2019 (5) TMI 1057 - AT - Income Tax

Tribunal Upholds CIT (A) Decision on Section 68 Addition

ACIT, Circle-2, Meerut Versus Shree Shiv Vankeshawar Educational & Social Welfare Trust

The Tribunal dismissed the appeal, upholding the CIT (A)'s decision to delete the addition under section 68 and confirming that the donations were not ... Exemption u/s 11 - normal donation OR corpus Donation - assessment of trust - Addition u/s 68 r.w.s 115BBC - HELD THAT:- If a normal donation is doubted by the AO about its genuineness, and identity of the donors, the addition cannot be made u/s 68 in the case of the trust as it has already been offered as an income. The identical issue arose before the Hon‟ble Delhi High Court in the director of income tax exemption vs Keshav social and charitable foundation [2005 (2) TMI 84 - DELHI HIGH COURT] wherein the Court held that when an income is credited to the income and expenditure account by the assessee trust then provisions of section 68 does not apply. Honourable High Court recognized that the situation may be different in case of corpus donation. As in the present case the amount of donation as held by the CIT – A is normal income already offered by the trust, these fact has never been controverted by the DR, respectfully following the decision of the Hon‟ble Delhi High Court, we uphold the decision of the learned CIT – A that the addition u/s 68 of the above donation cannot be made. Whether a normal donation or a corpus donation, cannot be termed as anonymous donation u/s 115BBC? - HELD THAT:- Sub-section (3) defines “anonymous donation” to mean any voluntary contribution referred to in section 2(24)(iia), where a person receiving such contribution does not maintain a record consisting of the identity of the person making such contribution indicating the name and address of the person and such other particulars as may be prescribed. We asked whether the central board of direct tax as prescribed any particulars which is required to be maintained by the assessee trust, the answer was no. We also did not find any such prescription about what kind of particulars the assessee trust is required to maintain. Therefore, it is apparent that at present the simple requirement is maintaining the name and address of the donors. In the present case, the assessee has already given much more detail then the name and address of the donors. Therefore with respect to the donation from 1038 persons the assessee has shown their name and address along with other particulars. It is not the case of the revenue that assessee has not maintained and provided these details to the assessing officer. We do not find that the donation received by the assessee falls into the definition of anonymous donation. Hence on the applicability of the provisions of section 115BBC we find that the learned CIT – A has correctly reached the conclusion that the donation received by the assessee is not an anonymous donation as provided u/s 115BBC. - Decided in favour of assessee Issues:1. Addition made by AO under section 68 read with Section 115BBC of the Income Tax Act is deleted by CIT (A).2. Applicability of section 115BBC of the Income Tax Act to the case.Analysis:1. The appeal was filed against the order of the Commissioner Of Income Tax (Appeals) deleting the addition made by the AO under section 68 read with Section 115BBC of the Income Tax Act. The AO contended that the signatures on confirmations and affidavits of donors were forged, and the assessee failed to prove the genuineness of transactions and creditworthiness of donors. However, the CIT (A) found that the donations were normal donations duly recorded by the assessee and shown as income, not corpus donations. The CIT (A) held that provisions of section 68 were incorrectly invoked and that section 115BBC was not applicable as the donations were not anonymous. The CIT (A) relied on case laws and directed the AO to allow exemption under sections 11 and 12 of the Income Tax Act.2. The AO argued that all donations were bogus and should be treated as anonymous donations under section 115BBC. However, the CIT (A) found that the donations were not anonymous as the assessee maintained records of donors' details. The AO's contention that the donations were corpus donations was refuted by the CIT (A), who held that the donations were normal income offered by the trust. The Tribunal upheld the CIT (A)'s decision, citing a Delhi High Court case that when income is credited to the trust's account, section 68 does not apply. The Tribunal also found that the donations did not fall under the definition of anonymous donations as per section 115BBC, as the assessee had provided detailed donor information.In conclusion, the Tribunal dismissed the appeal filed by the AO, upholding the CIT (A)'s decision to delete the addition made under section 68 and confirming that the donations were not anonymous under section 115BBC. The Tribunal's decision was based on the distinction between normal and corpus donations, as well as the adequacy of donor information provided by the assessee.