TaxTMI 
TaxTMI 
2024 (1) TMI 350
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Act. 3. That the Commissioner of Income-tax (Appeals) erred on facts and in law in disregarding the confirmation(s) furnished by the appellant during the course of assessment/appellate proceedings. 4. That the Commissioner of Income-tax (Appeals) failed to appreciate that there was no requirement under the provisions of section 115-BBC of the Act to prove the 'genuineness' of voluntary contributions received by the appellant-trust. 5. That the Commissioner of Income-tax (Appeals) failed to appreciate that mere non-receipt of response to notice issued under section 133(6) of the Act would not ipso-facto mean that the voluntary contributions received were non-genuine. 6. That the Commissioner of Income-tax (Appeals) erred on facts and in law in not following the binding decision of the CIT(A) in the appellant's own case for the earlier assessment year 2011-12, in gross violation of principles of judicial discipline. 7. That the Commissioner of Income Tax (Appeals) erred in confirming levy of interest under sections 234B of the Act." 3. The ld counsel of the assessee submitted that the ld CIT(A) has erred in affirming ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er of the coordinate bench of Tribunal for AY 2008-09 dated 21.10.2022 (supra). 4. The ld counsel also briefly reiterated the assessee's written submissions and submitted that it is settled law that wherein, assessee who was entitled to exemption u/s 115BBC of the Act and can claim benefit thereof for the purpose of income deem to chargeable to tax u/s 68 of the Act as per judgment of Hon'ble jurisdictional High Court in the case of DIT Vs. Hans Raj Samarak Society (2013) 35 taxmann.com 642 (Delhi). Further, placing reliance on the judgment of DCIT(E) Vs. Raunaq Educational Foundation 294 ITR 76 HC (Delhi), the ld counsel submitted that it is now well settled principle of law that although the exemption provisions are to be construed strictly as regards to applicability to the case of the assessee once it is found that the same is taxable, the same are required to be interpreted liberally. Ld counsel of assessee also placed reliance on the judgment of Hon'ble Supreme Court in the case of DCIT vs. Maharaja Agrasen Technical Education Society in ITA No. 5245/D/2015 for Assessment Year 2011-12 S.RM.M.CT.M. Tiruppani Trust v. Commissioner of Income-tax [1998], 230 ITR 636 (SC) C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the case of Rama Devi Memorial Charitable Trust, the ld DR submitted that when the assessee trust has failed to substantiate that the voluntary donation was received by obtaining credible and verifiable evidence in terms of complete names and addresses of the donors and purpose of donations then the AO is right in invoking provision of section 13(7) read with section 115BBC of the Act and the ld CIT(A) is also quite correct and justified in upholding the part addition made by the AO by taking balanced appropriate judicial approach. Finally, the ld DR submitted that the appeal of the assessee may kindly be dismissed being devoid of merits. 9. On careful consideration of the above rival submissions from the assessment order we note that the AO invoked provision of section 115BBC of the Act with following observations are and findings:- "8. Before proceedings further, some provisions of the Income Tax Act, 1961 regarding receipts of donations and credits in the books are discussed as under:- (a) As per the provisions of section 11(1)(d)) of the Income Tax Act, which reads as under;- "Subject to the provisions of section 60 to 63, the following income sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....donation received by trust/institution shall be exempt or cover u/s 11 only if the donation are voluntarily. If the donation is voluntarily then only it can consider income derived from the trust property. In absence of the confirmations as well as other evidence of identity and genuineness of transaction, it cannot be established that the donation are voluntary. Therefore, the receipts of donation by the assessee are to be examined as per the criteria of section 68 of the Income Tax Act. 12. The assessee provided only confirmation letters of donors in some cases. The confirmation letter inspire no confidence on the claim of assessee that the donation are genuine and voluntarily but casts serious doubts about the genuineness there of. Most of the confirmation letter submitted by assessee are made on computer with change of font or colours. Majority of letter head do not contain any phone number of the donors mentioned therein. Merely providing a name, address and PAN numbers of the donor, the assessee could not escape from its obligation which has been caste by law on it. The assessee has failed to furnish by way of evidence the ITR returns, financial statements including ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (i) During the appellate proceedings, it has been submitted by the appellant that all the details of the donors were filed before the A.O. giving