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

ITAT Nagpur held that trust donations were not anonymous under section 115BBC as the assessee maintained complete donor records including names, addresses, PAN and Aadhar details. The AO incorrectly invoked section 115BBC without proper procedure or opportunity to the assessee. CIT(A) correctly deleted the addition. Additionally, tied grants with stipulated conditions were held not to be income, requiring no Form 9A filing. The AO's additions were wrongly made and properly deleted by CIT(A). Revenue's appeal dismissed.

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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 NABARD

The 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 115BBC

The 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 9A

The 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.

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