2024 (10) TMI 424 - AT - Income Tax

Unexplained cash credit u/s 68 during demonetization period - difference of cash deposits and opening cash balance held as on 09/11/2016 - addition u/s u/s 115BBE - AR contended the assessee is a aided trust running government college and the amount of SBN actually deposited by it solitarily represents the exam fees collected from its students during the subsistence of demonetisation which then remitted to the Registrar of the DBAMU - HELD THAT - In explaining the nature source of cash deposits the appellant before the tax authorities below and also in the present proceeding claimed that it was entitled to accept SBN being a Government College. The said claim is not only baseless but untrue in the evince of category of registration granted by AICTE. The material placed on records does in no way suggest that the appellant is a Central or State Govt. College engaged in running educational institution, rather it a private unaided college as per the details laid in letter of approval extension issued by AICTE. Thus the very foundation of being a Government College is failed on record, in consequence explanation that it accepted the fees from the student also failed like house of cards. Further there is hardly any cogent deprecative material placed by the appellant to dismantle the Revenue s findings beyond an iota of doubt that the difference of SBN deposits assessed as income and brought to tax u/s 115BBE of the Act represents unaccounted income which appellant tried to colour it as being student fees received by misquoting itself as Government College, when it is not. Onus to prove - The burden of proof that, the nature sources of amount of cash deposits made into bank account do not in any way represents income is on claimant assessee and when assessee fails to discharge the same to the satisfaction of the Revenue with corroborative evidences, then the Revenue in view of Hon ble Apex Court decision in Shashi Garg Vs PCIT 2020, 113 taxmann.com 93 (SC) is entitled to treat the same as unexplained income of the assessee and can assessed as such. We see strong reasons in countenancing the action of both the tax authorities below. Consequently, we uphold the impugned addition sustained by Ld. NFAC - Decided against assessee.

Summary

Issues:
1. Failure to file return of income and unexplained cash deposits during demonetization period.
2. Validity of the claim that the assessee is a Government College entitled to accept demonetized currency.
3. Burden of proof regarding the nature and source of cash deposits.
4. Assessment of unexplained income under section 68 and 115BBE of the Income-tax Act.

Analysis:
1. The case involved the failure of a Trust to file its income tax return, leading to the identification of the Trust as a 'non-filer.' The Trust deposited a significant amount of demonetized currency into its bank account during demonetization. Despite multiple notices from the tax authorities, the Trust failed to provide a satisfactory explanation for the cash deposits. The Income Tax Officer treated the unexplained cash credit as income under section 68 of the Act, resulting in an addition to the Trust's taxable income under section 115BBE. The Trust's appeal to the CIT(A) was unsuccessful, leading to the appeal before the Tribunal.

2. The Trust claimed to be a Government College authorized to accept demonetized currency as fees from students. The Trust argued that the excess cash deposits represented exam fees collected from students during demonetization, which were later remitted to the university. However, the tax authorities disputed this claim, stating that the Trust failed to provide sufficient evidence to prove its status as a Government College entitled to accept demonetized currency. The Tribunal found that the Trust's registration as a private institution with no government grant contradicted its claim of being a Government College.

3. The burden of proof regarding the nature and source of the cash deposits rested on the Trust. The Tribunal emphasized that when an assessee fails to provide satisfactory evidence to explain cash deposits, the Revenue has the right to treat the amount as unexplained income. Citing a Supreme Court decision, the Tribunal highlighted the importance of corroborative evidence to support claims regarding cash deposits.

4. Ultimately, the Tribunal upheld the addition of the unexplained cash deposits as income under section 115BBE of the Act. The Tribunal found that the Trust's claim of being a Government College was baseless, as evidenced by its registration as a private institution. The Tribunal dismissed all grounds raised by the Trust, affirming the decisions of the tax authorities. The appeal of the Trust was consequently dismissed, and the impugned addition was upheld.

This detailed analysis of the judgment highlights the key issues, arguments presented by the parties, and the Tribunal's decision based on the evidence and legal principles involved in the case.