TaxTMI 
TaxTMI 
2012 (10) TMI 27
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....on of environment etc. During the assessment proceedings the A.O. noticed that the assessee has shown voluntary contribution received from 2700 donors amounting to Rs.68,99,943/-. In order to verify the genuineness of the donors, the A.O. issued summons under section 131 of the Act and letters calling information under section 133(6) of the Act. The reply of donors and relevant observation has been noted by the A.O. in paragraph no. 9 f his order. Some of the donors have refused to give the donation. During the assessment proceedings, statement of Smt. Laxmi Sharma, W/o. Shri Nand Kishore Sharma, Secretary of the society was recorded under section 131 of the Act. It was said in the statement that the donation was collected by arranging camps in nearby village. On the basis of examination, the A.O. noticed that the society is mainly controlled by Shri Nand Kishore Sharma and his family members i.e. father and wife, and relatives and the donation alleged to have received from 2700 donors within a period of 9 months were not genuine. Some of the donors admitted to have given donation. Some of the donors are not traceable on the address given by the assessee. The A.O. observed that i....
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....hat they are 502 in number and not 530 as noted by the A.O. in the remand report. Before the CIT(A), the assessee filed confirmation from 102 more donors who have given donation more than Rs.4,000/- stating that the A.O. refused to accept these confirmation letters. It was also stated that remaining donors could have also been produced if the A.O. had given time. Regarding those letters which were returned back unserved due to incomplete address, it was stated by the assessee that if this information would have been given to the assessee earlier, complete address of those donors could have been furnished. However, it was admitted before the CIT(A) that at the worst donation pertaining to 120 donors below Rs.4,000/- could have been disallowed in case explanation furnished by the assessee is not accepted. The assessee also raised objection before the CIT(A) that the assessee was not given opportunity to give the full address of the donors. He also opposed estimation of 53% as unexplained donation as rough method having no proper basis and authentic details and hence this method of computation was not accepted by the assessee. The CIT(A), considering the principle of natural justice,....
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....served that generally in the name of Gupt Dan unaccounted money are being channelized to such institutes and, therefore, with a view to prevent channelization of unaccounted money to these institutes by way of anonymous donations, a new section 115BBC has been inserted in the Income Tax Act, 1961 by the Finance Act w.e.f 01.04.2007. 5. The CIT(A) on the basis of verification carried out by the A.O. and after considering the assessee's submissions bifurcated donations in two parts, donations given more than Rs.4,000/- and donations given less than Rs.4,000/-. In respect of donors who have given donation more than Rs.4,000/- (amounting to Rs.21,58,700/-), the total number of donors were 502. A sample verification carried out for 359 persons (257 verified by the A.O. + 102 confirmations filed by the assessee before the CIT(A)). The CIT(A) found that the necessary verification made in case of 71.5% such donation (359/502x100) and hence about 28.5% such donors were remained unverified. The CIT(A) accordingly calculated 28.5% of Rs.21,58,700/- of which calculation comes to Rs.6,15,229/-. The CIT(A) found that to that extent Rs.6,15,229/- remained unverified. 6. As regards the do....
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....02 donors listed out by the appellant, verification could be made only from 359 persons (257 verified by the AO + 102 confirmations filed before me) and thus the appellant was able to get the necessary verification made in case of 71.5% such donation (359/502X100) and hence about 28.5% such donors remained unverified. As per the categorized list of all the donation furnished by the Ld. AR in rejoinder, which is reproduced in para 6.2, it may be seen that such donors are shown to have contributed Rs.21,58,700/-. Therefore, I find that in case of those donations which are shown more than 4,000/- an amount of Rs.6,15,229/- remained unverified being 28.5% of Rs.21,58,700/- 7.2 For other donations shown less than Rs.4000/- as per the list submitted by the Ld. AR and reproduced in para 6.2, the total amount involved is Rs.47,41,243/- having 2,197 donors. Out of these 2,197 donors, necessary verification were made from time to time, first by the Ld. CIT-I Agra, then by the AO during the assessment proceeding and also during remand proceeding and the result of such enquiries are given are as under:- Letter issued for verification Refused for giving donation or address is found wrong A....
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....donations found to be in form of unaccounted/unexplained money which could not be verified due to persons refusing to have given donation or their address were not complete or wrong or they could not be produced for verification by the appellant comes as under:- Donation above Rs.4,000 6,15,229 Donation below Rs.4,000 21,80,971 Total amount of donation Rs.27,96,200 in form of unaccounted/ unexplained money In view of the above findings, the total amount of Rs.27,96,200/- is found to be unexplained donation out of total amount of Rs.68,99,943/- claimed by the appellant to have been received as 'corpus donation'. Such unexplained donation can be treated as anonymous donation being in form of unaccounted money and is liable to be taxed u/s 115BBC." 7. The CIT(A) has decided the issue raised by the assessee that donations are received from named persons and not from anonymous persons. Therefore, section 115BBC of the Act is not applicable to the case of the assessee. The CIT(A) distinguished the judgement in the case of Hon'ble Supreme Court in the case of Smt. P.K. Norjahan relied upon by the assessee. The CIT(A) has also rejected the assessee's contention that the assessee soci....
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....irmed having given the donations, merely because seven persons have denied having given the donations of 2700 donor, the genuineness of trust is not lost. Ld. Authorised Representative submitted that the assessee has furnished complete details of donors, therefore, it cannot be held that donation received by the assessee was anonymous. Ld. Authorised Representative in support of his contrition relied upon order of I.T.A.T. Delhi Bench in the case of Hans Raj Samarak Society vs. Assistant Director of Income Tax (Exemptions), Trust Circle- II, Delhi. 9. The ld. Departmental Representative, on the other hand, relied upon the orders of the Revenue Authorities and submitted that the assessee has failed to maintain complete details regarding donors. Therefore, the case of the assessee is squarely covered by section 115BBC of the Act. 10. We have heard the ld. Representatives of the parties and records perused. The admitted facts of the case are that the assessee society has been granted registration under section 12AA of the Act. Before coming to the issue under consideration, we would like to refer and discuss the scheme of the Act. Income of wholly charitable or religious trusts or i....
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....use (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any anonymous donation, the income-tax payable shall be the aggregate of- [(i) the amount of income-tax calculated at the rate of thirty per cent on the aggregate of anonymous donations received in excess of the higher of the following, namely:- (A) five per cent of the total donations received by the assessee; or (B) one lakh rupees, and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the aggregate of anonymous donations received.] (2) The provisions of sub-section (1) shall not apply to any anonymous donation received by- (a) any trust or institution created or established wholly for religious purposes; (b) any trust or institution created or established wholly for religious and charitable purposes other than any anonymous donation made with a specific direction that such donation is for any university or other educational institution or any hospital or other medical ....
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....eption and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiac) or subclause (iiiae) and which may be approved by the prescribed authority] (vii) Trust or institutions referred to in section 11. (2) Includes any income by way of any anonymous donation. (3) Income tax payable shall be the aggregate of the amount of income tax calculation on the income by way of any anonymous donation @ 30%. (4) Amount of income tax with which the assessee would have been chargeable had his total income been reduced by the amount of income charged to tax @ 30%. (5) Anonymous Donation - for the purpose of anonymous donation, following conditions must be satisfied:- (i) Anonymous donation means voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (iv) or sub-clause (v....