Corpus Donations Allowed Despite Cash Collection and Minor Lapses

Falahe Darain Education Society Vs DCIT (ITAT Ahmedabad)

Corpus Donations & Cash Fee Receipts Upheld: ITAT Allows Full Exemption and Deletes Section 69A Addition

The Ahmedabad Bench of the ITAT allowed the appeal of an educational trust, granting full exemption under section 11(1)(d) for corpus donations and deleting the addition made towards cash deposits treated as unexplained under section 69A.

On corpus donations (₹48.38 lakh), the Tribunal held that the CIT(A) erred in denying exemption merely on technical or factual misconceptions. It was found that:

• Major corpus donations (about 88%) were supported by identifiable donors and were wrongly disallowed without any basis.
• In cases where written donor directions existed but were ignored, the denial was held to be factually incorrect.
• Donations collected by students for the Building Fund (Corpus) were supported by the Principal’s letter, and the intention of corpus donation stood established.
• Foreign donations credited into the FCRA account, accompanied by receipts clearly stating that the contribution formed part of the corpus, were held sufficient to meet the requirement of “specific direction.”

Accordingly, the Tribunal directed allowance of entire corpus donation exemption under section 11(1)(d).

On cash deposits of ₹70.69 lakh, the ITAT held that the additions were unsustainable as the trust had demonstrated that the deposits represented fees collected from students, duly recorded in the audited books, supported by cash books, student lists, and bank statements. In the absence of any defect in the books of account or adverse audit remarks, mere non-production of some fee receipts could not justify an addition under section 69A.

Thus, all additions were deleted and the assessee’s appeal was allowed in full.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

The present appeal has been filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”) dated 15.10.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2016-17.

2. The grounds of appeal raised by the assessee are as under:

“1. The Ld. CIT(A) has erred in confirming the addition of Rs. 48,38,779/- by denying the exemption u/s 11(1)(d) towards corpus donations. The appellant had received genuine voluntary contributions wholly for its charitable objects, which were duly recorded in the audited books of account and supported by donor lists and records filed before Ld. AO. The CIT(A) wrongly concluded that the absence of written directions from individual donors invalidated the corpus nature, ignoring that the donors’ intention and the trust’s consistent treatment established their corpus character. The addition was made merely due to non-compliance of a show cause notice and without any specific adverse finding or contrary material. The confirmation of such addition is unjustified, contrary to settled judicial principles, and deserves to be deleted.

2. The Ld. CIT(A) has erred in confirming the addition of Rs. 70,69,780/- made u/s 69A of the Act by treating cash deposits as unexplained money. The appellant had clearly explained that the deposits represented regular fee collections from students of its educational institutions, duly recorded in the audited books of account. The Ld. AO as well as Ld. CIT(A) failed to appreciate that the source of cash deposits was from the trust’s normal charitable activities and not from any undisclosed source. The addition was sustained merely due to non-production of certain registers and without pointing out any defect in the books or reconciliation. In the absence of any contrary evidence, the addition u/s 69A is arbitrary, contrary to facts and settled law, and deserves to be deleted.

3. The Ld. CIT(A) has erred in confirming the additions without properly appreciating the detailed submissions, remand report, and evidences placed on record. The order suffers from non-consideration of material facts and lack of judicial reasoning. The findings are therefore contrary to law and facts of the case. It is respectfully submitted that the additions so confirmed deserve to be deleted in the interest of justice and equity. It is submitted that the same be held so now.”

3. At the outset itself, Ld. Counsel for the assessee pointed out that there are primarily two issues involved in the present appeal relating to:

(i) rejecting assessee’s claim of exemption on account of corpus donations received by it to the tune of Rs.48,38,779/- &

(ii) making additions on account of cash deposited in bank accounts of the assessee to the tune of Rs.70,69,780/- on account of source of the same remaining unexplained.

