Donor intent for corpus donations can be proved by written directions and banking receipts, enabling exemption to be allowed.

Donor intent for corpus donations must be demonstrated by specific written directions or equivalent documentary and banking evidence; where donor letters, receipt entries and FCRA account credits exist, corpus exemption is allowable, and the tribunal deleted the contested corpus addition. Cash deposits alleged as fee receipts can be substantiated by student lists, cash book entries, bank statements and audited accounts; the tribunal found such combined evidence sufficient to explain deposits and deleted unexplained-cash additions, allowing the appeal in full.

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Issues: (i) Whether the exemption under section 11(1)(d) of the Income-tax Act, 1961 is rightly denied in respect of corpus donations of Rs. 48,38,779/-; (ii) Whether additions under section 69A of the Income-tax Act, 1961 of Rs. 70,69,780/- for cash deposits in bank accounts as unexplained money are justified.

Issue (i): Whether the corpus donations claimed by the assessee satisfy the statutory requirement of being voluntary contributions with a specific direction that they shall form part of the corpus.

Analysis: The tribunal examined the record item wise. It found that donations aggregating Rs. 42,33,543/- (items 1-7) were accepted by the AO with no basis shown for disallowance. For items 8-9 the assessee produced donor letters evidencing direction towards corpus. For items 10-49 (total Rs. 2,00,000/-) the collections by students were evidenced by the school principal's letter and student lists; the amount was a small proportion of total corpus receipts and the AO did not dispute the principal's letter. For item 50 the assessee corrected a PAN discrepancy during appellate proceedings. For items 52-55 (foreign donations) the receipts bore explicit stamps indicating the donations were for corpus and funds were credited to the FCRA account. The tribunal held that these documents together established donor intent either by specific written direction or by receipt entries and banking evidence, satisfying the condition required for corpus donations under section 11(1)(d).

Conclusion: The exemption under section 11(1)(d) of the Income-tax Act, 1961 is allowed in full and the addition of Rs. 48,38,779/- is deleted in favour of the assessee.

Issue (ii): Whether cash deposits totaling Rs. 70,69,780/- in two bank accounts can be treated as unexplained money under section 69A when the assessee claims they represent fees received in cash.

Analysis: The tribunal reviewed the lists of students, cash book entries, bank statements and audited financial statements submitted by the assessee. The institutions were bona fide educational entities and the receipts were reflected in audited books without adverse auditor comments. The AO and the appellate authority had faulted the absence of fee receipts or reconciliations in one instance, but the tribunal found the combined documentary evidence sufficient to substantiate the source as fee collections and to account for the bank deposits.

Conclusion: The additions under section 69A of the Income-tax Act, 1961 amounting to Rs. 70,69,780/- are deleted and the claim of the assessee is accepted.

Final Conclusion: The appeal is allowed in entirety; the assessee's claims for exemption of corpus donations and explanation for cash deposits are accepted, resulting in reversal of the additions challenged on both issues.

Ratio Decidendi: Donor intent for corpus may be proved either by explicit written direction or by documentary and banking evidence (including receipts specifying corpus and credit to FCRA account) and a bona fide, audited accounting of cash fee receipts supported by student lists, cash book entries and bank statements suffices to discharge the assessee's onus against additions under section 69A.

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