Delhi ITAT: No Section 115BBC Tax on Donations from Identified Donors

Lala Sher Singh Memorial Jeevan Vigyan Trust Society Vs DCIT (ITAT Delhi)

Delhi ITAT: Donations from Identified Donors Cannot Be Taxed as Anonymous Donations Under Section 115BBC

The Delhi ITAT held that corpus and voluntary donations received from identified donors cannot be treated as anonymous donations under section 115BBC merely because some donors did not respond to notices under section 133(6) or the Assessing Officer questioned the genuineness of the donations.

The assessee, a charitable trust, filed its return declaring nil income. During scrutiny, the Assessing Officer treated ₹2.29 crore (comprising ₹1.02 crore of corpus donations and ₹1.27 crore of voluntary donations) as anonymous donations under section 115BBC and also made an addition of ₹57 lakh under section 68 towards unsecured loans. While the CIT(A) deleted the addition under section 68, it sustained the addition relating to donations.

Before the Tribunal, the assessee demonstrated that it had maintained complete particulars of the donors, including names, PANs, addresses, income-tax returns, confirmations, audited financial statements and, in the case of corpus donations, specific letters directing that the contributions formed part of the corpus of the trust.

The Tribunal observed that the Assessing Officer’s remand report did not dispute the identity of the donors. It held that non-compliance by some donors with notices issued under section 133(6), or the absence of further independent verification, does not convert an identified donation into an anonymous donation within the meaning of section 115BBC.

Relying on the Delhi ITAT’s earlier decision in Hans Raj Samarak Society, affirmed by the Delhi High Court, the Tribunal reiterated that where the trust maintains records containing the names and addresses of donors, the donations cannot be regarded as anonymous, and section 115BBC has no application.

Accordingly, the ITAT deleted the additions of ₹1.27 crore towards voluntary donations and ₹1.02 crore towards corpus donations, holding that both categories of donations were duly supported by donor particulars and documentary evidence. The assessee’s appeal was partly allowed.

Cases Discussed

• Falahe Darain Education Society vs. DCIT, ITA No. 2111/Ahd/2025
• DIT vs. Hans Raj Samarak Society (Delhi HC), 217 Taxman 114
• Hans Raj Samarak Society vs. DIT (ITAT Delhi), ITA No. 1041/Del/2012
• Madhavi Raksha Sankalp Nirmal Niketan vs. DDIT (Exemption), 165 ITD 627 (Mum)
• Hans Raj Samarak Society vs. ADIT (Exemption), 133 ITD 530 (Del)

FULL TEXT OF THE ORDER OF ITAT DELHI

The appeal filed by the Appellant/Assessee is against order dated 30.08.2025 of Ld. Commissioner of Income Tax(Appeals)-30, New Delhi (hereinafter referred to as ‘the CIT(A)’) u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of assessment order dated 31.12.2019 of Ld. Assessing Officer / DCIT, Circle Exempt-1(1), Delhi (hereinafter referred to as ‘the AO’) u/s 143(3) of the Act for Assessment Year 2017-18.

2. Brief facts of the case are that the assessee filed return of income on 30.12.2017 disclosing Nil income. The case was selected for scrutiny under CASS and notice u/s 143(2) of the Act dated 19.09.2018 was issued to the assessee. Notices u/s 142(1) of the Act along with questionnaire were issued from time to time. The assessee filed few details. Notice u/s 133(6) of the Act were issued to certain parties. The assessee filed replies darted 23.11.2019 and 13.12.2019. A show cause notice dated 19.12.2019 was issued to the assessee. The assessee uploaded letter dated 23.12.2019 but did not furnish any details. On completion of proceedings, Ld. AO vide order dated 31.12.2019 made additions of Rs. 2,29,55,000/- and 57,00,000/- on account of anonymous donations and unsecured loans as unexplained cash credits respectively.

2.1 Against order dated 31.12.2019 of ld. AO, the assessee filed appeal before ld. CIT(A) which was partly allowed order dated 30.08.2025. The impugned action of Ld. AO in treating corpus conation of Rs. 1,02,05,000/- and voluntary donations of Rs. 1,27,50,000/- received from identified persons as anonymous donations was upheld. The addition of Rs. 57,00,000/- u/s 68 of the Act was deleted.

3. Being aggrieved the appellant/assessee preferred present appeal on following grounds:

“1. That, on the facts and in the circumstances of the instant case, the impugned assessment order dated 31.12.2019 framed u/s. 143(3) of the Income-tax Act, 1961 (“the Act”) for Assessment Year (“AY”) 2017-18 by the Ld. Assessing Officer(“AO”)/Respondent, and erroneously upheld, in part, by the Ld. Commissioner of Income-tax (Appeals) [“Ld. CIT(A)”] vide order dated 30.08.2025, is ex facie unlawful, void ab initio, and bad in law.