4. Drawing our attention to the facts of the case from the orders of the authorities below, it was pointed out that the assessee was a trust formed for educational and charitable purposes registered u/s.12AA of the Act and also u/s.80G of the Act. During the impugned year, the assessee had received voluntary contribution forming part of corpus to the tune of Rs.48,38,779/-, which was claimed as exempt u/s.11(1)(d) of the Act. During assessment proceedings, the assessee failed to file any details with regard to the said corpus donation and, accordingly, the AO denied the assessee’s claim of exemption to the said donations and added the same to the income of the assessee.

5. Further, the AO noted the assessee to have deposited cash in two bank account in Bank of India and State Bank of India totaling to Rs.70,69,780/-. Again in the absence of any justification regarding the source of said cash, the AO treated the same as income of the assessee and made addition to the income of the assessee. Thus, against the return of income filed by the assessee declaring Nil income, addition to the tune of Rs.1,19,08,559/-(48,38,779 + 70,69,780) was made to the income of the assessee, thus, resulting in the total income being assessed at the said figure.

6. Before the Ld. CIT(A), the assessee filed all evidences to prove the genuineness of its claim and pleaded with the Ld. CIT(A) to admit the same for deciding its appeal. Ld. CIT(A) admitted the evidence filed by the assessee, forwarded the same to the AO directing him to submit a remand report on the same. The AO submitted his remand report justifying the addition made during the assessment proceedings. Copy of the remand report was forwarded to the assessee who, in turn, filed their rejoinder to the remand report. Thereafter, considering both the AO’s report and assessee’s reply to the same, Ld. CIT(A) confirmed the addition made by the AO finding merit in the remand report submitted by the AO justifying the addition made during assessment proceedings.

7. Aggrieved by the order of the Ld. CIT(A), the assessee has come up in appeal before us raising the above grounds.

8. Taking up Ground No.1 pertaining to the addition made of corpus donation received by the assessee, Ld. CIT(A) we have noted, has confirmed the addition made finding that the assessee failed to establish the identity of the actual donors and no written direction from any donor specifying that the amount is for corpus fund had been produced. Ld.CIT(A) held so after considering the remand report of the AO and the submissions filed by the assessee to him. His findings in this regard are contained at para 4.6 of the order as under:

“4.6. After carefully considering the assessment order, submissions of the appellant, remand report, and material available on record, the findings are as follows:

(i) Disallowance of Corpus Donations- Rs.4.3,79 TAY

For a donation to qualify as a “corpus donation” under section 11(1)(d), two conditions must be satisfied:

1. There must be a voluntary contribution made by an identifiable donor; and

2. The donor must give a specific written direction that the contribution shall form part of the corpus.

In the present case the assessee failed to establish the identity of actual donors, as the donations were collected by students without maintaining donor details. No written direction from any donor specifying that the amount is for the corpus fund has been produced. Merely classifying a receipt as “corpus” in the internal books does not meet the statutory requirement. Even for foreign contributions, no donor correspondence or corpus direction has been submitted. Accordingly, the AO was justified in disallowing the claim of corpus donation exemption. The addition of Rs. 48,38,779/- is therefore confirmed.

9. During the course of hearing before us, Ld. Counsel for the assessee contended that the Ld.CIT(A) findings as above were factually incorrect, based solely on the AO’s remand report, ignoring material/documents and the reply filed by the assessee to the remand report before him, and completely misappreciating the facts.

10. In this regard he first drew our attention to the breakup of corpus donation of Rs.48,38,779/- disallowed in its case, which was filed during appellate proceedings and considered by the AO in his remand report. He drew our attention in this regard to paper book page nos. 64 to 67, which is reproduced hereunder:

11. Thereafter, he drew our attention to the remand report of the AO with respect to corpus donation, which is reproduced at page nos. 4 to 6 para 4.1 of the CIT(A)’s order as under:

“4. 1 Addition of Rs. 48,38, 7 79/- on account of disallowance of claim of corpus donation u/s 11(1)(d) of the Act.

The assessee, vide its submission dated 16.09.2019 before Ld. CIT(A)-9, has submitted the list of 55 donors from whom the assessee has claimed to have received the corpus donation. The detailed analysis of the submission made by the assessee in respect of the claim of corpus donation is as follows:

Note- The sum total of the amount of donation, claimed to be corpus donation by assessee, is mentioned as Rs. 48,38,724/-.

