Case Law Details
ACIT Vs Uthangarai Sri Vidya Mandir Educational Trust (ITAT Chennai)
The case of ACIT Vs Uthangarai Sri Vidya Mandir Educational Trust, heard by the Income Tax Appellate Tribunal (ITAT) in Chennai, delves into the applicability of Section 115BBE of the Income Tax Act. This section pertains to the taxation of unexplained income at a higher rate. The trust contested the application of this section to cash and gold coins seized during a search, arguing that Section 115BBE applies only when no explanation is offered for the income.
In the assessment year 2017-18, the trust raised objections against the application of Section 115BBE on cash amounting to Rs. 2.75 crores and gold coins worth Rs. 7.35 lakhs seized during a search operation. The trust maintained that the cash found was recorded in its books of accounts and explained as part of regular expenses and withdrawals made over time. However, the source of the gold coins was not adequately explained.
Both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] acknowledged that the cash in question was recorded in the trust’s books of accounts. However, they raised concerns about the trust’s failure to file income tax returns for certain assessment years and questioned the basis for declaring the opening cash balance. Despite the explanation provided by the trust regarding the origin of the cash, the authorities asserted that the entire amount found during the search should be assessed in the year of the search.
Regarding the gold coins, since the source could not be explained, the provisions of Section 115BBE were deemed applicable to this amount.
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