Addition u/s 68 for corpus donation received from struck off companies – SLP dismissed
In a recent judgment, Hon’ble Supreme Court dismissed the Special Leave Petition (SLP) of the assessee against the order of the High Court upholding addition under section 68 towards corpus donation received from companies struck off from Registrar of Companies.
ABCAUS Case Law Citation:
4501 (2025) (04) abcaus.in SC
In the instant case, the assessee was a public charitable trust registered under Section 12A of the Income Tax Act, 1961 (the Act) and under Section 80G of the Act. It was running only one educational institution.
The assessee filed return by showing nil income. The case having been picked up for scrutiny under CASS, notice had been issued and a questionnaire had been issued.
The assessee had received corpus donation from six companies. The list of names and addresses of the donors were sought to be verified and random notices had been issued under Section 133(6) of the Act. Resultantly, the addition was made u/s 68 for three companies and the tax was levied u/s 115BBE and 115BBC of the Act on the ground that the said donor entities are being presently struck off record of registered companies. The revenue authorities have treated these three entities as “Shell Company”.
The Assessing Officer (AO), CIT(A) and the ITAT upheld the addition and the matter travelled to the Hon’ble High Court.
Before the High Court the assessee submitted that there was sufficient material to show that the three companies existed and had been filing returns at the time of making the corpus donation. It was stated that the amounts had been received by way of cheque, the companies were incorporated 31 years before and even if they were no longer registered at the time when the matter was inquired, there was no such reason why addition should have been made.
The Hon’ble High Court observed that the two companies at West Bengal had sent replies by post from Mumbai and it was in such circumstances the Assessing Officer came to the conclusion that the explanation given was not bona fide. Also, assessee failed to produce the director and shareholders of the companies. The genuineness was further clouded by the fact that present status of company in ROC was strike off or dormant.
Further, the High Court noted that nothing was brought on record that those companies were actually functioning at the time of donations and when they were struck off.
In such circumstances, the High Court opined that the genuineness, identity and creditworthiness of these companies was rightly doubted by the Assessing Officer and in such circumstances, the additions had been made. In view of the above, the High Court dismissed the appeal of the assessee.
Not satisfied, the assessee filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court challenging the order of the High Court. The Supreme Court dismissed the SLP with the following remark,
“There is a delay of 388 days in filing the Special Leave Petition which has not been satisfactorily explained. Even otherwise, we have gone through the Special Leave Petition and do not find any merit in the same. The Special Leave Petition is, therefore, dismissed on the ground of delay as well as on merits.”
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