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Case Law Details

Case Name : Amikrupa Education Trust Vs ITO (ITAT Ahmedabad)
Appeal Number : ITA No. 581/Ahd/2023
Date of Judgement/Order : 24/01/2024
Related Assessment Year : 2017-18

Amikrupa Education Trust Vs ITO (ITAT Ahmedabad)

Introduction: In a significant judgment by the Ahmedabad Income Tax Appellate Tribunal (ITAT), the case of Amikrupa Education Trust Vs Income Tax Officer (ITO) has set a notable precedent concerning cash deposits made during the demonetization period in India. The ITAT’s decision, dated 24-01-2024, revolves around the challenge against the order by the National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, which involved an addition of Rs. 49,80,000 as unexplained money under Section 69A of the Income Tax Act, 1961.

Detailed Analysis:

Amikrupa Education Trust, the appellant, faced scrutiny for depositing cash amounting to Rs. 49,80,000 in its bank account during the demonetization period. The Assessing Officer (AO) initially added this amount under Section 69A as unexplained money, a decision upheld by the CIT(A). The core issue revolved around whether cash deposits made during demonetization could be considered unexplained if the assessee provides a satisfactory explanation of their source.

The ITAT examined the trust’s submissions and evidences, including details of student fees, consulting fees, interest income, and specific funds related to educational activities. The tribunal noted that the assessee’s books of accounts, which were not rejected at any stage, clearly documented these transactions, including the accumulation of cash in hand leading up to the demonetization period.

Importantly, the ITAT highlighted that the invocation of Section 69A requires a lack of record in the books of accounts or unsatisfactory explanations from the assessee. However, in this case, Amikrupa Education Trust had documented evidence supporting the source of cash deposits, including bank statements and details of fees received from students.

Conclusion: The Ahmedabad ITAT’s ruling in favor of Amikrupa Education Trust underscores a crucial aspect of tax law, emphasizing that cash deposits made during the demonetization period cannot be automatically considered as unexplained money under Section 69A if the assessee can substantiate their source. This decision not only provides relief to the appellant but also serves as a guide for similar cases where taxpayers have faced additions for cash deposits made during demonetization. The ITAT’s order, allowing the appeal of Amikrupa Education Trust, reinforces the principle of fairness in tax assessments, ensuring that taxpayers are not unduly penalized for compliant financial behavior. This landmark ruling will likely influence the handling of similar cases, highlighting the importance of maintaining detailed records and providing clear explanations for cash transactions, especially during extraordinary events like demonetization.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This is an appeal filed against the order dated  21-04- 2023 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2017-18.

Section 69A Cash Deposits during Demonetization not Taxable if Source Explained

2. The grounds of appeal are as under:-

1. The order passed by the Ld. CIT (A) is against law, equity & justice.
2 The Ld. CIT(A) has erred in upholding the addition U/S 69A of the Act of Rs. 49,80,000/- of cash deposited in bank as unexplained money. Rs. 40,90,878/-
3. The Ld. CIT(A) has erred in law and on facts in invoking section 115BBE of the Act when transactions are occurred prior to insertion of provision on statute.
4. The appellant Craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.
Total tax effect (see note below) Rs. 40,90,878/-

