JCIT (OSD) Vs Lekh Raj Educational & Charitable Trust (ITAT Chandigarh)
The Income Tax Appellate Tribunal (ITAT), Chandigarh, recently delivered its order in the appeal filed by the Joint Commissioner of Income Tax (OSD) against the Lekh Raj Educational & Charitable Trust. The case centered on substantial additions made by the Assessing Officer (AO) to the trust’s income, which were subsequently deleted, either wholly or partly, by the Commissioner of Income Tax (Appeals) [CIT(A)]. The Revenue’s appeal contested these deletions, totaling Rs. 9,10,37,838.
Background of the Case
The dispute primarily involved two major categories of additions: Rs. 5,89,04,300 on account of unexplained corpus funds and Rs. 3,21,33,538 due to unexplained unsecured loans. The Revenue argued that the CIT(A) erred in deleting these additions, asserting that the trust failed to adequately prove the genuineness of the transactions or the identity and creditworthiness of the donors and lenders.
Unexplained Corpus Fund: A Precedent-Setting Decision
The first significant point of contention revolved around the unexplained corpus fund of Rs. 5,89,04,300. The Assessing Officer had made this addition under Section 68 of the Income Tax Act, 1961, alleging that the trust could not substantiate the genuineness of these donations. The trust had provided names of donors for cheque contributions but lacked comprehensive details like addresses or Permanent Account Numbers (PANs), and for cash donations, even names were not specified. The AO concluded that merely providing a list of donors was insufficient to establish genuineness.