“It is pertinent to note that a letter 22-12-2015 signed by Smt. A.A. Shaikh, Principal F.D.High School For Girls, Jamalpur Darwaja (E), Ahmedabad, 380001 has been submitted by the assessee. This letter comprises of the name of students of standard 11B for which the assessee has claimed that they are in nature of corpus donation. The assessee has not submitted the receipts issued in respect of the donation received. Further, on perusal of the said letter it is found that it is mentioned that the students have collected donations voluntarily for Jamalpur Building Fund (Corpus Donation). This makes it evident that the amount mentioned against the name of students in the said letter is actually the amount of donation collected by the students and not the amount of donation donated by the students on their own. It implies that the identity of the real donor is not maintained by the assessee which becomes even more necessary as the donations have been received in cash. Therefore, the students have merely acted as a medium through whom the donations have been received in cash from an unknown donor and the details of that unknown donor and the specific direction from that unknown donor for treating the donation as corpus donation has not been furnished by the assessee.

• • In respect of the donation claimed to be corpus donation in respect of name appearing from Sr. No. 8 and Sr. No. 9 above, the assessee has failed to submit any letter/correspondence from the donor to prove that the donation received is in the nature of corpus donation so the donation received can’t be treated as corpus donation merely on the basis of receipts issued to the donor. Thus, the said donation can’t be treated as voluntary donation meant for corpus donation.
  • In respect of the donation claimed to be corpus donation in respect of name appearing from Sr. No. 10 to Sr. No. 49 above, the detailed reasons for which the said donation can’t be treated as corpus donation has been mentioned, in bold letters, below the table specified above in para 4.1 above.
  • In respect of the donation claimed to be corpus donation in respect of name appearing from Sr. No. 50, the discrepancy in respect of PAN is pointed out above.
  • In addition to the above, the assessee has also claimed to have received corpus donation from outside India (Sr. No. 52 to 55 above) and in the ITR for relevant A. Y. the assessee has mentioned as Registration no. under Foreign Contribution (Regulation) Act, 2010 (FCRA) as 041910206. On verification of the website link https://fcraonlinenic in/fc8_statewise.aspx it is found that the said registration number is appearing in the list of FCRA registered associations (at Sr. No. 4 in the screenshot pasted below). The relevant screenshot is pasted below:

However, the assessee has failed to submit any letter/correspondence from the donor to prove that the foreign donation received is in the nature of corpus donation so the foreign donation received can’t be treated as corpus donation merely on the basis of receipts issued to the donor. Thus, the said donation can’t be treated as voluntary donation meant for corpus donation.”

12. Referring to the above, he pointed out that out of the total corpus donation of Rs.48.38 Lakhs received by the assessee, the AO in his remand report noted anomaly with respect to the donations listed at Sr. Nos. 8 to 55. He pointed out that there was no anomaly noted in the corpus donations listed at Sl. Nos.1 to 7 which in all amounted to Rs.42,33,543/-. He, therefore, contended that there was no case at all for disallowing assessee’s claim of exemption u/s.11(1)(d) of the Act with respect to these corpus donations.

13. Ld. DR was unable to controvert these factual contentions made by the Ld. Counsel for the assessee before us.

14. In view of the above, we hold that the disallowance of exemption claimed by the assessee u/s11(1)(d) of the Act towards corpus donation made to the tune of Rs. 42,33,543/-, pertaining to donations received from parties listed at S. Nos. 1-7 of the list of donors reproduced above, is not sustainable, being admittedly made without giving any basis or reasons. The disallowance of corpus donation of Rs. 42,33,543/- is therefore directed to be deleted.

15. Thereafter, Ld. Counsel for the assessee pointed out that the AO noted discrepancy with respect to corpus donations listed at Sl. No.8 & 9 to the effect that the assessee had failed to submit any letter or correspondence from the parties listed therein to prove that the donation received was in the nature of corpus donation. That for the said reason he held that the said donation could not be treated as voluntary donation meant as corpus donation.