name. address, date of payment, amount and PAN. During the assessment proceedings, the A.O. issued notices u/s 133(6) of the Act, where notices were not complied in 37 cases, as against the total notices issued in 49 and the A.O. has stated as under: • No reply received in 22 cases, • In 11 cases, postal authority gave remark as "Not Known", and • In 4 cases, postal authority gave remark as "Left". However, the appellant has submitted that the A.O. has wrongly considered the donations in 37 cases as non-genuine and further, the A.O. has not given the benefit of set off of application of income against the receipt of the assessee trust. (ii) The appellant has submitted that in A.Y. 2008-09, the A.O. has made the addition of Rs. 22,53,53.785/-, in the assessment order u/s 143(3) dated 30.12.2010. by holding anonymous donations and as such there is no applicability of section 115BBC/13(7) of the Act and the total income was determined at Rs. 16,30,38,330/- This assessment order u....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., donation @ Rs. 1.46 Cr is stated to have been received. The counsel of Adivasi Mahila Samiti has in response to letter u/s 133(6) stated that during the relevant period Adivasi Mahila Vikas Samiti did not make any transaction with the said M/s Gian Sagar Educational and Charitable Trust and made no payment to them on any account. As the alleged donor M's Adivasi Mahila Vikas Samiti, has not confirmed the donation to the appellant, to this extent the name or address of the donor is incorrectly maintained by the appellant & therefore, onus on the appellant to the extent of this donation to maintain identity of donor is not fulfilled. As the meaning of maintaining identity of donors means name & address should be correct. If the name of the person with address maintained by assessee denies to have paid donation, it means such details are not correctly maintained & therefore, not maintained. Neither during the present impugned assessment proceeding nor during the present appellate proceedings, the appellant has produced or contradicted this findings. Considering these above Rs. 1.46 Crores allegedly received from M's Adivasi Mahila Vikas Samiti is treated as anonymou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....v Social & Charitable Foundation (2005) 278 ITR 152 (Del) High Court of Delhi In view of the above judicial pronouncements, application of income is to he allowed as the registration u/s 12AA is continuing & therefore, the activities of the trust are in accordance with its Memorandum of Association Considering the entire facts & circumstances of the case, I hereby confirm anonymous donation to the extent of Rs. 1.46 Crores u/s 115 BBC and balance donation is not treated as anonymous donation within the provision of section 115 BBC and application of income of income is allowed for balance addition, Accordingly these grounds of appeal are partly allowed. " (iii) During the appellate proceedings, the donation in the name of 5 persons were also verified by the A.O. and in the remand report, same has been found in order, as reply has been received. The details of these 5 donors, are as under- S. No. Name Amount (in Rs.) 1. M/s. Hicon Gensets Pvt. Ltd. 2,000,000 2. M/s. Blue View Tic Up Project 10,000,000 3. M/s. Janhit Seva Trust 20,000,000 4. M/s. BSL Engineering Services Ltd. 2,000,000 5. M/s. BSL. Scaffold....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onations in the name of 5 donors of Rs. 4,00,00,000/-, are not anonymous. Accordingly, additions to the extent of Rs. 4,00,00,000/-, are deleted and the balance alleged donations to the extent of Rs. 11,60.77,000/-, are hereby confirmed. (vi) During the appellate proceedings, it has been submitted by the appellant that even if the donations are considered as anonymous, then the application of income u/s 13(7), is to be allowed on full amount of addition of Rs. 15,60.77,000/-. From the above, it is clear that donations to the extent of Rs. 4.00,00,000/-, are not considered as anonymous and remaining amount of donation of Rs. 11,60,77,000/-, is considered as anonymous. Accordingly, the A.O. is directed to allow the application of income to the extent of Rs. 4,00,00,000/- only. Accordingly, ground no. 2, is hereby partly allowed." 11. On careful consideration of the above noted rival submissions and perusal of the paper book filed by the assessee spread over 150 pages at the outset we note that in addition to the said paper book the assessee has also filed copy of order of Tribunal for AY 2008-09 in assessee's own case dated 21.10.2022 in ITA No. 4775/Del./2015 wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....been mentioned therefore benefit of said orders of Tribunal is not available for the Revenue in the case in hand. 14. The ld. counsel has relied on the various judgments and orders including judgment of Hon'ble High Court of Delhi in the case of DIT vs. Keshav Social & Charitable Foundation reported as 146 Taxmann 569 (Del.) wherein it was held that where the complete list of donors were not file or that donors were not produce, did not necessarily lead to an inference that assessee was trying to introduce unaccounted money by way of donation receipts. 