TaxTMI 
TaxTMI 
2011 (9) TMI 369
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....pect of application of income by way of capital expenditure. Thus, the total income was computed at Rs. 31,56,990/-. 1.1 In respect of addition of Rs. 19,25,047/-, it has been mentioned in the assessment that a sum of Rs. 20,39,547/- was credited to the building fund account. The assessee filed confirmation letters covering the amount of Rs. 1,14,500/-. In respect of the balance amount, the assessee expressed inability to collect letters of confirmations from the donors. This shows that it does not maintain record of the donor. Cash vouchers could not be produced in support of the credit made in the books by way of cash donations. Thus, out of total donations of Rs. 20,39,547/-, the amount of Rs. 19,25,047/- was considered as anonymous donation liable to be taxed u/s 115BBC of the Act. 1.2 In respect of the amount of Rs. 3,37,841/-, it was found that the amount received as donation as per receipt book was not entered in income and expenditure account. The discrepancy were attributed to a computer snag. An affidavit from the Accountant was filed in this behalf. The AO rejected the affidavit on the ground that it has not been sworn by the President or the secretary of the society. ....
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....ccount was required to be filed. The same could not be filed before the AO on account of virus in the computer. The assessee could not submit evidence regarding identity of donors also. The position continues to be the same in the appellate proceedings. Therefore, it has been held that the provisions of section 115BBC are applicable. 4.1 Before us, the ld. counsel for the assessee referred to page no. 118 of the paper book, which shows the excess of income over expenditure at about Rs. 6.98 lakh. The account does not show credit of any donation. Thereafter, she referred to page nos. 93 to 112, which show donations aggregating to Rs. 7,97,100/- from 219 parties received in this year. She also referred to page nos. 57 and 58 of the paper book, an affidavit of Shri Rajiv Gupta, the accountant of the assessee-society. It is inter-alia deposed that donations totaling to Rs. 20,39,547/- were received by the society in cash as well as by cheque and the same were recorded in the books of account. The receipt issued for donations show the name and address of the donor. These details are entered in the computer also. Survey was conducted at the premises of the society on 30.01.2008. A print....
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....ken into account, namely, that the provisions contained in section 11 or 12 shall not be applicable so as to exclude anonymous donations from the total income. Thus, as this provision is applicable, the deduction cannot be granted under the aforesaid provision. 4.3 We have considered the facts of the case and submissions made before us. The AO has made addition of Rs. 19,25,047/- and it has been mentioned that a sum of Rs. 20,39,547/- was introduced in the balance-sheet by crediting the amount to the building fund. The income has been offered for taxation as receipt in the computation. The provisions contained in section 68 are applicable as the assessee has not furnished confirmation to establish identity and genuineness of the transactions. Notices were issued in the course of hearing and confirmations were received from 10 donors covering an amount of Rs. 1,14,500/-. The balance amount of Rs. 19,25,047/- has been taxed u/s 115BBC. The question before us is-whether, the donations are anonymous donations as understood in the aforesaid provision? 4.4 Sub-section (1) of the aforesaid provision provides that where the income of an institution etc. referred to in section 11 includes....
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....tive manner and, therefore, no other word can be read in section 115BBC(3) other than the words finding place therein. The definition is that it means a voluntary contribution referred to in section 2(24)(iia), where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the contributor and such other particulars as may be prescribed. No other particular has been prescribed under this provision. Therefore, the receiver has the obligation to maintain the identity indicating the name and address only and nothing more. The ld. counsel has clearly brought out that both the details are mentioned in the donation receipts. These receipts are still in the custody of the department as the receipt books were impounded in the course of survey. This fact has not been rebutted by the ld. DR. The AO has taxed the amount by mentioning that confirmation letters from the donors have not been filed. Such confirmations are not required to be filed for coming to the conclusion as to whether the donation was anonymous or not. Therefore, the case of the revenue regarding taxation of this amount under sub-section (2) fails on this ground itself.....
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....ier. It is inter-alia mentioned that the list of donations submitted to the survey party on 30.01.2008 is correct and the list of donations submitted to the AO is not correct to the extent of receipt nos. 904 to 1000. This has happened due to virus in the computer. In reply, the ld. DR repeated the facts and submitted that the amount of Rs. 3,37,841/- is not reflected in income and expenditure account. 5.2 We have considered the facts of the case and submissions made before us. On perusal of record, it is found that the assessee has added a sum of Rs. 20,39,547/- to the total income representing donations towards building fund. This consists of donations of Rs. 19.25 lakh taken by the assessing officer to be covered u/s 115BBC. Therefore, the submission of the ld. counsel that the assessee has already offered for taxation a sum of Rs. 88,841/- for taxation is correct. Accordingly, only a sum of Rs. 2,49,000/- is required to be added further to the total income. We may reiterate that the provisions of section 68 are not applicable at all in so far as the sum of Rs. 88,841/- is concerned. The other amount of Rs. 2,49,000/- also does not lose the character of donation as the details ....
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....nment of objects of the society for five years. In the course of hearing, her attention was drawn towards the decision of Supreme Court in the case of CIT v. Nagpur Hotel Owners' Association [2001] 247 ITR 201. It is submitted that the society had passed a resolution. The details had been furnished in the audit report. An additional ground had also been taken before the ld. CIT(A) on 03.11.2010 in this behalf. Therefore, the conditions contained in section 11(2) were substantially complied with even before the completion of the assessment. The decision in the case of Nagpur Hotel Owners' Association (supra) is to the effect that even if there is no valid limitation prescribed under the Act and the Rules, it is reasonable to presume that intimation required u/s 11 has to be furnished before the assessing authority to complete the assessment because such requirement is mandatory and without such particulars the assessing authority cannot entertain the claim of the assessee, therefore, the compliance will have to be at any time before completion of assessment proceedings. It is further mentioned that it is necessary that the AO must have this information at the time he completes the a....
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....ssee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation prescribed under the Act and the Rules even then, in our opinion, it is reasonable to presume that the intimation required under Section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particulars of this income the assessing authority cannot entertain the claim of the assessee under Section 11 of the Act, therefore, compliance of the requirement of the Act will have to be any time before the assessment proceedings. Further, any claim for giving the benefit of Section 11 on the basis of information supplied subsequent to the completion of assessment would mean that the assessment order will have to be reopened. In our opinion, the Act does not contemplate such reopening of the assessment. In the case in hand it is evident from the records of the case the respondent did not furnish the required information t....
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....ing that unaccounted money by way of anonymous donation was used for the expenditure. It was submitted before the ld. CIT(Appeals) that the purchase of fixed assets is an application of income, thus, the expenditure has to be deducted u/s 11(1)(a). The ld. CIT(Appeals) considered the facts and the submissions made before him. It is mentioned that the taxation of anonymous donation amounting to Rs. 3,37,841/- and Rs. 19,45,812/- u/s 115BBC has no bearing in the matter as the tax on anonymous donation is levied separately. However, the amount spent on purchase of capital assets has to be allowed in computing the total income as application of income. Therefore, this ground has been decided in favour of the assessee. 7.1 The ld. DR submitted that the ld. CIT(Appeals) erred in coming to this conclusion in as much as he did not take into account the provision contained in section 13(7). This provision prohibits deduction under section 11(1)(a) in respect of anonymous donations. On the other hand, the ld. counsel for the assessee relied on the decision of the ld. CIT(Appeals) and the submissions made before us regarding the anonymous donation. 7.2 We have considered the facts of the ca....