2024 (1) TMI 350 - AT - Income Tax

Trust donations with complete donor details cannot be treated as anonymous under Section 115BBC

M/s. Gian Sagar Educational and Charitable Trust Versus DCIT, Central Circle-29, Delhi

M/s. Gian Sagar Educational and Charitable Trust Versus DCIT, Central Circle-29, Delhi - TMI Issues Involved:1. Treatment of voluntary donations as 'anonymous donations' under section 115BBC of the Income Tax Act, 1961.2. Maintenance of complete records of the identity of donors.3. Disregard of confirmations furnished by the appellant.4. Requirement to prove the 'genuineness' of voluntary contributions.5. Implications of non-receipt of response to notice issued under section 133(6).6. Non-following of binding decision of the CIT(A) in the appellant's own case for the earlier assessment year.7. Levy of interest under section 234B of the Act.Summary:1. Treatment of Voluntary Donations as 'Anonymous Donations':The assessee contested the treatment of voluntary donations amounting to Rs. 11,60,77,000 as 'anonymous donations' under section 115BBC of the Income Tax Act, 1961. The Tribunal noted that the Assessing Officer (AO) had made this addition due to the failure of the assessee to provide satisfactory evidence regarding the identity and genuineness of the donors. The AO had invoked section 115BBC, treating the donations as income from undisclosed sources.2. Maintenance of Complete Records of Donors:The assessee argued that it had maintained complete records of the identity of the donors, including names, addresses, PAN numbers, and other details. The Tribunal observed that the assessee had indeed provided these details, but the AO had found the confirmations submitted by the assessee to be unconvincing, citing inconsistencies and lack of substantial evidence.3. Disregard of Confirmations Furnished:The AO disregarded the confirmations provided by the assessee, noting that many notices issued under section 133(6) were either returned undelivered or received no response. The Tribunal found that while the assessee had submitted some confirmations, the AO's concerns about the genuineness of these documents were valid.4. Requirement to Prove Genuineness:The assessee contended that there was no requirement under section 115BBC to prove the genuineness of voluntary contributions. However, the Tribunal upheld the AO's stance that the genuineness and creditworthiness of the donors needed to be established to qualify for exemption under section 11.5. Non-receipt of Response to Notices:The assessee argued that non-receipt of responses to notices issued under section 133(6) should not automatically render the donations non-genuine. The Tribunal noted that the AO had given ample opportunity to the assessee to provide evidence, but the responses were inadequate, leading to the conclusion that the donations were not genuine.6. Non-following of Binding Decision:The assessee pointed out that the CIT(A) had not followed the binding decision in the appellant's own case for the earlier assessment year 2008-09, where similar issues were decided in favor of the assessee. The Tribunal acknowledged this but emphasized that each assessment year must be evaluated on its own merits.7. Levy of Interest under Section 234B:The Tribunal did not specifically address the issue of the levy of interest under section 234B, as the primary focus was on the treatment of donations under section 115BBC.Conclusion:The Tribunal, after considering the rival submissions and the factual matrix, found that the issue was squarely covered in favor of the assessee by the order of the coordinate bench of the Tribunal for AY 2008-09. The Tribunal directed the AO to delete the addition of Rs. 11,60,77,000 made under section 115BBC, thereby allowing the appeal of the assessee.