2024 (11) TMI 961 - AT - Income Tax

Trust donations with complete donor records not anonymous under section 115BBC despite incorrect AO invocation

Nageshwara Charitable Trust Versus Income Tax Officer Exemption, Ward–1, Nagpur And (Vice-Versa)

ITAT Nagpur held that trust donations were not anonymous under section 115BBC as the assessee maintained complete donor records including names, ... Assessment of trust - addition as anonymous donations u/s 115BBC - donation remained unverified due to donation denied by the persons, insufficient address and no reply received from the donors - HELD THAT:- As decided in Shri Dadasaheb Gawai Charitable Trust [2024 (7) TMI 836 - ITAT NAGPUR] anonymous donations are concerned, the assessee maintained the record of the identity and address of the persons who are making contribution and other particulars and, therefore, provisions of section 115BBC of the Act are not applicable. In the present case, the assessee has maintained identity of the donors i.e., complete details such as name, address, PAN card details, Aadhar details and, hence, provisions of section 115BBC of the Act are not applicable to the assessee Trust. We find that the assessee has given all the details of the donors including names, address, PAN card details, Aadhar details, etc. Thus, the assessee discharged onus casted upon it by producing all the details before the AO. AO without following the procedure and without providing proper opportunity to the assessee, doubted the genuineness of the donations and invoked the provisions of section 115BBC of the Act, which is not correct. CIT(A) after considering all the facts and explanation given by the assessee, deleted the addition. We find no infirmity in the order passed by the learned CIT(A). Addition being unspent grant shown in the Balance Sheet, but not shown as income in the Income & Expenditure Account - HELD THAT:- As Tied–up grants are not voluntary contribution and cannot be considered as “Income”. Form no.9A, is required to be filed under rule 17(1) of the Income Tax Rules, 1963. The requirement to file Form no.9A, arises only when application falls short of 85% of the income derived from the property held under the Trust. Once it is held that grants received under certain stipulated conditions, is not income, there is no requirement to file Form no.9A. Acquiescence on the part of the assessee cannot be held against them as there is no estoppel against the statute. So, the Assessing Officer had fallen under wrong premise to add which has been correctly deleted by the learned CIT(A) and such order needs no interference at our end. Accordingly, grounds no.1 & 2, raised by the Revenue are dismissed. Issues Involved:1. Addition of Rs. 2,10,99,102 as income due to unspent grants from NABARD.2. Addition of Rs. 8,33,380 as anonymous donations under Section 115BBC.3. Alleged procedural lapse in filing Form 9A.Issue 1: Addition of Rs. 2,10,99,102 as Income Due to Unspent Grants from NABARDThe core issue revolves around the treatment of Rs. 2,10,99,102 received as a grant from NABARD, which the Assessing Officer (AO) added to the assessee's income, arguing it was unspent and not shown in the Income & Expenditure Account. The assessee contended that these funds were received for specific purposes related to tribal development and farmers' welfare projects and were treated as liabilities in the balance sheet. The CIT(A) deleted this addition, asserting that such grants, received with specific conditions, do not constitute income and must be refunded if not utilized. The CIT(A) also noted that the application for condonation of delay in filing Form 9A was pending, which would nullify the addition once allowed. The Tribunal upheld the CIT(A)'s decision, emphasizing that tied-up grants are not voluntary contributions and cannot be considered income, thus dismissing the Revenue's appeal on this ground.Issue 2: Addition of Rs. 8,33,380 as Anonymous Donations Under Section 115BBCThe AO treated Rs. 8,33,380 as anonymous donations due to unverified donor details, invoking Section 115BBC. The CIT(A) upheld this addition, citing insufficient donor records and the assessee's failure to demonstrate the genuineness of donations. However, the Tribunal found that the assessee had maintained donor identities and details, thus discharging their onus. The Tribunal noted that the AO had doubted the donations without providing the assessee an opportunity to address these doubts, and concluded that the provisions of Section 115BBC were not applicable. Consequently, the Tribunal set aside the CIT(A)'s order and deleted the addition, allowing the assessee's appeal on this ground.Issue 3: Alleged Procedural Lapse in Filing Form 9AThe AO contended that the assessee failed to file Form 9A timely, impacting the treatment of the NABARD grant. The CIT(A) noted that the application for condonation of delay in filing Form 9A was pending, and once allowed, it would nullify the addition. The Tribunal supported the CIT(A)'s stance, indicating that the requirement to file Form 9A arises only when application falls short of 85% of the income derived from the property held under the trust. Since the grants were not considered income, the necessity to file Form 9A was negated, reinforcing the CIT(A)'s decision to delete the addition.Conclusion:The Tribunal allowed the assessee's appeal, deleting the addition under Section 115BBC and upheld the deletion of the NABARD grant addition, while dismissing the Revenue's appeal. The judgment emphasized the specific purpose of grants and the procedural aspects related to anonymous donations, highlighting the importance of maintaining proper donor records and adhering to statutory requirements.