K. P. Religious & Charitable Trust Vs ITO (ITAT Delhi)
Delhi ITAT Remands ₹1.17 Crore Addition After Trust Alleges Fake Bank Account Opened Using Forged Documents
The Delhi ITAT restored the matter to the CIT(A) after finding that the tax authorities had failed to conduct a proper enquiry into the assessee trust’s claim that a fraudulent bank account had been opened in its name using forged documents.
The assessee, K.P. Religious & Charitable Trust, challenged an addition of ₹1.17 crore made under section 69 on account of deposits in a Punjab National Bank account allegedly standing in its name. The trust consistently maintained that the account had been fraudulently opened and operated by third parties (Chander Shekhar and Usha Yadav) using forged KYC documents, and that it had even lodged an FIR against the culprits.
The Assessing Officer, however, treated the deposits as unexplained income of the trust, relying primarily on the bank records showing the managing trustee as the authorised signatory. The CIT(A) confirmed the addition, observing that the trust had failed to conclusively establish forgery and had not explained the source of the deposits.
Before the Tribunal, the assessee produced a signature comparison report and argued that neither the Assessing Officer nor the CIT(A) had investigated the alleged fraud, examined the real beneficiaries, or provided an opportunity for cross-examination of the concerned bank officials.
Accepting that these issues required deeper factual verification, the ITAT held that both the Assessing Officer and the CIT(A.), who possess co-terminus powers, ought to have conducted a proper and detailed enquiry into whether the bank account had in fact been opened through forged documents. Since such enquiry was absent, the Tribunal set aside the appellate order and restored the matter to the CIT(A) for fresh adjudication after considering all evidence and granting adequate opportunity to the assessee. The appeal was allowed for statistical purposes.
Cases Discussed
- Mahesh Gautam v. Commissioner of Income-tax (Allahabad HC), [2025] 178 com597(Allahabad)
- CIT v. Kuwer Fibers (P.) Ltd. (Delhi HC), [2017] 77 com345(Delhi)
- M/s Pebble Investment And Finance Ltd. v. ITO (SC), [2017-TIOL 238-SC IT] Supreme Court
- Central India Electric Supply Co. Ltd. v. Income-tax Officer Company Circle-x New Delhi (Delhi HC), [2011] com169 (Delhi)
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the orders of the National Faceless Appeal Centre Delhi [hereinafter referred to as “Ld. NFAC”] vide order dated 07-11-2025 arising out the Assessment Order passed dated 24-12-2018 under section 143(3)/147 of the Income Tax Act, 1961 (in short “the Act” Act, dated 28-06-2023.
