2024 (12) TMI 1327 - AT - Income Tax

Addition u/s 68 - unexplained cash credit - HELD THAT - Cash deposit in the bank account represents legitimate fee collections from students, supported by detailed documentation submitted by the assessee. The addition made u/s 68 is, therefore, unsustainable. The reliance placed by CIT(A) on judicial precedents is misplaced, as the facts and circumstances of the present case are distinguishable, and the assessee has satisfactorily discharged its onus of proving the source of the cash deposits. Accordingly, the addition made u/s 68 of the Act is directed to be deleted, and the ground of appeal of the assessee is allowed. Application of Section 115BBE and initiation of penalty u/s 271AAC are consequential in nature. Since the addition u/s 68 has been deleted, these grounds are also allowed in favour of the assessee.

Summary

Issues:
Appeal against addition under Section 68 of the Income Tax Act and initiation of penalty proceedings under Section 271AAC.

Analysis:
The appeal was directed against the order of the Commissioner of Income Tax (Appeals) confirming the addition made by the Assessing Officer under Section 68 of the Act and upholding the initiation of penalty proceedings under Section 271AAC. The case involved the assessee, a charitable trust, which disclosed a cash deposit of Rs. 14,53,000/- in a bank account during the demonetization period. The Assessing Officer considered the cash deposit as unexplained credit under Section 68, leading to the initiation of penalty proceedings. The CIT(A) upheld the addition under Section 68 and the penalty initiation, citing the assessee's failure to provide adequate evidence to substantiate the cash deposits.

During the appeal, the Authorized Representative (AR) of the assessee explained that the cash deposit represented legitimate fee collections from students of the educational institute managed by the trust. The AR provided detailed documentation, including fee receipts, cash book records, and comparative data to support the genuineness of the cash deposits. The AR highlighted that the bank account and the fees collected were disclosed in the audited financial statements, and the trust had submitted a complete list of fees received to the Assessing Officer.

The Appellate Tribunal considered the submissions made by both parties and reviewed the material on record. The Tribunal noted that the trust was engaged in charitable activities and primarily derived income from student fees and donations. The Tribunal found that the detailed documentation submitted by the assessee, including student-wise fee records and corroborating documents, sufficiently proved the legitimacy of the cash deposits. The Tribunal distinguished the present case from judicial precedents cited by the CIT(A) and concluded that the addition under Section 68 was unsustainable.

As a result, the Tribunal allowed the appeal, directing the deletion of the addition made under Section 68 of the Act. Consequently, the grounds related to the application of Section 115BBE and the initiation of penalty under Section 271AAC were also allowed in favor of the assessee. The appeal was allowed in its entirety, and the order was pronounced in the Open Court on 09th December, 2024 at Ahmedabad.