2023 (3) TMI 722 - AT - Income Tax

Assessment of trust - Addition of corpus donation - Second round of litigation before the AO, the assessee has not produced any new material or evidence, therefore, the AO once again made the addition - HELD THAT - Since the assessee has not brought any fresh evidence/material before the AO or before the CIT(A) and also before us. Considering the fact that in compliance of the Tribunal s order the report was submitted by the AO after considering all the contentions of the assessee in the rejoinder, the order has been passed by the AO and in the absence of any new material brought before us, we do not find any infirmity or error in the findings of the lower authorities. Accordingly, the grounds of appeal of the assessee failed and the appeal filed by the assessee is dismissed.

Summary

Issues Involved:
1. Addition of corpus donation as income.
2. Non-consideration of confirmation letters/statements u/s 131.
3. Non-admission of affidavits as additional evidence.
4. Allegation of donor companies being bogus.
5. Relevance of search and seizure operations.
6. Non-compliance with ITAT directions.
7. Dismissal of affidavits and material produced.
8. Assessment based on suspicion and surmises.
9. Examination of facts by CIT(A).
10. Adherence to ITAT directions.

Summary:

1. Addition of Corpus Donation as Income:
The Commissioner of Income Tax (Appeals) confirmed the action of the Assessing Officer in making an addition of corpus donation of Rs. 2,94,00,000/- received by the appellant, holding it to be in the nature of income without invoking any provision of the Income Tax Act, 1961.

2. Non-consideration of Confirmation Letters/Statements u/s 131:
The CIT(A) upheld the AO's decision to not take cognizance of the confirmation letters/statements recorded in response to summons u/s 131, which included identification papers and other documents confirming the corpus donation.

3. Non-admission of Affidavits as Additional Evidence:
The CIT(A) did not admit the affidavits of the directors/accountants of the donor companies as additional evidence, noting that none of the conditions of rule 46A were satisfied for their admission.

4. Allegation of Donor Companies Being Bogus:
The CIT(A) relied on the AO's observations that the donor companies were bogus entities floated to transfer funds and evade tax, without any material evidence to the contrary.

5. Relevance of Search and Seizure Operations:
The CIT(A) considered the search and seizure operations carried out on the Usha Group, which established the floating of bogus companies, including the donor companies in question, even though the operations were for an earlier assessment year.

6. Non-compliance with ITAT Directions:
The CIT(A) was found to have not followed the ITAT's directions to examine the circumstances establishing the receipt of donations or the money having gone back to the donors.

7. Dismissal of Affidavits and Material Produced:
The CIT(A) dismissed the affidavits and material produced by the appellant, reiterating the findings of the original assessment that the donations were not genuine.

8. Assessment Based on Suspicion and Surmises:
The CIT(A) upheld the AO's assessment based on suspicion and surmises, noting that the complete identity of the donors was made available but did not establish the genuineness of the donations.

9. Examination of Facts by CIT(A):
The CIT(A) was criticized for confirming the AO's observations without properly examining the facts of the case or the material produced by the appellant.

10. Adherence to ITAT Directions:
The CIT(A) was found to have not adhered to the ITAT's directions in their order dated 10th July, 2009, regarding the examination of the material produced by the appellant.

Conclusion:
The appeal filed by the assessee was dismissed due to the lack of new evidence or material produced before the AO, CIT(A), or the Tribunal. The addition of Rs. 2,94,00,000/- as taxable income was confirmed, and no error was found in the findings of the lower authorities. The order was pronounced on 16/03/2023.