Appellate Tribunal Upholds Anonymous Donations Addition

The Appellate Tribunal confirmed the addition of Rs. 2,35,89,700 as anonymous donations under section 115BBC of the Income-tax Act, 1961. The Tribunal emphasized that even though 85% of the donations were applied for charitable purposes, if a receipt is deemed anonymous, it falls under section 115BBC. The Tribunal set aside the previous decision due to inadequate time given to prove the genuineness of donors, directing the Assessing Officer to re-examine the case with the opportunity for the assessee to provide necessary evidence. The appeal was allowed for statistical purposes, stressing the importance of a fair examination by the AO.

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Issues:
Confirmation of addition of Rs. 2,35,89,700 as anonymous donations under section 115BBC of the Income-tax Act, 1961.

Analysis:
The only issue before the Appellate Tribunal was the confirmation of the addition of Rs. 2,35,89,700 as anonymous donations under section 115BBC of the Income-tax Act, 1961. The assessee, a society registered under section 12A and enjoying registration under section 80G, received donations during the assessment year 2016-17. The Assessing Officer (AO) issued notices to 49 persons from the list of donors provided by the assessee, but most notices were returned or remained unresponded. The AO treated the donations as anonymous and made the addition under section 115BBC. The Commissioner of Income Tax (Appeals) upheld the AO's decision, further directing consideration under section 68 read with section 115BBE of the Act.

The Tribunal noted that the assessee is a charitable trust and argued that since 85% of the donations were applied for the trust's objects, section 115BBC should not apply. However, the Tribunal held that if a receipt is deemed anonymous donations, it falls under section 115BBC, affecting the exemption under other sections. The Tribunal highlighted that section 13(7) clarifies that anonymous donations are not excluded from total income, subject to tax under section 115BBC.

Regarding the time given to prove the genuineness of donors, the Tribunal found that the AO did not allow adequate time before passing the order. Considering this, the Tribunal set aside the impugned order and directed the AO to re-examine the case, providing the assessee with an opportunity to produce necessary evidence. The assessee assured cooperation in this regard.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for a fair examination by the AO. The order was pronounced on 7th September 2020.

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