3. The assessee trust filed its return of income for assessment year 2017-18 on 07-11-2017 declaring total income at Rs. nil. The case was selected for complete scrutiny and notice u/s. 143(2) was issued on 24-09-2018 and  the same was emailed to the Thereafter, notices u/s. 142(1) of the Income Tax Act, dated 06-05-2019 and 16-10- 2019 were issued and emailed to the assessee requiring to submit certain details/information. In response to the notices, the assessee trust submitted the  details. The assessee is a public trust and registered u/s. 12AA of the Act dated 26- 07-2007.   The  trust is doing educational activities by  running a college in the name of  Vadodara  Design  Academy.  During the year under consideration, the source of income of the assessee trust is  students  fees,  consulting  fees  and  interest. In the return of income, the trust has shown gross receipts of Rs. 1,42,83,126/- and has applied income of Rs. 1,73,98,907/- for revenue expenditure towards  objects  of trust. The Assessing Officer observed that on 01-11-2016 the assessee has shown accumulated cash on hand of Rs. 10,09,134/- thereby showing cash receipt of Rs. 22,04,000/- towards study tour expense of Rs. 18,30,000/- Building Event Fund on 01-11-2016. According to the cash book, total cash on hand as on 01-11-2016 is of Rs. 51,33,134/-.   Out of this cash balance on hand, the assessee has shown  cash  deposit into bank account held with Kotak Mahindra Bank totaling to Rs. 49,80,000/-. The  Assessing Officer after taking cognizance of the assessee’s submission made addition of Rs. 49,80,000/- u/s. 69A on account of unexplained money.

4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

5. The A.R. submitted that the study tour fund, Buildthon event fund as well as the cash in hand was properly shown in the books of accounts including the other related cash received by the assessee. During the demonetization period, the assessee was having the cash in hand which was never denied by the Assessing Officer as well as by the CIT(A) and thus deposited all cash on hand in denomination of Rs. 500 and Rs. 100. The ld. A.R. submitted that the Assessing Officer refused to accept the assessee’s contention with respect to the cash deposited during the period 09-11-2016 to 31-12- 2016 nearly on the pretext that the same  was deposited during the  demonetization  period  and  hence  was  suspicious   in nature. The transactions are duly recorded in audit books of accounts of the assessee and thus it cannot be treated as unexplained  money  u/s.  69A  of  the  Act.  The  ld.  ld.   A.R. further submitted that the invocation  of  section  69A  can  be done   only  when  assessee  has  recorded  different  transactions in books  of  accounts.  Besides  this,  the  Assessing  Officer  has not  rejected  the  books  of  the  assessee.  The  ld.  A.R.  relied upon the decision  of  Hon’ble  Apex  Court  in  case  of Parasthuram Potterty Works Ltd. vs. ITO 106 ITR 1 (SC).

6. The D.R. submitted that no bank slip was attached during the submission of the evidence before the Assessing Officer as well as before the CIT(A). Thus, the assessee has not fully disclosed the cash deposits and thus it remains unexplained and therefore section 69A of the Act was properly invoked. The ld. D.R. further submitted that the assessee has not given the details as to fees received/elective income/loan as well as the buildthon fund  and  study  tour fund including the cash book from the bank from 01-04-2016 to 08-11-2016 and the date of cash deposits in bank from 01-04-2016 to 08- 11-2016.    The ld. D.R. relied upon the assessment order and the order of the CIT(A).

7. Heard both the sides and perused all the relevant materials available on record. There is a delay of 35 days in filing the present appeal for which the assessee has filed the condonation of delay application stating therein the reason for The reason for delay appears to  be  genuine,  hence delay in filing present appeal is condoned. It is pertinent to note that the books of accounts of the assessee trust  were never rejected at any point of time by the Assessing Officer. Besides this, the evidences produced by the assessee before the Assessing Officer as well as before the CIT(A) clearly shows that the assessee has  received fees from  students related  to the event as well as study tour including the buildthon event fund. The assessee has given the cash bills from bank from 01-04-2016 to 08-11-2016. Hence, the assessee has given the expenses for the said period. Thus, the assessee has given all the details as to how the assessee has that much cash in hand during the demonetization period. This was never doubted by the Revenue. In fact, the bank statements clearly  show including the details given of the students from which the fees and the money has been received. The bank slip cannot be crucial evidence to reject the other direct evidence produced by the assessee before the Assessing Officer. Thus, the Assessing Officer as well as the CIT(A) was not right in making the addition of cash deposits amounting to  Rs.  49,80,000/-  in bank account during the demonetization period by invoking section 69A as the assessee has fully explained the cash deposits and thus the same cannot be treated as unexplained money. Thus, the appeal of the assessee is allowed.

8. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 24-01-2024

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