2014 (5) TMI 703 - HC - Income Tax

Addition made u/s 68 of the Act - Addition of donations collected and interest Genuineness of transactions Held that - The Tribunal was rightly of the view that the onus is upon the assessee to establish the nature of entries in his books of account including the bank account, expenditure and sources of the same with evidence - The onus cast upon the assessee is not an empty formality but is to be discharged with evidence which can stand the test of judicial security - the assessee claims that it had received certain amount on behalf of another person who in turn is in charge of a Gurdwara and he was out of country, the amount remitted by the Sangat being in the form of foreign exchange, after encashment was deposited in his bank account, which latter was returned to the person by cheque - assessee has tried to explain the source of money deposited in his bank account, without evidence - Mere explanation is not sufficient to discharge the onus cast upon him under the Act - the assessee has not established the veracity of his explanation - the affidavit of a third person is mere self-serving evidence unless the same is backed by some other evidence justifying the nature of the transaction or the concerned party appears in person to verify its contents thus, the order of the Tribunal is upheld and as such no substantial question of law arises for consideration - Decided against Assessee.

Summary

Issues:
1. Genuineness of donations collected by the appellant.
2. Justification of the addition made by the Assessing Officer and upheld by the Tribunal.
3. Validity of the findings of the ITAT and the Assessing Officer.

Issue 1: Genuineness of Donations:
The appellant collected a sum of Rs. 11,26,000 on behalf of Baba Balwinder Singh as donations from the Sangat of the UK. However, the Assessing Officer and the Tribunal concluded that these donations were not genuine as the appellant failed to produce Baba Balwinder Singh to establish the authenticity of the donations. The Tribunal upheld the addition made by the Assessing Officer, emphasizing the lack of evidence to prove the authorization for collecting the donations and the subsequent withdrawal of the deposited amount in cash by Balwinder Singh. The affidavit filed by Balwinder Singh was disregarded due to non-compliance with the order for cross-examination. The onus was on the appellant to substantiate the nature of entries in the books of account, but the explanation provided was deemed insufficient without reliable evidence.

Issue 2: Justification of Addition:
The Assessing Officer and the Tribunal justified the addition of Rs. 11,26,000 and interest of Rs. 39,410 based on the lack of evidence to support the genuineness of the donations collected by the appellant on behalf of Baba Balwinder Singh. The Tribunal highlighted that the appellant failed to provide concrete evidence to establish the source of the deposited money in the bank account, despite repeated opportunities. The explanation offered was considered inadequate as it lacked supporting evidence and verification. The Tribunal emphasized the importance of discharging the onus with substantial evidence to meet the requirements of the Income-tax Act.

Issue 3: Validity of Findings:
The findings of fact by the Assessing Officer and the Tribunal were deemed appropriate and not shown to be erroneous or perverse. The Tribunal upheld the addition based on the lack of credible evidence and inconsistencies in the appellant's explanation regarding the donations collected. The Tribunal emphasized the necessity of genuine explanations supported by reliable evidence to discharge the onus placed on the assessee under the Act. Despite multiple opportunities provided to the appellant, the failure to substantiate the claims with concrete evidence led to the dismissal of the appeal.

In conclusion, the High Court dismissed the appeal by the assessee, upholding the addition of Rs. 11,26,000 and interest of Rs. 39,410, as the appellant failed to provide sufficient evidence to prove the genuineness of the donations collected. The Court affirmed the findings of the Assessing Officer and the Tribunal, emphasizing the importance of credible explanations supported by reliable evidence to meet the requirements of the Income-tax Act.