Sant Baba Sunder Singh Ji Canadian Charitable Trust Vs CIT (Punjab and Haryana High Court)
The Punjab and Haryana High Court heard an appeal concerning penalties levied on Sant Baba Sunder Singh Ji Canadian Charitable Trust (the trust) by the Income Tax authorities for violation of provisions of the Income Tax Act, 1961. The appellant challenged the orders of the Income Tax Appellate Tribunal, Division Bench, Chandigarh (14.06.2016), which had upheld the orders of the Commissioner of Income Tax (Appeals), Patiala (26.12.2013), and the penalty order of the Joint Commissioner of Income Tax, Sangrur Range, Sangrur (30.06.2011). The core question of law was whether a penalty could be imposed under Section 271E of the Act for repayment of a loan in cash in a subsequent year when the loan itself had been treated as income under Section 68 due to doubts about its genuineness.
The trust, registered under the Societies Registration Act, 1860 on 22.03.1996, ran educational institutions, including Akal Academy and Brakkat College of Education at Village Tallewal. During the Assessment Year 2008-09, the Income Tax Officer, Barnala, in the order dated 08.11.2010, added amounts of Rs.3,37,000/- and Rs.79,784/- received as cash advances from the Mohattim of the Gurudwara, treating them as income under Section 68 due to inability of the trust to prove their genuineness. The total addition amounted to Rs.36,86,342/-, and penalty proceedings under Section 271D were initiated separately but ultimately withdrawn due to low tax effect.