16. Ld. Counsel for the assessee pointed out that the above findings of the AO, confirmed by the Ld.CIT(A), were factually incorrect since the assessee as a matter of fact had placed on records letters / communications of the said parties clearly specifying the donation being given towards the corpus of the trust.

17. In this regard, he pointed out that in the reply filed by the assessee to the remand report the assessee had categorically pointed out that during remand proceedings the letter and correspondence under the signature of the donors listed at Sl. No. 8 & 9 had been filed to the AO. He further pointed out that the said documents were again submitted to the Ld. CIT(A) in response to the remand report of the AO. Our attention was drawn to the said documents, being letters or correspondence from the donors listed at Sl. Nos. 8 & 9 specifying the donations towards the corpus of the assessee trust, placed at paper book page nos. 174 & 175 of paper book no.1.

18. The Ld. DR was unable to controvert the factual contention of the assessee that with respect to donors listed at Sl. Nos. 8 & 9, the assessee had filed letters from the donors specifying their intent of having made the donations towards the corpus of the assessee trust. The Ld. DR was unable to support in any way the finding of the Ld. CIT(A) to the contrary that the assessee had been unable to produce any written direction from the donors specifying the amount towards the corpus fund of the assessee trust.

19. In view of the above, we agree with the Ld. Counsel for the assessee that with respect to corpus donation pertaining to that made by the donors listed at Sl. Nos. 8 & 9 of the detail of donors reproduced above, the findings of the Ld.CIT(A) of the assessee having not produced any evidence reflecting the intent of the donors to have made the donations towards the corpus of the assessee trust,based on which he has denied the assessee’s claim of exemption u/s.11(1)(d) of the Act, is factually incorrect. The assessee, we have noted, had filed letters from the said two donors clearly indicating the donations to have been made for towards the corpus of the assessee trust. Ld. CIT(A)’s order disallowing the assessee’s claim of exemption of corpus donation made by donors listed at S.No.8 & 9 of the list of donors reproduced above is, therefore, we hold, incorrect and the AO is directed to allow the said claim of exemption to the assessee.

20. Our attention thereafter was drawn to the remand report of the AO and it was pointed out therefrom that the AO had further noted anomaly with respect to donation listed at Sl. Nos. 10 to 49. He pointed out that the AO noted these donations to have been collected by the students of the School run by the assessee i.e. F.D. High School for Girls, Jamalpur Darwaja (E), Ahmedabad, of standard 11B. The AO, he pointed out noted the said fact from a letter dated 22.12.2015 signed by Smt. A. A. Shaikh, Principal of the said School. The AO found that the assessee had not submitted receipts issued in respect of the said donations received and noting that the amounts were collected by the students, he found that the identity of the real donors was not maintained by the assessee, the students having merely acted as medium through whom the donation has been received in cash from unknown donors. He further noted that besides the facts that donors were not identifiable, there was also no specific direction from unknown donors for treating the donation as corpus donation.

21. To this, Ld. Counsel for the assessee drew our attention to the reply filed by the assessee to the remand report reproduced at page 10 of the order as under:

