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Income Tax Appellate Tribunal, “ A ” BENCH, AHMEDABAD
Before: SHRI T.R. SENTHIL KUMAR & SHRI MAKARAND V. MAHADEOKAR
आयकर अपीलीय अिधकरण, अहमदाबाद "ायपीठ “ए“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “ A ” BENCH, AHMEDABAD
"ी टी.आर. से""ल कुमार, "ाियक सद" एवं "ी मकरंद वसंत महादेवकर, लेखा सद" के सम!। ] ] BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.1567/Ahd/2024 िनधा"रण वष" /Assessment Year : 2017-18 Dawoodi Bohra Jamat Godhra The Income Tax Officer बनाम/ Dawoodi Bohra Masjid Ward Exemption v/s. Vohrawad, Godhra Vadodara Godhra – 389 001 (Gujarat) "थायी लेखा सं./PAN: AAATD 4476 D (अपीलाथ$/ Appellant) (%& यथ$/ Respondent) Assessee by : Ms. Urvashi Sodhan, AR Revenue by : Shri b.P. Srivastava, Sr.DR सुनवाई की तारीख/Date of Hearing : 05/12/2024 घोषणा की तारीख /Date of Pronouncement: 09/12/2024 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM:
This appeal by the assessee is directed against the order dated 11/07/2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] for the Assessment Year (AY) 2017-18. The order of the CIT(A) confirmed the addition made by the Assessing Officer [hereinafter referred to as “AO”] under Section 68 of the Act, amounting to Rs.14,53,000/- taxed at the rate prescribed under Section 115BBE of the Act, and upheld the initiation of penalty proceedings under Section 271AAC of the Act. Dawoodi Bohra Jamat Godhra vs. ITO Asst. Year : 2017-18
Facts of the case:
The assessee e-filed its return of income on 06/07/2017 declaring a total income of Rs.1,12,09,340/-, after claiming an exemption under Section 11 of the Act. The return was processed under Section 143(1) of the Act. The case was reopened by issuing a notice under Section 148 of the Act on 30.03.2021, based on information from the ITO Ward-1, Godhra, concerning cash deposits of Rs.16,50,000/- made in Account No. 25010292001020416 of The Prime Co-operative Bank, Godhra. The account is operated by MSB Educational Institute, run by the assessee-trust, and the deposit was made during the demonetization period.
During the course of assessment proceedings, the AO observed that in the return of income, the assessee disclosed only one bank account with Bank of Baroda (A/C No. 1035) and other bank accounts, as reported by the SFT (Statement of Financial Transactions), including those with IDBI Bank, HDFC Bank, Axis Bank, and the Prime Co-operative Bank, were not disclosed. The AO observed that the assessee had deposited Rs.16,50,000/- in cash in the Prime Co-operative Bank account during the demonetization period. The explanation provided by the branch manager indicated that this account was operated by MSB Educational Institute.
3.1. The AO scrutinized the assessee’s cash book and noticed that on 08.11.2016, a total cash receipt of Rs.15,60,800/- was recorded, purportedly towards tuition fees, bus fees, term fees, activity fees, development fees, and sports fees and the closing cash balance on 08.11.2016 was Rs.14,84,376/-, which was considered exceptionally high and unexplained. The AO also Dawoodi Bohra Jamat Godhra vs. ITO Asst. Year : 2017-18
noted that the average cash balance during the year fluctuated between Rs.10,000/- to Rs.3,00,000/-, concluding the high cash balance as of 08.11.2016 inconsistent and irrational. The AO asked the assessee to submit detailed student-wise and course-wise records of the fees collected. The assessee failed to provide complete details, citing the difficulty of retrieving such data for 464 students. The AO also noted that the sample details submitted lacked complete correspondence addresses of students, making verification not possible.
3.2. The AO concluded that the cash book balance was manipulated on 08.11.2016, the day demonetization was announced, to accommodate unaccounted cash. The AO also concluded that the assessee’s claim that the cash receipts on that day were genuine was not substantiated with supporting documents or credible evidence. The AO rejected the explanation provided by the assessee regarding the source of Rs.14,53,000/- deposited in the bank account and treated it as unexplained cash credit under Section 68. Being not satisfied with the order of AO, the assessee filed an appeal before the CIT(A) who upheld the reopening u/s 147 and dismissed the appeal confirming the addition u/s 68 of the Act citing assessee’s inability to provide adequate evidence to substantiate the cash deposits. The CIT(A) also upheld the taxation under Section 115BBE of the Act and initiation of penalty proceedings under Section 271AAC of the Act.
Aggrieved by the order of the CIT(A), the assessee is in appeal before us with following grounds of appeal: 1. The Ld. CIT (A) has erred in law and on facts of appellant's case in holding that the assessment order passed U/s 147 r.w.s. 144 r.w.s. 144B of the Act is Valid. Dawoodi Bohra Jamat Godhra vs. ITO Asst. Year : 2017-18
The assessment order passed U/s 147 r.w.s. 144 r.w.s. 144B of the Act is bad-in- law as statutory notice U/s 143(2) of the Act was not issued. 2. The Ld. CIT (A) has erred in law and on facts of the appellant's case in confirming the order of the Ld. AO of making addition of Rs.14,53,000/- on erroneous plea that it is an unexplained cash credit U/s 68 of the Act. 3. Both the lower authorities have erred in law and on facts of the appellant's case in holding that cash deposited in bank is unexplained. 4. The charging income tax U/s 115BBE of the Act on addition made U/s 68 of the Act is not justified. 5. The initiation of penalty proceedings u/s 271AAC of the Act is not justified. 6. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before hearing of the appeal.
