December 19, 2025 : The Pune Bench of the Income Tax Appellate Tribunal has held that reassessment proceedings initiated on the basis of unexplained cash credits under Section 68 of the Income-tax Act, 1961 cannot be sustained where the final addition is made under Section 115BBC relating to anonymous donations. The Tribunal ruled that Sections 68 and 115BBC operate in distinct and mutually exclusive fields, and therefore the very assumption of jurisdiction under Section 147 was invalid, rendering the entire reassessment proceedings unsustainable in law.
The Bench comprising Accountant Member Dr. Manish Borad and Judicial Member Vinay Bhamore allowed the appeals filed by Rajarshi Shahu Shikshan Sanstha, a Maharashtra-based charitable trust engaged in running schools and colleges in Miraj and surrounding districts of Sangli. The Tribunal set aside additions made towards alleged anonymous donations for Assessment Year 2012–13 and connected years.
For AY 2012–13, the trust had filed its return declaring nil income after claiming exemption available to charitable institutions. The return was subjected to scrutiny and a regular assessment under Section 143(3) was completed in March 2015, accepting the returned income. Similar returns were filed for subsequent years.
In February 2019, the Income Tax Department conducted a survey under Section 133A at the trust’s premises. Based on statements recorded during the survey and replies from certain persons who allegedly denied having made donations, the Assessing Officer formed a belief that donations received by the trust were not genuine.
While recording reasons for reopening the assessment, the Assessing Officer alleged that donations aggregating to ₹1.36 crore had not been satisfactorily explained and were liable to be taxed as unexplained cash credits under Section 68. Approval under Section 151 was also obtained on this basis. However, when the reassessment order was passed in December 2019, no addition was made under Section 68. Instead, the entire amount was treated as anonymous donations and taxed under Section 115BBC.
The assessee challenged the reassessment before the Commissioner of Income Tax (Appeals), arguing that the reassessment was invalid since the final addition was made under a provision entirely different from the one forming the basis of reopening. The appellate authority rejected the plea, prompting the assessee to approach the Tribunal.
Before the ITAT, the key question was whether reassessment initiated on the footing of Section 68 could survive when the final addition was made under Section 115BBC without recording fresh reasons or issuing a fresh notice.
The Tribunal examined both provisions in detail and noted that Section 68 deals with unexplained credits in the books, requiring proof of identity, creditworthiness and genuineness, whereas Section 115BBC applies only to charitable institutions and taxes donations as anonymous where prescribed donor particulars are not maintained. The two provisions, the Bench held, operate in different spheres and cannot be substituted for each other.
The Bench observed that the Assessing Officer’s “reason to believe” was confined to Section 68, yet the reassessment order completely abandoned that basis and invoked Section 115BBC. Relying on the Bombay High Court’s ruling in CIT v. Jet Airways (I) Ltd., and noting that the Supreme Court had declined to interfere in Lark Chemicals Pvt. Ltd., the Tribunal reiterated that if no addition is made on the issue which formed the basis of reopening, the reassessment itself fails.
Rejecting the Revenue’s reliance on Explanation 3 to Section 147, the Tribunal held that the Explanation does not permit substitution of the original ground of reopening with a new and unrelated charging provision. It further noted that no show-cause notice proposing taxation under Section 115BBC was issued and that the reopening was initiated beyond four years without establishing any failure by the assessee to disclose material facts fully and truly.
Holding that these defects went to the root of jurisdiction, the Tribunal quashed the reassessment proceedings for AY 2012–13. Since the reopening itself was held to be invalid, the Tribunal did not examine the merits of the addition under Section 115BBC. All appeals filed by the assessee were allowed and the impugned additions were set aside in full.
Case Title: Rajarshi Shahu Shikshan Sanstha v. ITO
Case No.: ITA Nos. 1121 to 1126/PUN/2024