• “In this connection, it is submitted that these comments of Ld. AO is with regard to Corpus donations received in cash, as mentioned in Sr. No. 10 to 49, total amounting to Rs. 2,00,000/- (Rs.5000/- each from 40 donors).
• The Ld. AO has rightly referred letter dated 22/12/2015, issued from Principal of F. D. High School for Girls, wherein list of students of this school containing Name, Standard and Division is enclosed who have collected donations, voluntarily for the appellant trust for Jamalpur Building Fund (Corpus Donation)
• With regard to the objection raised by Ld. AO that the assessee has not submitted the receipts issued in respect of the donation received, in this connection it is submitted as under:
• That the Ld. AO has asked details/documents of donors who have provided the Bank name and cheque No. through which they have donated corpus donations by issuing letter dated 13/05/2024, during the remand proceedings. The appellant has duly submitted response against such letter at his office as well as online, along with required annexures.
• It is clearly evident from the said letter dated 13/05/24 that the Ld. AO has not asked any details/documents regarding corpus donations received in cash. From the above, it is clear that objection of the Ld. AO regarding non-submission of donation receipts for such donation is not found tenable
• Further, in this connection, the Ld. AO has objected regarding maintainability of identity of real donor as the donations have been received in cash. It is submitted that the Ld. AO has rightly mentioned that those students have collected donations voluntarily for Building Fund on behalf of trust, which is in nature of Corpus donations. The same is duly acknowledged by Ld. AO himself in the said para.
• In this regard, the Ld. AO has stated that such real donors are unknown as details and specific direction from that unknown donor for treating it as corpus is not furnished by the assessee. It is submitted that such contention of AO is self-contradictory to his understanding as he, earlier in his para. mention that students have collected donations voluntarily for Jamalpur Building Fund which itself shows the specific direction for donations received from the students and therefore it is clear regarding directions and person donated are duly known.
• Further, it is required to mention that such donations received in cash are accounted as Corpus donations in the name of Students of Std. 11B of F. D. High School for girls. They have collected said donations from different donors, with specific direction for Jamalpur Building Fund during the AY 2016-17, and appellant has maintained Name and Address of Donor, which is required as per the provisions of the Act.
• Therefore, contention of the AO about identity of real donors is not correct as appellant has duly maintained record of the identity of donor indicating name and address of the person making donations, as not to attract Anonymous donations as per Sec. 115BBC of the Act.
• Hence, rationale of the Ld. AO regarding not to treat corpus donation, for donation claimed to be corpus in respect of name appearing Sr. No. 10 to 49, is not acceptable and totally invalid based on facts of the case. Kindly consider the detailed explanation before making any adverse view.”

22. Ld. Counsel for the assessee contended that the impugned donations amounted in all to Rs.2 lacs and even as per the AO this amount of Rs.2 Lakhs was collected by the students of Class 11B from various persons towards the corpus funds of the assessee trust. He stated that in the remand proceedings, the AO never asked the assessee to produce the receipts of the donations collected by the students. He, therefore, stated that the exemption in this case had been denied without giving the assessee due opportunity for proving the genuineness of its claim.

23. Ld. DR, on the other hand, countered by relying on the finding of the AO and the Ld. CIT(A) that the assessee had neither furnished the evidence of the identity of the donors nor any evidence proving that the donation was made for the corpus of the assessee trust.

24. Having heard the contentions of both the parties, we find that the quantum of donation in consideration is Rs.2 Lakhs out of the total corpus donation received by the assessee Rs.48,38,779/-. The fact that these donations were collected by the students of the School from various persons for corpus of the Trust is evidenced by the letter of the Principal of the School dated 22/12/2015 who, vide the said letter had handed over the amount collected to the trustees of the trust, submitting list of all the students from whom they had collected donations for the corpus of the assessee trust/ Building Fund. The AO /CIT(A) have not doubted the veracity of the letter of the Principal of the school. Therefore, the fact that the students had collected this amount for the corpus of the trust remains undisputed. Moreover, we have noted that the impugned donations constitute a miniscule portion of the total corpus donations received by the assessee, majority of which, has been accepted by the AO as constituting corpus donation. While the total corpus donations received by the assessee is 48.38 lacs, the AO has accepted as genuine 42.33 lacs noted in para 12-14 of our order above, constituting approx. 88% of the total corpus donations. The impugned donations being 2 lacs constitute barely 5% of the total donations. The AO having accepted 88% of the total corpus donations and the impugned donations being barely 5% of the total corpus donations with respect to which the fact of the same having been collected for the corpus of the assessee trust by students of the school run by the assessee trust is not disputed, we see no reason to disallow assesses claim of exemption to the said donation u/s 11(1)(d) of the Act.

25. In view of the above, we hold that the denial of grant of exemption u/s 11(1)(d) of the Act to donations collected in cash by students of the School run by the assessee trust amounting in all to Rs.2 Lakhs as unjustified. The AO is accordingly directed to grant exemption of the same.

26. Thereafter, Ld. Counsel for the assessee pointed out from the remand report of the AO that the AO treated the donation listed at Sl. No.50 as not qualifying for exemption due to discrepancy in respect of PAN.

