INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Corpus donations received by trust treated as bogus - Assessee furnished relevant details

Assessee trust showed Rs. 5 crores as Corpus Fund received during the year. AO required assessee to furnish names and addresses of the persons alongwith the amount of donation. Assessee submitted names of the persons who made corpus donations by cheque. However, no details like address, PAN, etc. had been submitted for verification. As regard cash donations, assessee has merely submitted the corpus donation account as appearing in his own books of account. Even name of the persons who had given cash donations in corpus was not mentioned. AO required assessee to provide identity of donors, their creditworthiness and mode of transaction but assessee had only provided a list of donors with no address, no creditworthiness. Thus, AO held that the assessee was not able to the genuineness of donations. Accordingly, AO made addition under section 68. Held: Undisputedly, a list containing name, address and amount of 78 persons claimed to have given corpus donation was provided by assessee to AO. However, the AO chose to call only 18 persons out of these 78 persons. Out of these 18 persons, 9 persons accepted the fact of giving donation. How a conclusion could be drawn merely because 9 out of 18 persons had denied giving donation. Even out of remaining 60 persons, 30 persons would have denied if they were called. This was stretching the power of investigation given to the AO, too far. As regards persons who had come and denied before AO the fact of fiving donation, certain fallacies were pointed out by assessee before AO which have not been dealt with by. AO further, cross examination of these persons was specifically asked by assessee, which was not provided it. Therefore, in the facts and circumstances of the case, donation received could not be said to be not genuine, and, therefore, no addition could be sustained as section 68 does not given power to AO to make addition based on his inference drawn on a sample of transactions.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

INCOME TAX ACT, 1961

Section 68

SUBSCRIBE FOR FULL CONTENT