During the course of hearing before us, the Authorized Representative (AR) of the assessee explained the facts and circumstances. The AR highlighted the status of the assessee as a registered charitable trust engaged in education and community welfare. The AR informed that the trust manages 11 charitable institutions for carrying out its educational, religious, and welfare activities and Income is primarily generated from fees collected from students and donations received during religious and community events.
5.1. The AR submitted that that the cash deposit of Rs.14,53,000/- represented legitimate fee collections from students of the MSB Educational Institute, part of the assessee trust. The AR also stated that the bank account with Prime Co-operative Bank, Godhra, was disclosed in the books of accounts and the same is part of audited financial statements. The AR pointed out the schedule of “Cash and Bank Balances” where the said bank account Dawoodi Bohra Jamat Godhra vs. ITO Asst. Year : 2017-18
5 was disclosed. The AR further stated that the Fees were collected after the school reopened on 05/11/2016 post-Diwali vacation. In support, the AR, pointed out the copy of circular issued to parents for deposit of fees which was submitted to lower authorities. The AR reiterated that the assessee has maintained detailed student records, and partial information was provided to the AO. The AR took us through the paper book and explained the details submitted to AO vide letter dated 10-02-2022. According to the said details the assessee submitted the complete list of fees received, amounting to Rs.19,82,350/-, in the tabular format giving following details:- 1. Date of Receipt 2. Receipt No. 3. Name 4. Fee Amount 5. Standard 6. Address
5.2. The AR also explained the receipts with the help of cash book and month-wise analysis of fees received, cash deposited in bank with comparative details of earlier years.
The Departmental Representative (DR) appreciated the detailed submission of the AR and requested to set aside the order and remand the matter back to the file of AO for verification. The AR, in response to DR’s request, stated that these details were available with the AO and has already verified.
We have carefully considered the submissions made by the AR of the assessee and the DR, as well as the material available on record, including the Dawoodi Bohra Jamat Godhra vs. ITO Asst. Year : 2017-18
orders passed by the lower authorities. We find that the assessee is a registered charitable trust under Section 12A of the Income Tax Act, engaged in education, religious, and community welfare activities. The trust manages 11 charitable institutions, including the MSB Educational Institute, and derives its income primarily from student fees and donations. The cash deposit of Rs.14,53,000/- in the Prime Co-operative Bank, Godhra, was attributed to legitimate fee collections from students of MSB Educational Institute. The AR pointed out that the bank account in question was disclosed in the audited financial statements under the schedule of "Cash and Bank Balances." The AR also referred to the circular issued to parents for fee payment after the school reopened on 05/11/2016 post-Diwali vacation, corroborating the timing and purpose of the cash collections. The AR highlighted that during the assessment proceedings, the assessee had submitted complete list of fees received, amounting to Rs.19,82,350/-, in a tabular format. Copies of the cash book and an analysis of fees received along with comparative data of earlier years to substantiate the genuineness of the cash deposits. The AR emphasized that these details were made available to the AO vide letter dated 10/02/2022, and the AO had sufficient opportunity to verify the same.
7.1. The CIT(A) relied on judicial precedents, such as, Mangilal Jain v. ITO (315 ITR 105) and Kale Khan Mohammad Hanif v. CIT (50 ITR 1) to justify the addition under Section 68 of the Act. These decisions held that the onus is on the assessee to prove the genuineness of credits appearing in its books of accounts. However, the facts of the present case are distinguishable. Unlike in the cited cases, the assessee here provided substantial documentary evidence to explain the source of the cash deposits. The details submitted by Dawoodi Bohra Jamat Godhra vs. ITO Asst. Year : 2017-18
the assessee, including student-wise fee records and corroborating documents, demonstrate that the deposits were derived from legitimate sources aligned with the charitable activities of the trust.
7.2. The DR requested that the matter be remanded back to the file of AO for verification. However, we note that the detailed submissions made by the assessee, including fee receipts, cash book, and bank reconciliation, were already available with the AO during the assessment proceedings. The AR asserted that the AO had sufficient opportunity to verify these details and that no specific discrepancies were pointed out in the assessment order. Hence, remanding the matter would serve no useful purpose and result in unnecessary delay.
7.3. In light of the above findings, we conclude that the cash deposit of Rs.14,53,000/- in the bank account represents legitimate fee collections from students, supported by detailed documentation submitted by the assessee. The addition made under Section 68 of the Act is, therefore, unsustainable. The reliance placed by the CIT(A) on judicial precedents is misplaced, as the facts and circumstances of the present case are distinguishable, and the assessee has satisfactorily discharged its onus of proving the source of the cash deposits. Accordingly, the addition of Rs.14,53,000/- made under Section 68 of the Act is directed to be deleted, and the ground of appeal of the assessee is allowed.
The grounds of appeal relating to the application of Section 115BBE of the Act and initiation of penalty under Section 271AAC of the Act are Dawoodi Bohra Jamat Godhra vs. ITO Asst. Year : 2017-18
consequential in nature. Since the addition under Section 68 of the Act has been deleted, these grounds are also allowed in favour of the assessee.
In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 09th December, 2024 at Ahmedabad. (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER
अहमदाबाद/Ahmedabad, िदनांक/Dated 09/12/2024 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की "ितिलिप अ#ेिषत/Copy of the Order forwarded to : 1. अपीलाथ$ / The Appellant 2. "%थ$ / The Respondent. संबंिधत आयकर आयु& / Concerned CIT 3. 4. आयकर आयु& अपील ( ) / The CIT(A)- (NFAC), Delhi िवभागीय "ितिनिध आयकर अपीलीय अिधकरण राजोकट/DR,ITAT, Ahmedabad, 5. , , गाड" फाईल / 6. Guard file.
आदेशानुसार/ BY ORDER, स%ािपत "ित //// सहायक पंजीकार (Asstt.