27. He pointed out that in response to the remand report of the AO as above, the assessee furnished its reply pointing out the correct PAN number of donor therein. He drew our attention to the reply furnished by the assessee reproduced at page no.12 of the CIT(A) order as under:

• “The Ld. AO has correctly observed in respect of Corpus donation from Sr. No. 50 that the PAN has been mentioned as AMXPG2539H instead of AMXPG2529H. The appellant acknowledge the said discrepancy of PAN that donor has incorrectly mentioned 3rd last number in PAN in his letter due to some typographical error.
• In this connection, it is submitted that the appellant has correctly mentioned PAN of the donor in the Summary of Corpus donation. Kindly consider this being typographical error and appreciate the same.”

28. Ld. Counsel for the assesse contended that having resolved the discrepancy pointed out by the AO in his remand report, there was no case for disallowing assesse’s claim of the exemption with respect to donation listed at Sl. No.50. Ld. DR was unable to controvert the factual contention made by the Ld. Counsel for the assessee as above.

29. In view of the above, since, the Ld. Counsel for the assessee has suitably demonstrated that the discrepancy noted by the AO with regard to the donation listed at Sl. No.50 of the list above was suitably resolved by the assessee in the appellate proceedings by furnishing the correct PAN number of the donor, we agree with the Ld. Counsel for the assessee that the disallowance of exemption with respect to the said donor listed at Sl. No.50 amounting to Rs. 50,000/- is unjustified. The AO is directed to allow the exemption to donation of Rs. 50,000/-u/s.11(1)(d) of the Act.

30. Lastly, Ld. Counsel for the assessee contended that the AO noted discrepancy in donations listed at Sl. Nos. 52 to 55, which was foreign contributions received by the assessee. He pointed out from the remand report of the AO that the AO noted the assessee to be duly registered under Foreign Contribution (Regulation) Act, 2010 (‘FCRA’). However, the AO noted the assessee to have failed to submit any letter or correspondence from the donor to prove that the foreign donation received was in the nature of corpus donation. In this regard, Ld. Counsel for the assessee drew our attention to the reply filed by the assessee, which was reproduced at page nos.12 & 13 of the order as under:

• “In this connection, it is submitted that such donations are received from outside India and donation receipts of these donation have specific stamp, stating that ‘This donations is given for specific direction that it shall be form part of Trust Corpus.
• Further, Ld. AO failed to appreciate that such donations are directly credited in SBI- FCRA Saving Bank Account (Account No.10458553700), which shows that it is a foreign donation and letter/correspondence from the donor is not possible at the time of assessment scrutiny. And the same has not be asked by the Ld. AO while issuing letter dated 13/05/2024 during remand proceeding. Further, during remand proceeding, appellant has duly submitted bank statement of SB IF CRA account, duly highlighting such donations.
• Considering the circumstances of the case, kindly appreciate the same that donation receipts as well as extract of bank statement submitted before Ld. AO during the remand proceedings which proves that these donations are correctly credited in FCRA Bank account and duly accounted as corpus in our audited books of account.”

31. Referring to the above, he pointed out that the donation receipts of these donations carried a specific stamp that the donation was given for specific direction that they shall form corpus of the trust. He drew our attention to the copy of such donation receipts placed before us at paper book page no.8 6.

32. The Ld. DR, on the other hand, countered by stating that the Ld. CIT(A) had categorically noted that to qualify as corpus donation the donor must give a specific written direction that the contribution shall form part of the corpus and that merely classifying the receipt as corpus in the books did not meet the statutory requirement. He pointed out that the Ld. CIT(A) had noted with respect to the foreign contribution, there was no donor correspondence or corpus donation submitted and, therefore, Ld.DR contended that the denial of exemption with respect to the foreign contribution was justified.

33. We have heard the rival contentions. The denial of the exemption to the foreign donation received by the assesse is admittedly for the reason that there was no correspondence from the donors directing the donation to be treated as corpus donation.