15. On careful consideration of the above rival submissions, first of all we note that on being asked by the bench the ld CIT(DR) did not dispute the factual position that the facts and circumstances pertaining to the present appeal for AY 2012-13 are identical to the facts and circumstance of earlier AYs 2008-09 wherein, the ld First Appellate Authority on the identical issue granted relief to the assessee with following observations and findings:- 16. Furthermore, it is also relevant to note that the order of the ld CIT(A) for AY 2008-09 (supra) has been upheld by the coordinate bench of Tribunal vide order dated 21.10.202....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the donations on the pretext that A.O. had no power of reviewing the order passed previously and his power was only restricted to the extent of rectifying the mistakes which are apparent on the face of the record. This finding of the A.O. did not find favour with the Ld. CIT(A). The Ld. CIT(A) while deleting the addition has noted that if a person receives donation and maintains the record of identity and address of the donors and then such donation cannot be considered to be anonymous donation as defined in sub- section (3) of Section 115BBC of the I.T. Act, 1961. He further held that requirement of Section 115BBC is not at with onus on the assessee-trust casted under section 68 of the I.T. Act, 1961 i.e., to prove creditworthiness of the donors. He has given a finding that since the assessee-trust has maintained and disclosed name and address of the donors during the assessment proceedings and which were accepted by the A.O. in the original assessment order, therefore, the provisions of Section 115BBC would not be applicable to the facts of the case. He has further noted that details of the names and addresses of the donors has not been proved to be wrong or those persons have n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see by the order of the Tribunal for AY 2008-09. Accordingly, respectfully following the same sole grievance of assessee, raised in the grounds noted above, is allowed and hence, the Assessing Officer is directed to delete the addition. 18. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 19/10/2023. ============= Document 1 I have considered the impugned assessment order, written submission alongwith paper books and oral arguments of Ld. AR. The Ld. AR has enclosed original assessment order framed u/s 143(3), rectification order passed u/s 154 and revision order passed by CIT(Central)-III, New Delhi. Facts in brief is that in original assessment order the assessing officer has made addition u/s 115 BBC read with section 68 for Rs. 12,50,83,785/- and Rs. 10,02,70,000/- u/s 68 of I.T. Act totaling to Rs. 22,53,53,785/- on account of non genuineness and creditworthiness of donors, and did not allow any deduction on account of application of Income as per the provision of Section 11 while computing taxable income, however allowed set off of loss as per I&E A/c. Order u/s 154 was passed on 27.05.2011 allowing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecord. I do not agree with this finding of the assessing officer. Ld. CIT(Central) III, New Delhi has passed order u/s 263 directing the assessing officer to make de-novo assessment after considering the facts & circumstances of the case & considering the legal provision specially section 13(7) read with section 115 BBC of the Act, 1961. I have considered the provisions of section 115 BBC read with subsection (7) of section 13 of I.T. Act. As per the provision of section 115 BBC, any anonymous 'donation is taxable at the flat rate of 30% of such donation. Therefore, section 115 BBC is a charging section itself. The provisions of subsection (1) of section 115 BBC is reproduced as under:- (1) Where the total income of an assessee, being a person in receipt of income on behalf of any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or any hospital or other institution referred to in sub-clause (iiiae) or sub-clause (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 nay trust or institution refe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent order. In one donor namely M/s. Adivasi Mahila Vikas Samiti, it has been categorically stated that it has not made any donation to the appellant. The relevant portion of finding is contained in para 6.1 of the original assessment order & reproduced as under:- Document 4 6,1 Here, it is pertinent to stress-upon the reply received in this office in the case of Adivasi Mahila Vikas SemitÃ, Fuldungri, P.Q. Ghatsila, Distt. Singhbhum, Jharkhand - 832303 from whom, donation @ Rs. 1.46 Cr is stated to have been received. The counsel of Adivasi Mahila Samiti has in response to 'letter u/s 133(6) stated that during the relevant period Adivasi Mahila Vikas Samiti did not make any transaction with the said M/s Gian Sagar Educational and Charitable Trust and made no payment to them on any account. As the alleged donor M/s Adivasi Mahila Vikas Samiti, has not confirmed the donation to the appellant, to this extent the name or address of the donor is incorrectly maintained by the appellant & therefore, onus on the appellant to the extent of this donation to maintain identity of donor is not fulfilled. As the meaning of maintaining identity of do....