Facts of the Case

The assessee, Ms. Sanjana, was a spiritual teacher associated with Kriya Yog Ashram & Research Institute, Jhunsi, Allahabad, a non-profit organisation engaged in propagation of Kriyayoga. For Assessment Years 2012-13 to 2016-17, the Assessing Officer noticed substantial deposits in the assessee’s bank accounts and initiated proceedings under sections 147/148 of the Income-tax Act, 1961, treating the assessee as a resident liable to tax in India.

The assessee contended that the bank deposits represented voluntary donations received from devotees, including foreign nationals, in her capacity as a custodian for the Ashram, and that the funds were subsequently utilised for charitable activities. The Assessing Officer, however, treated excess of receipts over expenditure and certain bank deposits as unexplained income under section 69A or as income from other sources. The Commissioner of Income Tax (Appeals), NFAC partly sustained the additions. Aggrieved, the assessee preferred appeals before the Tribunal.

Issues Involved

  1. Whether voluntary donations received by the assessee as a custodian for a charitable institution could be taxed as her personal income.
  2. Whether excess of receipts over expenditure could be treated as taxable income in the hands of the assessee.
  3. Whether additions under section 69A were justified in absence of evidence that the deposits represented unexplained personal income.
  4. Whether the rule of consistency should be applied when similar additions were deleted in earlier assessment years.

Petitioner’s (Assessee’s) Arguments

The assessee submitted that she was not carrying on any business activity and was only acting as a conduit or custodian for funds belonging to Kriya Yog Ashram. It was argued that detailed confirmations, bank statements, and utilisation of funds for charitable purposes were furnished and accepted by the Assessing Officer in earlier years.

Reliance was placed on appellate orders for Assessment Years 2010-11 and 2011-12, wherein similar additions made under section 69A were deleted on identical facts. It was contended that there was no change in facts or circumstances and, therefore, the rule of consistency required deletion of the additions.

Respondent’s (Revenue’s) Arguments

The Revenue relied upon the assessment and appellate orders, contending that the assessee had substantial bank deposits and surplus receipts, which were rightly treated as her income. It was argued that principles of res judicata do not strictly apply to income-tax proceedings and that each assessment year is separate.

Court Order / Findings

The Tribunal observed that the Department itself had accepted that the assessee was engaged in charitable activities connected with Kriya Yog Ashram and that the funds were utilised for such purposes. It was noted that the Assessing Officer had not brought any material on record to establish that the bank deposits or excess receipts represented personal income of the assessee.

The Tribunal further held that voluntary donations received by the assessee in her capacity as a custodian for the Ashram could not be taxed as her personal income. Excess of receipts over expenditure, including interest-free loans and amounts carried forward for utilisation in subsequent years, could not be treated as taxable income in absence of any finding that such amounts were bogus or unexplained.

Applying the rule of consistency and relying on earlier appellate orders in the assessee’s own case, the Tribunal deleted the additions sustained by the CIT(A). Accordingly, the appeals of the assessee for Assessment Years 2012-13 to 2016-17 were allowed.

Important Clarification

The Tribunal clarified that where an individual receives voluntary donations merely as a custodian or conduit for a charitable institution, such receipts cannot be assessed as personal income. Additions under section 69A or on account of excess receipts over expenditure require cogent evidence that the amounts represent unexplained or personal income of the assessee, and the rule of consistency must be followed in absence of any change in facts.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770633319_SANJANAALLAHABADVS.ITOWARD15ALLAHABAD.pdf

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