The assessee, on the other hand, has drawn our attention to the receipts issued by the assessee to the foreign donors specifically mentioning the fact that the donation was received towards the corpus of the assessee trust. Considering the fact that the receipts categorically mentioned the fact of the donation having been received towards corpus donation and there is no objection to the donors to the said receipts nor has the Revenue in any way demonstrated the donors to have rejected/objected to the treatment of the receipts by the assessee towards corpus, it can be safely assumed that the donors accepted the donations as being towards the corpus of the trust. This, in our view, is sufficient compliance with the condition noted by the Ld. CIT(A) of there being a specific direction that the donation should form part of the corpus of the trust to qualify as corpus donation for claiming exemption u/s 11(1)(d) of the Act. The objective being that only those donations will be treated as corpus which the donor agrees to be treated so, whether the agreement is by way of his direction given in writing or it comes out in an implicit manner through a receipt issued to him mentioning the fact of the donation having been made the corpus of the trust, the end result is the same. Both show and reflect the intention of the donor of the donation having been made towards the corpus of the trust and that in our view fulfills the conditions stated in law and as noted by the Ld. CIT(A) of there being a specific direction by the donor of the donation being made towards corpus of the trust.

34. In the light of the same, having noted the facts on record to have demonstrated sufficiently the foreign donations received by the assessee to have been made towards the corpus of the trust, we see no reason for denying the assessee’s claim of exemption of such donation u/s.11(1)(d) of the Act to the same. The AO, accordingly, is directed to allow the assessee’s claim of exemption u/s.11(1)(d) of the Act of foreign donation received by it.

35. It was common ground that the above were the only infirmities noted by the AO/CIT(A) in the corpus donation received by the assessee to disallow the entire corpus donation received by the assessee of Rs.48,38,779/-. Since, we have dealt with each anomaly noted by the Ld. CIT(A) and have found the same to be not sufficient or have found the denial of the exemption to be incorrect, we direct the AO to allow the assessee’s claim of exemption of corpus donation u/s.11(1)(d) of the Act to the entire extent claimed by it amounting to Rs.48,38,779/-.

36. Ground No.1 raised by the assessee is allowed.

37. Ground of appeal No.2 relates to the addition made by treating cash deposit in the bank account of the assessee as from unexplained sources. Drawing our attention to the facts of the case, Ld. Counsel for the assessee pointed out that the deposit of cash in two bank accounts managed by the assessee was treated as from unexplained sources; i. Rs.11,92,280/- deposited in Bank of India & Rs.58,77,500/- deposited in the State Bank of India.

38. In this regard, Ld. Counsel for the assessee pointed out that the AO in his remand report had contended that while the assessee had claimed the said cash deposits to be out of fees received in cash, however, the assessee had not been able to produce the receipts issued for fees to substantiate its claim. He drew our attention to the AO’s remand report in this regard reproduced at page no.13 and 14 of the order as under:

“4.2 Addition of Rs. 70,69,780/- on account of cash deposited in bank which treated as unexplained.

• • On perusal of the details submitted by the assessee before your good office in respect of the details of cash deposited in the bank accounts during relevant A.Y. it is pertinent to note that the assessee has submitted the cash book of F.D. English High School Jamalpur that has the narration to highlight that the said cash deposits are fees received in cash. However, the assessee has not been able to produce the receipts issued for the fees received in cash during the relevant assessment year to substantiate the narrations appearing in the cash book.
  • The assessee has also submitted bank book of FD (Mubin) institute of Engg & Tech (it is pertinent to note the assessee has not submitted the cash book and also did not furnish the copy of bank statement as well). The bank book has the narration to highlight the fact that cash deposited in the bank account are fees received in cash. However, the assessee has not been able to produce the receipts issued for the fees received in cash during the relevant assessment year to substantiate the narrations appearing in the bank book.”