2. That the Respondent has erred in issuing notice u/s 143(2) of the Act dated 18.09.2018 for AY 2017-18 without adhering to the binding CBDT Instruction F. No. 225/157/2017/ITA-II dated 23.06.2017, thereby rendering the impugned assessment proceedings void ab initio and unlawful vide this Hon’ble Tribunal in Anita Garg v. ITO., ITA No. 4053/Del/2024, Shilpi Sardana v. DCIT., ITA No. 1425/Del/2024.

3. That the impugned assessment proceedings are vitiated in law and liable to be quashed as the notice issued u/s 143(2) of the Act dated 18.09.2018 does not specify whether the scrutiny is limited, complete or compulsory manual, contrary to the mandate of binding CBDT Instruction F. No. 225/157/2017/ITA-II dated 23.06.2017 vide Hon’ble Supreme Court in Commissioner of Customs v. Indian Oil Corpn. Ltd., [2004] 136 Taxman 491.

4. That the Ld. CIT(A) erred on facts and in law in affirming the impugned action of the Respondent in treating corpus donations of Rs. 1,02,05,000/-and voluntary donations of Rs. 1,27,50,000/-, received from identified persons/donors, as “anonymous donation” u/s. 115BBC of the Act vide ITO v. Aishwarya Foundation., ITA No. 103/Pat/2020 (ITAT Patna).

5. That on the facts and circumstances of the present case, the Ld. CIT(A) order, partly affirming the impugned assessment order, is unsustainable for being perverse on facts and de hors the evidence placed on record by the Appellant.

6. That the Ld. CIT(A) erred on facts and in law in not appreciating that the Appellant had maintained complete records of the identity of the donors, including PAN, address, Income Tax returns et al, in compliance with provisions of section 115BBC of the Act vide this Hon’ble Tribunal in DCIT v. JAI MAA SAVITRI EDUCATIONAL SOCIETY., ITA 4256/Del/2017.

7. That the Ld. CIT(A) failed to appreciate that mere non-compliance to notice issued u/s. 133(6) of the Act would not ipso facto mean that the corpus/voluntary donations received were non-genuine.

8. That the Ld. CIT(A) failed to appreciate that there was no requirement under the provisions of section 115BBC of the Act to prove the “genuineness” of corpus/voluntary donations received by the Appellant.

9. The Appellant craves leave to add, delete, modify or vary any of the grounds of appeal at any time during the pendency of the appeal or at the time of hearing.”

4. Ld. Authorized Representative for appellant/assessee submitted that grounds of appeal Nos. 1 and 9 are general in nature. Ground of appeal Nos. 2 and 3 are challenging notice u/s 143(2) of the Act is not in accordance with CBDT notification dated 09.08.2018 were not pressed. Grounds of appeal Nos. 4 to 8 regarding addition upheld by Ld. Commissioner of Income Tax (Appeals) representing corpus and voluntary donations u/s 115BBC of the Act amounting to Rs. 2,29,55,000/- were raised. Ld. CIT(A) failed to appreciate that the assessee had furnished return of income declaring nil income. The breakup of aggregate donation of Rs. 2,29,55,000/- was as under:

8. The breakup of aggregate donation of Rs. 2,29,55,000/-is as under:

4.1 Detail of the names of donors, the amounts donated, copies of the audited financial statements of donors, their PANs, and Copies of their ITRs etc. were filed regarding voluntary donations of Rs. 1,27,50,000/-. Likewise, details such as the names, dates of incorporation, PANs, addresses of the donors, amounts donated, copies of their ITRs, and copies of letters were submitted as evidence in respect of corpus donations of Rs. 1,02,05,000/-. The above details of the donations were submitted at page No. 228 to 885 of the paper book.

4.2 It is submitted that having regard to the foregoing the finding of the learned CIT(A) in para 11.5 that though assessee furnished details like Name, PAN and partial bank entries have been provided the evidence fall short of establishing complete donor identity and specific directions for corpus donation in a manner that satisfied the statutory requirements is factually incorrect legally misconceived and in fact entirely vague and untenable. It is submitted that at no point of time the learned Assessing Officer in the remand report has stated after considering the additional evidence that the evidences filed by the appellant fall short of establishing complete donor identities. All that the remand report states is that the assessee during the appellate proceedings has submitted confirmation letter from donors alongwith Name, PAN and address of the donors. Further states; however, since the relevant bank account statements showing the donation receipts was not submitted by assessee thus the genuineness and creditworthiness of the transactions remain unverified. Thus at no point of time the identity of the donor has been disputed in the remand report. Further the adverse observations as to non-compliance u/s 133(6) and absence of independent verifications or the observation that appellant’s counter arguments do not adequately addressed the gaps for instance relying on cursory ITR details or settlement agreements does not substitutes for maintained record of donor particular at time of receipt. The finding is here too factually incorrect and patently untenable and does not find support from remand report, which is the now edifice of the addition sustained by the learned CIT(A). It is thus submitted that the observation and conclusion that the appellant had not maintained the requisite records and therefore the contributions qualify as anonymous donation is factually incorrect and not in accordance with law, apart from being legally unsustainable.

