2010 (2) TMI 994 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 33,07,500 found in the assessee's bank locker.
2. Deletion of addition of Rs. 4,50,000 representing cash deposits in the savings bank account.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 33,07,500 Found in the Assessee's Bank Locker:

The Revenue appealed against the deletion of Rs. 33,07,500 found in the assessee's bank locker, arguing that the Commissioner of Income-tax (Appeals) erred in accepting the assessee's claim that the amount represented donations received on behalf of the Mathoshri Anandibai Charitable Trust (MACT). The Revenue highlighted several points:
- The trust had a separate bank account, and there was no explanation for keeping the money in the locker of the assessee, who was not a trustee at the time of the search.
- The donors were mostly relatives and friends of the assessee's son-in-law, with modest means, incapable of making sizable cash donations.
- No donor was produced before the Assessing Officer for examination.

The search action under section 132 revealed cash in the locker, which the assessee claimed belonged to MACT. The assessee provided documentation, including the trust deed, registration certificate, donors' list, and consent letters. However, the Assessing Officer rejected the claim due to:
- Lack of financial statements before the search.
- Delayed appointment of trustees and registration under section 12A.
- Affidavits from donors being filed post-search and donors being incapable of making such donations.
- The trust's bank account not being used for donations.
- All donations being in cash and the cash bundles having consecutive serial numbers, indicating false claims.

The Commissioner of Income-tax (Appeals) deleted the addition, noting:
- The assessee consistently claimed the cash belonged to MACT, supported by donation receipts and books of account.
- The trust had acquired land before the search, proving its existence.
- The Department granted 12A registration to MACT, affirming its legitimacy.
- The explanation for the cash bundles was accepted, and the Assessing Officer did not contradict this in the remand report.
- The affidavits from donors were rejected by the Assessing Officer without summoning them for examination.

The Tribunal upheld the deletion, emphasizing:
- The burden of proof under section 69A lies with the Revenue to show the money belongs to the assessee.
- The assessee had no independent source of income and consistently claimed the cash belonged to MACT.
- The unsatisfactory explanation does not automatically result in deeming the money as the assessee's income.
- The discretion under section 69A must be exercised considering the facts, and the addition in the assessee's hands was not justified.

2. Deletion of Addition of Rs. 4,50,000 Representing Cash Deposits in Savings Bank Account:

The Revenue also contested the deletion of Rs. 4,50,000, which the assessee claimed was from donations received on behalf of MACT. The Assessing Officer had rejected this claim for similar reasons as above, treating the deposits as the assessee's unexplained cash and taxing it as undisclosed income.

The Commissioner of Income-tax (Appeals) deleted the addition, considering the same reasons for the deletion of Rs. 33,07,500. The Tribunal upheld this deletion as well, noting that the reasons for deleting the addition of Rs. 33,07,500 equally applied to the cash deposits.

Conclusion:

The Tribunal dismissed the Revenue's appeal and upheld the Commissioner of Income-tax (Appeals)'s order, confirming that the cash found in the locker and the cash deposits were explained as donations received on behalf of MACT. The cross-objection filed by the assessee was also dismissed as not pressed. The order was pronounced on February 5, 2010.