2023 (11) TMI 947 - HC - Income Tax

Assessment of trust - corpus donation receipts - addition u/s 68 - corpus donation had been received by the petitioner-Company from entities as struck off the record of the registered companies and therefore, they had to be treated as shell companies - as donors identity was doubtful and the provisions of Section 115BBC of the Act were invoked - Tribunal, is justified in concurring with the findings of CIT (A) and in confirming the impugned income under the provisions of 115BBC, section 68 read with section 115BBE being perverse and against the statutory provisions. HELD THAT - As the companies at West Bengal had sought to give the details of the donations from Mumbai and it was in such circumstances the Assessing Officer came to the conclusion that the explanation given was not bona fide. Opportunity was given to produce the Directors which was not done due to which the authorities below have noted that companies are no longer functional and are defunct and struck off by the Registrar of Companies. Nothing was brought on record that they were actually functioning at the time of donations and when they were struck off. In such circumstances, we are of the considered opinion that the genuineness, identity and creditworthiness of these companies was rightly doubted by the AO and in such circumstances, the additions had been made. The matter had also been taken before the Appellate Authority and the Commissioner had duly granted the benefit by thoroughly enquiring into the matter qua the other donations that had been received. The question of law thus which is sought to be framed does not arise keeping in view the above facts and circumstances as before the authorities the appellant could not produce sufficient material to dispel the suspicion which had been raised about the donations received from the companies which were not even based geographically close to the educational institution and the reason to grant the donation was never properly explained - Appeal dismissed.

Summary

Issues involved:
The issues involved in the judgment are the addition of Rs. 8 lakhs under Section 68 of the Income Tax Act, 1961 for the assessment year 2014-15 and the questions of law related to the justification of concurring with the findings of CIT (A) and confirming the impugned income under the provisions of 115BBC, section 68 read with section 115BBE of the Income Tax Act, 1961.

Summary of Judgment:

Issue 1: Addition of Rs. 8 lakhs under Section 68 of the Income Tax Act:
The Tribunal upheld the addition of Rs. 8 lakhs under Section 68 of the Act, based on the reasoning that the corpus donation had been received by a company that had been struck off the record of registered companies, leading to doubts about the identity of the party. The appellant argued that sufficient material was produced to show the existence of the companies at the time of donation, but failed to provide concrete evidence. The Assessing Officer concluded that the donations were not genuine, leading to the addition of Rs. 8 lakhs. The Appellate Authority sustained the addition based on lack of satisfactory explanation regarding the nature and source of the amounts credited.

Issue 2: Questions of Law Raised:
The questions of law raised in the appeal revolved around the justification of concurring with the findings of CIT (A) and confirming the income under specific provisions of the Income Tax Act. The appellant failed to produce enough material to dispel suspicions regarding the donations received from companies located far from the educational institution, leading to doubts about the genuineness, identity, and creditworthiness of the companies. The Commissioner had thoroughly enquired into the matter and granted benefit regarding other donations, but the specific donations in question remained unsubstantiated.

Conclusion:
The Court found no merit in the appeal, as the appellant could not sufficiently explain the suspicious donations received from defunct companies located far from the institution. The lack of concrete evidence and failure to address the doubts raised by the authorities led to the dismissal of the appeal, affirming the addition of Rs. 8 lakhs under Section 68 of the Income Tax Act for the assessment year 2014-15.

This summary provides a detailed breakdown of the judgment, highlighting the issues involved and the key points discussed in each issue.