Trust wins on Section 69A challenge, anonymous donations through boxes exempt from Section 115BBC

ITAT Mumbai ruled in favor of the assessee trust on multiple grounds. Section 69A was held inapplicable as donated amounts were properly recorded in audited books and bank statements, with no undisclosed assets found. The tribunal remanded interest on corpus fund matter to AO for verification of its nature. Regarding anonymous donations, ITAT determined Section 115BBC doesn't apply to charitable trusts receiving offerings through donation boxes, as maintaining donor records is impractical for such institutions. The provision targets unaccounted money in educational/medical institutions receiving capitation fees, not legitimate charitable donations.

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Issues Involved:

1. Determination of total income and disallowance of deductions.
2. Applicability of Section 69A and Section 115BBE of the Income Tax Act.
3. Verification of interest claimed pertaining to corpus fund.
4. Applicability of Section 115BBC regarding anonymous donations.

Summary:

1. Determination of Total Income and Disallowance of Deductions:
The assessee, a charitable trust registered under Section 12A of the Income Tax Act, filed its return of income declaring NIL income. The Assessing Officer (AO) assessed the income at Rs. 2,88,96,000/-, treating certain cash deposits as unexplained money under Section 69A and chargeable to tax under Section 115BBE. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed the addition under Section 69A, leading to the enhancement of assessed income to Rs. 7,75,34,410/-.

2. Applicability of Section 69A and Section 115BBE:
The Tribunal examined whether Section 69A, which pertains to unexplained money, could be applied. It concluded that Section 69A is applicable only when the money is not recorded in the books of account. In this case, the donations were duly recorded in the books and bank statements, and the books were audited. Therefore, Section 69A and consequently Section 115BBE could not be applied. The Tribunal relied on various judicial pronouncements to support its decision, including cases like *DCIT v. M.C. Hospital* and *CIT v. Uttaranchal Welfare Society*.

3. Verification of Interest Claimed Pertaining to Corpus Fund:
Regarding the interest claimed by the assessee, the Tribunal directed the AO to verify if the interest pertains to the corpus fund. If so, it should be allowed as an accretion to the corpus fund; otherwise, it should be deemed income subject to the benefits available under Section 12A.

4. Applicability of Section 115BBC Regarding Anonymous Donations:
The Tribunal discussed the provisions of Section 115BBC, which pertains to the taxation of anonymous donations. It noted that the assessee, being a religious and charitable trust, received donations in donation boxes from numerous devotees. The Tribunal emphasized that it is generally not possible for such institutions to maintain records of each donor. It concluded that the provisions of Section 115BBC are not applicable to the assessee-trust, as they are meant to check the inflow of unaccounted money into institutions like universities and medical institutions. The Tribunal relied on cases such as *CIT (E) v. Bhagwan Shree Laxmi Naraindham Trust* to support its view.

Conclusion:
The Tribunal allowed the appeal of the assessee for statistical purposes, directing the AO to verify the interest claimed and concluding that Sections 69A and 115BBE were not applicable in this case. The provisions of Section 115BBC were also deemed inapplicable to the assessee's donations.

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