39. He, thereafter, drew our attention to the reply filed by the assessee to the same as under:

• “For cash deposited in Bank of India (Rs. 11,92.280/-), the appellant has duly submitted Summary of transaction, cash book of FD High school along with bank statement and supporting extract of audited financial statement.
• Further, for cash deposited in State Bank of India (Rs.58,77,500/-), the appellant has duly submitted summary of transactions, Bank book of FD (Mubin) Institute of Engg & Tech, along with supporting extract of audited financial statement.
• These documents are filed before your good self to substantiate the fact that these cash deposits are in relation to the fees received from students in cash.
• It is further mentioned that during the remand proceeding, the Ld. AO not asked any details or documents regarding cash deposited during the year under consideration and now the Ld. AO objecting the same in remand report stating that certain documents like receipt issued for fees received in cash, cash book and Bank statements of FD (Mubin) Institute of Engg. & Tech. are not provided by assessee. Hence, the said contention of the Ld. AO has not correct.
• The Appellant has filed sufficient documents to substantiate the fact of the case that all those cash deposits are in nature of fees received and if your goodself require any further information, we can provide the same based on the prior intimation.
• It is hereby mentioned that the contention of Ld. AO that appellant has not submitted certain documents without asking to the appellant during the remand proceeding, is totally unjustifiable. It shows that the Ld. AO is making these adverse comments just to support his impugned addition made on account of cash deposits amounting to Rs. 70, 69, 780/-, which is not valid.”

40. Ld. Counsel for the assessee pointed out from the above that the assessee had fairly submitted the entire list of students from whom fees had been received in cash supported with entry in the cash books of the respective School and tallied with the deposit of the said cash in the bank statement. He pointed out that the assessee had submitted its audited financial statement of both the Institutes in respect of which, the cash receipts were deposited in the two bank account noted. He, therefore, contended that the assessee had duly substantiated its explanation of the cash deposits pertaining to receipts of fees in the respective Institute run by the assessee.

41. Ld. DR, on the other hand, submitted that the assessee had failed to discharge its onus of proving the source and genuineness of the cash deposit. He drew our attention to the order of the Ld. CIT(A) holding so at page 18 of the order as under:

“(ii) Addition u/s 69A-Cash Deposits Rs. 70,69,780/-

The assessee claimed that the cash deposits represented fees collected from students. However

• • No receipts for cash fees were produced;
  • No reconciliation between student registers, fee receipts, and bank deposits was made available; and
  • For one of the institutions, even the cash book was not produced.

Hence, the source of cash deposits remains unsubstantiated. The AO’s action in treating the same as unexplained money u/s 69A is therefore justified. The addition of Rs. 70,69,780/- is confirmed.”

42. We have heard the rival contention. The issue is with respect to the cash deposited in the two bank accounts of the assessee, which, the assessee had claimed pertains to fees collected from two Schools/Educational Institutes run by it while the Revenue contends the source of the same having remained unexplained on account of unsustantiation of the explanation of the assessee with due evidences.

43. In support of its contention, we have noted, the assessee submitted a list of students from whom the fees were received alongwith the copy of cash book and even bank statement. The assessee also submitted its audited financial statement pointing out there was no adverse comments made by the Auditor with respect to any transaction carried out by the assessee. Undeniably, the assessee is running educational institutions. It has submitted the list of students from whom the fees have been collected in cash. The assessee has reflected the said receipts in cash in its cash book and the fees received have been duly accounted for as income of the assessee. The books of accounts of the assessee are duly audited and no discrepancy has been pointed out in the same. In the light of the above, we do not find any merit in the orders of the authorities below rejecting assessee’s explanation merely for the reason that the cash receipts of the fees were not submitted or even in one case the cash book was not produced. It is not disputed that the books of accounts of the assessee are audited and there is no reason pointed out by the AO to doubt the assessee’s explanation of fees have been received in cash especially when the assessee has exhibited/demonstrated the said fact in both the cases by filing the list of students from whom the fees have been received in cash and also demonstrated in one case the fact of having accounted the said fees in its cash book. When no infirmity having been noted in these facts and evidences, produced by the assessee, we see no reason for doubting the explanation of the assessee and we, accordingly, hold that the orders of the authorities below treating the cash deposit as unexplained as not justified. We direct the AO, therefore, to delete the addition made on account of cash found deposited in the books of the assessee amounting to Rs.70,69,780/-. Ground of appeal No.2 raised by the assessee is allowed.

44. In the result, appeal filed by the assessee is allowed.

This Order pronounced on 27/01/2026