2019 (3) TMI 1264 - AT - Income Tax

Assessment of trust - funds received from abroad - transfer of funds and utilization of funds received from abroad - assessee is a Pastor and running a religious society - AO has treated the entire amount received by the assessee as a professional income in his individual capacity and the same is added to the total income of the assessee - HELD THAT - The assessee has not established a fact that the amounts received by the assessee from abroad have been transferred to the society for the purpose of construction of the building and maintenance of church. Therefore, we find that the assessee failed to discharge the burden casted upon him to show that the funds received from abroad to his individual savings account and subsequently by withdrawing the amount, the same has been transferred to the society. Therefore, we are of the opinion that the AO as well as CIT(A) rightly made the addition. We find no infirmity in the order of the CIT(A). Thus, this appeal filed by the assessee is dismissed. Receipt of gifts from abroad - HELD THAT - Assessee has not established a fact that the funds received by the assessee have been transferred to the society for the purpose for which the funds are received. We find that the assessee failed to discharge the burden casted upon him to show that he has transferred the funds from his personal account to the society. His explanation is that on 01/02/2004 the entire amount was withdrawn and handed-over to the society for the purpose for which it is received. There is nothing available on record what is the work carried by the society and what is the expenditure incurred - Entire transaction is not a genuine transaction. Therefore, we find no infirmity in the order passed by the ld. CIT(A). Thus, this appeal filed by the assessee is dismissed.

Summary

Issues Involved:
1. Taxability of foreign funds received by the assessee.
2. Proof of transfer and utilization of funds for religious and charitable purposes.
3. Treatment of amounts received as professional income.

Issue-wise Detailed Analysis:

1. Taxability of Foreign Funds Received by the Assessee:
The primary issue was whether the foreign funds received by the assessee should be treated as taxable income. The assessee, a Pastor, claimed that the funds received from abroad were for specific purposes such as the construction of church buildings and charitable activities. However, the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] found that the assessee failed to provide sufficient evidence to prove that the funds were utilized for the stated purposes. Consequently, the AO treated the entire amount of ?2,50,275/- and ?5,50,259/- received by the assessee as his professional income and added it to his total income. The Tribunal upheld this decision, noting that the assessee did not establish the transfer of funds to the society or their utilization for the intended purposes.

2. Proof of Transfer and Utilization of Funds for Religious and Charitable Purposes:
The assessee claimed that the funds received were transferred to a religious society named 'Ramadasupeta Area Church of Christ Welfare Ministries.' However, the AO and CIT(A) observed that the assessee failed to provide documentary evidence or maintain proper books of accounts to substantiate the transfer and utilization of the funds for religious and charitable activities. The Tribunal agreed with the lower authorities, emphasizing that the burden of proof was on the assessee to demonstrate that the funds were indeed used for the intended purposes. The lack of evidence led to the conclusion that the transaction was not genuine, and the amounts were rightfully added to the assessee's professional income.

3. Treatment of Amounts Received as Professional Income:
The AO treated the foreign funds received by the assessee as professional income due to the absence of evidence supporting their transfer to the society and utilization for charitable purposes. The CIT(A) confirmed this treatment, noting that there was no registration under section 12A of the Income Tax Act for the society, which would have allowed for tax exemption. The Tribunal upheld the decisions of the AO and CIT(A), finding no infirmity in their orders. The Tribunal concluded that the assessee failed to discharge the burden of proof, and the entire amounts received were correctly treated as professional income and added to the assessee's total income.

Conclusion:
The Tribunal dismissed both appeals filed by the assessee, confirming that the foreign funds received were taxable as professional income due to the lack of evidence supporting their transfer and utilization for religious and charitable purposes. The decisions of the AO and CIT(A) were upheld, and the assessee's appeals were dismissed.