme where he could declare the later there would come IDS or similar scheme where he could declare the amount and get amnesty. amount and get amnesty. So, he definitely got the cash back with the So, he definitely got the cash back with the intention of enjoying for personal purposes or investing somewhere for intention of enjoying for personal purposes or investing somewhere for intention of enjoying for personal purposes or investing somewhere for pecuniary benefits. He did not generate the money in such clandestine pecuniary benefits. He did not generate the money in such clandestine pecuniary benefits. He did not generate the money in such clandestine manner for nothing or for keeping idle at home. Secondly, keeping such manner for nothing or for keeping idle at home. Secondly, keeping such manner for nothing or for keeping idle at home. Secondly, keeping such huge sum of currency notes for 3 to 8 years would have made the notes huge sum of currency notes for 3 to 8 years would have made the notes huge sum of currency notes for 3 to 8 years would have made the notes brittle and decaying also. These suffered the risk of burglary or loss brittle and decaying also. These suffered the risk of burglary or loss brittle and decaying also. These suffered the risk of burglary or loss otherwise too. So, for the reasons stated above, I feel that from the point of otherwise too. So, for the reasons stated above, I feel that from the point of otherwise too. So, for the reasons stated above, I feel that from the point of circumstantial evidence, appellant' circumstantial evidence, appellant's claim is not reasonable or logical and s claim is not reasonable or logical and hence not acceptable. Accordingly, I reject the arguments and dismiss the hence not acceptable. Accordingly, I reject the arguments and dismiss the hence not acceptable. Accordingly, I reject the arguments and dismiss the ground.”
At the outset we may like to mention that on last occasion i.e. At the outset we may like to mention that on last occasion i.e. At the outset we may like to mention that on last occasion i.e. 01.07.2024, the Ld. counsel for the assessee appeared and the 01.07.2024, the Ld. counsel for the assessee appeared and the 01.07.2024, the Ld. counsel for the assessee appeared and the matter was adjourned to 23.07.2024 tter was adjourned to 23.07.2024 on her request, but today on her request, but today when the case was called for, neither any one attended nor any when the case was called for, neither any one attended nor any when the case was called for, neither any one attended nor any adjournment application was filed adjournment application was filed on behalf of the assessee of the assessee. In the circumstances, we were of opinion that the circumstances, we were of opinion that the assessee assessee is not and therefore, the appeal is interested in pursuing the appeal pursuing the appeal and therefore, the appeal is adjudicated after hearing arguments of the Ld. Departmental adjudicated after hearing arguments of the Ld. Departmental adjudicated after hearing arguments of the Ld. Departmental Representative (DR) and Representative (DR) and examination of material available on material available on record. 4.
The main issue in dispute The main issue in dispute in the instant case i in the instant case is the source of . The assessee contented that he the cash deposit of Rs.54,50,000/ Rs.54,50,000/-. The assessee contented that he had made certain donations to had made certain donations to few trusts engaged in research engaged in research activity in assessment year 2009 ssessment year 2009-10, 2014-15 and claimed and claimed weighted deduction for same u/s 35AC u/s 35AC of the Income-tax Act, 1961( In short Act, 1961( In short ‘the Act’). The relevant table of the donation The relevant table of the donations is available in para 6.2 is available in para 6.2 of the assessment order of the assessment order, which is reproduced as under which is reproduced as under for ready refrence:
“ A.Y Name of Trust Name of Trust Deduction Expenses Cash amount deducted (Rs.) deducted (Rs.) received (Rs.) (cheque/NEFT) (Rs.) 2009-10 Navjeevan Charitable Navjeevan Charitable 31,00,000 3,10,000 27,90,000 Trust
2010-11 Navjeevan Charitable Navjeevan Charitable 5,00,000 50,000 4,50,000 Trust 2013-14 School of Human School of Human 10,00,000 1,50,000 8,50,000 Genetics & Population Genetics & Population Health 2014-15 School of Human School of Human 16,00,000 2,40,000 13,60,000 Genetics & Population Genetics & Population Health 54,50,000 Total 62,00,000 7,50,000 5.1 The assessee contended that above parties returned the assessee contended that above parties returned the assessee contended that above parties returned the amount of donation back to assessee in cash after deducting 10% amount of donation back to assessee in cash after deducting 10% amount of donation back to assessee in cash after deducting 10% commission. The assessee he assessee further contented that he contented that he had withdrawn the said deduction u/s 35AC u/s 35AC and the paid taxes thereon in all those and the paid taxes thereon in all those assessment years. Further stated that years. Further stated that the cash, which was received which was received back was kept with him and deposited in ICICI Bank on 12.11.2016 back was kept with him and deposited in ICICI Bank on 12.11.2016 back was kept with him and deposited in ICICI Bank on 12.11.2016 i.e. during the demonetization period. The lower authorities have during the demonetization period. The lower authorities have during the demonetization period. The lower authorities have rejected the contention of the assessee on the basis of the rejected the contention of the assessee on the basis o rejected the contention of the assessee on the basis o circumstantial. According to the Ld. CIT(A) in normal circumstances circumstantial. According to the Ld. CIT(A) in normal circumstances circumstantial. According to the Ld. CIT(A) in normal circumstances no one will keep the cash currency for 3 to 8 years and therefore, no one will keep the cash currency for 3 to 8 years and therefore, no one will keep the cash currency for 3 to 8 years and therefore, rejected the contention of the assessee as not reasonable or logical. rejected the contention of the assessee as not reasonable or rejected the contention of the assessee as not reasonable or Before us, no evidences have been filed Before us, no evidences have been filed in support f contention f contention that assessee withdrawn the deduction in respect of corresponding years assessee withdrawn the deduction in respect of corresponding years assessee withdrawn the deduction in respect of corresponding years and cash was returned back by those trust and cash was returned back by those trusts to the to the assessee. The assessee has not filed any such affidavit from those trusts assessee has not filed any such affidavit from those trusts assessee has not filed any such affidavit from those trusts supporting it contention the cash was received back. In the facts supporting it contention the cash was received back. In the facts supporting it contention the cash was received back. In the facts and circumstances of the case, we do not find any infirmity in the and circumstances of the case, we do not find any infirmity in the and circumstances of the case, we do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute order of the Ld. CIT(A) on the issue in dispute and accordingly and accordingly, we uphold the same. The ground uphold the same. The grounds of the appeal of the assessee are of the appeal of the assessee are rejected.
In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open Court on nounced in the open Court on 19/08/2024. /08/2024.