2022 (6) TMI 667 - AT - Income Tax

Tribunal Upholds Identity of Donors in Trust's Appeal, Emphasizes Section 115BBC Compliance

The Tribunal condoned the delay in filing the appeal by the Revenue based on specific dates, proceeding to adjudicate the case on its merits. The ... Requirement to maintain record of identity for donors under section 115BBC - Taxation of anonymous donations - Non-application of section 68 where donations are disclosed and applied for charitable purposes - Condonation of delay by excluding pandemic periodRequirement to maintain record of identity for donors under section 115BBC - Taxation of anonymous donations - Non-application of section 68 where donations are disclosed and applied for charitable purposes - Whether the donations received by the assessee are to be treated as anonymous donations liable to tax under section 115BBC. - HELD THAT: - The Tribunal examined the statutory definition of 'anonymous donation' in section 115BBC, which requires the recipient to maintain a record indicating the name and address of the donor and such other prescribed particulars. The assessee submitted names and addresses of 2,300 donors and produced confirmation letters; submissions were filed online in parts due to portal size restrictions. The AO had not doubted the genuineness of the donations in the assessment order and had accepted confirmations for 933 donors while disallowing only the remaining amount for lack of confirmation. The Tribunal held that absence of PAN in some confirmations does not render the donations anonymous because the statutory requirement is maintenance of name and address (and other particulars as may be prescribed), and no additional particulars beyond name and address have been prescribed. The Tribunal also noted that donations were made through banking channels and that receipt books/advertisements corroborate the fundraising. Further, section 68 was held inapplicable because the amounts were disclosed as donations and applied for charitable purposes. The Tribunal found that the AO failed to properly scrutinize the material before him and that the assessee had established identity of donors as mandated by section 115BBC; accordingly the donations could not be taxed as anonymous donations under section 115BBC. [Paras 6, 7]Donations are not anonymous within the meaning of section 115BBC and cannot be subjected to tax under that provision; no interference with the CIT(A)'s allowance.Condonation of delay by excluding pandemic period - Whether the delay of 135 days in filing the Revenue appeal before the Tribunal should be condoned. - HELD THAT: - The Tribunal applied the Hon'ble Supreme Court's decision in SMW(A) No.3 of 2020 to exclude the period between 15/03/2020 and 28/02/2022 from limitation computation for filing appeals. Applying that exclusion, the Tribunal found the delay to be condonable and exercised its discretion to condone the delay of 135 days, thereby admitting the appeal for merits adjudication. [Paras 2]Delay of 135 days in filing the appeal is condoned and the appeal is admitted for adjudication on merits.Final Conclusion: The Revenue appeal is dismissed; the Tribunal upholds the CIT(A)'s finding that the donations are not anonymous for the purposes of section 115BBC, and the cross-objection by the assessee is disposed of as supportive. Issues: Delay in filing appeal, Treatment of donations as anonymous, Compliance with section 115BBC of the ActDelay in filing appeal:The Revenue filed an appeal against the order of the Ld. CIT(A) with a delay of 135 days. The Tribunal condoned the delay based on the decision of the Hon'ble Supreme Court, excluding the period of limitation for filing appeals between specific dates. The Tribunal proceeded to adjudicate the case on its merits despite the delay.Treatment of donations as anonymous:The case involved an assessee, a Trust running educational institutions, which received a corpus donation but failed to file confirmation letters for a significant portion of the amount. The Ld. AO treated a substantial sum as anonymous donation under section 115BBC of the Act. The Ld. CIT(A) allowed the appeal after the assessee submitted confirmation letters from donors, numbering 2300, and provided evidence of filing these letters on the electronic portal of the department.Compliance with section 115BBC of the Act:The Revenue raised various grounds challenging the decision of the Ld. CIT(A), including issues related to the timing of submission of confirmation letters, lack of verification by the AO, and acceptance of the assessee's contentions. The Tribunal heard arguments from both sides and analyzed the provisions of section 115BBC, which require maintaining records of the identity of donors. The Tribunal noted that the assessee had provided details of donors, including names and addresses, to the Revenue Authorities, and the absence of PAN in confirmation letters did not render the donations anonymous. The Tribunal held that the donations were not anonymous as the identity of donors was established, and thus, the provisions of section 115BBC did not apply. Consequently, the Tribunal dismissed the appeal of the Revenue.This comprehensive analysis of the judgment covers the issues of delay in filing the appeal, treatment of donations as anonymous, and compliance with section 115BBC of the Act, providing a detailed overview of the legal proceedings and the Tribunal's decision.