4.3 In such circumstances, the edifice made by the learned Assessing Officer and the learned CIT(A) to hold the donations as anonymous donations under Section 115BBC of the Act is fundamentally and factual misconceived and thus untenable. The only thing that remains is that in respect of corpus donations, the finding is also that assessee has not had any evidence to establish that those donations were toward the corpus of the trust. That finding is also factually incorrect is evident from the tabular chart here under which establishes that in respect of each of the corpus donations, the assessee had placed on record the evidence, the evidence in the shape of confirmation from donor which has been admitted and now stands accepted also:

4.4 Reliance was placed on the following judicial pronouncement:

i) 133ITD 530 (Del) Hans Raj Samarak Society vs. ADIT (Exemption)

ii) ITA No. 1041/Del/2012 Hans Raj Smark Society vs. DIT (8-21) affirmed by Delhi High Court in the case of DIT vs. Hans Raj Samarak Society reported in 217 Taxman 114(22-23)

iii) 165 ITD 627 (Mum) Madhavi Raksha Sankalp Nirmal Niketan vs. DDIT (Exemption)

iv) ITA No. 2111/Ahd/2025 the Falahe Darain Education Society vs. DCIT.

5. Ld. Departmental Representative relied on impugned order.

6. From examination of record in light of the aforesaid rival contention, it is crystal clear that Ld. CIT(A), in para No. 11.5, observed that though the assessee furnished details like name, PAN and partial bank entries did not dispute their truthfulness. The bank account’s statement showed the donations receipt were genuine and proved creditworthiness of the transactions. Remand report of ld. AO did not dispute the identity of donors, adverse observations as to non-compliance u/s 133(6) of the Act and absence of independent verification could not substitute for the maintained record of donor at particular time of receipt, therefore the findings of ld. CIT(A) that the contributions qualify as anonymous donation is factually incorrect.

7. A co-ordinate bench in order dated 18.09.2012 in ITA No. 1041/Del/2012, Hans Raj Samarak Society vs. DIT affirmed by Delhi High Court in the case of DIT vs. Hans Raj Samarak Society reported in 217 taxmann 114 in para 7.2 observed as under:

“7.2 We have considered the facts of the case and submissions made before us. It has already been held by us that the donations received by the assessee are not anonymous donations. The details in respect of the name and address are available in possession of the AO in the form of the name and address are available in possession of the AO in the form of donation receipts, which were impounded in the course of survey. The discrepancy in respect of the amount of Rs.2,49,000/- has occurred on account of computer malfunctioning, but the details as above are available in the donation receipts. Therefore, no donation can be said to be anonymous. We have also not accepted the case of the revenue that the amounts are taxable u/s 68 by relying on the decision of the Tribunal in the case of Keshav Social Charitable Foundation and the decision of the Tribunal in the case of the assessee itself for assessment year 2006-07. These findings displace the foundation of disallowance made by the AO Accordingly, it is held that the ld. CIT (Appeals) rightly allowed the deduction.”

8. In view of above material facts by respectfully following the decision of co-ordinate Bench impugned action of ld. CIT(A) and Ld. AO in holding voluntary donations of Rs. 1,27,50,000/- despite additional evidence consisting of list of donors along with name, PAN, donation amount, address u/s 68 of the Act being illegal is set aside.

9. Regarding evidence in respect of corpus donation of 1,02, 05,000/-, the assessee had filed evidence in respect of donors to establish towards corpus donations proved the voluntary donations. Ld. AO and Ld. CIT(A) erred in holding corpus donations as anonymous donations. Therefore, the action of Ld. CIT(A) and ld. AO being illegal is set aside. Accordingly, grounds of appeal Nos. 4 to 8 are accepted. Ground of Appeal Nos. 2 and 3 are dismissed as not pressed. Grounds of appeal Nos. 1 and 9 are general in nature.

10. In the result, the appeal filed by the appellant/assessee is partly allowed.

Order pronounced in the open court on 05.08.2026