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or of Income Tax (Exemptions) & Anr. vs. Sri Belimatha Mahasamsthana Socio Cultural & Educational Trust 336 ITR 694 High Court of Karnataka . iii) Director of Income Tax (Exemption) vs. Bharat Kalyan Pratishthan (2002) 257 ITR 609 (Del) High Court of Delhi iv) Assistant Commissioner of Income Tax vs. Geetanjali Education Society* (2008) 114 TTJ (Jd) 697 ITAT, Jodhpur v) Director of Income Tax vs. Raunaq Education Foundation 294 ITR 76 (Del) High Court of Delhi vi) Director of Income Tax (Exemption) vs. Keshav Social & Charitable Foundation (2005) 278 ITR 152 (Del) High Court of Delhi In view of the above judicial pronouncements, application of income is to be allowed as the registration u/s 12AA is continuing & therefore, the activities of the trust are in accordance with its Memorandum of Association. Considering the entire facts & circumstances of the case, I hereby confirm anonymous donation to the extent of Rs. 1.46 Crores u/s 115 BBC and balance donation is not treated as anonymous donation within the provision of section 115 BBC and application of income of income is allowed for balance addition. Accordingly, these grou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....basic issue which has to be adjudicated whether application of income is to be allowed on such addition made on account of such alleged donation which remained unverified or creditworthiness of donors were doubtful. In the impugned assessment neder, the bifurcation of total addition is not mentioned, only the reference of original assessment is made. I have perused the original assessment made u/s 143(3). The broad bifurcation of addition on the basic of finding and enquiry made during the assessment proceedings & survey proceedings are as under:- Document 8 1.Total amount of donation in respect of which notices u/s 133(6) have not been served or no reply received [Ref: Para 6.2 of the order (total 11 cases)] 2.Total amount of Corpus donation where notices u/s 133(6) not served or no reply received [Ref: para 6.2 of the order (total 73 cases)] Amount in (Rs.) Rs. 1,91,00,000/- Rs. 10,59,83,755/- 3.Total amount of Corpus donation where Creditworthiness of the donors were not proved On the basis of balance sheet Financial result Rs. 10.02.70.000/- Rs. 22.53.53.785/- In the present impugned assessment proceedings, Ld. as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion and such other particulars as may be prescribed. A perusal of the above definition reveals that if the person receiving such donation maintains the record of identity and address of donors then such donation cannot be called anonymous have been notified as per the requirement of this section. In view of the above facts. I agree with the arguments of Ld. AR that the requirement of section 115 BBC is not at par with onus on the assessee casted u/s 68 of LT. Act, i.e. to prove creditworthiness of the donors. Emphasis in section 115 BBC is to maintain & declare correct identity of the donors. The Ld. AR argued that the appellant have maintained & disclosed such name & address of donors during the assessment proceeding as accepted by the assessing officer in the original assessment order, therefore section 115 BBC is not applicable to the facts of the case. I have examined these arguments on the facts of the case & perused original assessment order. As per para (5) of the original assessment order, the appellant has maintained the narne & address of all the donors, which has been reproduced in the assessment order. Unless these details a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellant has not maintained the requisite details to establish the identity of donors specially under the circumstances where all the alleged donation are through banking channels and letters of donors were produced during the assessment proceedings. The appellant has filed complete details of donation during the present impugned assessment proceedings, containing name, address & PAN. Therefore, these are the cases at the most of not discharging onus u's 68 of LT. Act. In any case all the donation except corpus donation is credited as income of the assessee. In my view these donation cannot be called anonymous donation therefore section 115 BBC read with section 13(7) are not applicable. In view of the above facts I agree with the arguments of Ld. AR that even in case of unexplained cash credit u/s 68 the income have to computed in accordance with the provision of section 11 to 13 of I.T. Act. I have perused the judicial pronouncements relied by the Ld. AR on this issue. Since, registration u/s 12AA is continuing in the case of the applicants, therefore, the appellant's income has to be computed in accordance with the provision of section 11 ....