2019 (9) TMI 812 - AT - Income Tax

Reopening of assessment u/s 147 - reasons recorded after the expiry of 4 years from the end of the assessment year - HELD THAT - In the present case the central bureau of investigation has made the detailed enquiry and found that the financing of the appellant to the extent stated in the reasons recorded are not what is disclosed by the assessee but a camouflage transaction. It is also interesting to note in the para number 16 of the order of the honourable High Court where in it relied upon the decision of CIT vs Multiplex trading and industrial company limited 2015 (10) TMI 23 - DELHI HIGH COURT and stated that where in cases where the primary facts as asserted by the assessee for framing of assessment are subsequently discovered as false the reopening of assessment may be justified. In the present case the primary facts stated by the assessee in the original assessment proceedings are found to be false. In the present case the assessing officer has received a specific information about the huge cash deposit in the bank account of the assessee and through Mr SK Sharma and backed by the statement of the donors statement of the chartered accountant statement of the entry operator et cetera reasons are recorded. Unexplained income in treating the donation is bogus donation - HELD THAT - Apparently if the trusts has credited alleged donation to the income and expenditure account provisions of section 68 cannot be applied. Therefore in such cases from 1-4-2007 u/s 15 BBC the provisions of anonymous donation and its taxability at a different rate applies. However if the donation is not credited to the income and expenditure account on provisions of section 68 are rightly applied by the lower authorities. We confirm the actions of lower authorities in taxing the sum of INR 4, 000, 000 as unexplained income being bogus donation credited to the general fund in the balance sheet. In the result ground number 2 of the appeal is dismissed.

Summary

Issues Involved:
1. Reopening of assessment under section 148 of the Income Tax Act.
2. Addition of ?4,000,000 as unexplained income for AY 2006-07.
3. Enhancement of income by ?3,500,000 for AY 2007-08.
4. Addition of ?6,000,000 as unexplained income for AY 2007-08.

Issue-Wise Detailed Analysis:

1. Reopening of Assessment under Section 148:
The reopening of the assessment was challenged by the assessee on the grounds that the reassessment was made after four years from the end of the assessment year and there was no failure on the part of the assessee to disclose fully and truly all material facts. The assessee relied on several judicial precedents, including decisions from the Delhi High Court and the Supreme Court. However, the Tribunal upheld the reopening of the assessment, stating that the information received from the Deputy Director of Income Tax and the Central Bureau of Investigation (CBI) indicated that a significant amount of cash was deposited in the bank accounts of the society, which was not disclosed by the assessee. The Tribunal concluded that the assessee failed to disclose fully and truly the material facts necessary for the assessment, justifying the reopening under section 148.

2. Addition of ?4,000,000 as Unexplained Income for AY 2006-07:
The assessee argued that the addition of ?4,000,000 as unexplained income was unjustified as the assessing officer did not conduct an independent inquiry. The Tribunal noted that the assessee failed to provide satisfactory evidence to substantiate the genuineness of the donations received. The statements of the donors recorded by the CBI revealed that they did not make any donations to the assessee. The Tribunal upheld the addition under section 68 of the Income Tax Act, as the assessee failed to prove the genuineness of the transactions.

3. Enhancement of Income by ?3,500,000 for AY 2007-08:
The Tribunal observed that the addition of ?3,500,000 was based on the statement of Shri Mahesh Garg, who confirmed providing accommodation entries to the assessee. The learned CIT (A) deleted the addition for AY 2006-07 and directed it to be taxed in AY 2007-08. The Tribunal upheld this decision, noting that the amount was credited in the books of accounts in AY 2007-08.

4. Addition of ?6,000,000 as Unexplained Income for AY 2007-08:
For AY 2007-08, the assessee received donations amounting to ?9,500,000 from 122 persons. The assessee failed to provide substantial evidence to prove the genuineness and creditworthiness of the donors. The CBI's investigation revealed that the donors were not genuine, and the donations were bogus. The Tribunal upheld the addition of ?6,000,000 as unexplained income under section 68 of the Income Tax Act. Additionally, the Tribunal confirmed the inclusion of ?3,500,000 as accommodation entry from Shri Mahesh Garg in AY 2007-08, as directed by the learned CIT (A).

Conclusion:
The Tribunal dismissed the appeals filed by the assessee for both assessment years 2006-07 and 2007-08, upholding the reopening of assessments, additions of unexplained income, and enhancement of income based on the findings of the lower authorities and the CBI investigation. The Tribunal emphasized the failure of the assessee to disclose fully and truly the material facts necessary for the assessment and the lack of satisfactory evidence to substantiate the genuineness of the donations received.