Case Law Details

Case Name : Shree Shiv Vankeshawar Educational & Social Welfare Trust Vs ACIT (ITAT Delhi)
Appeal Number : ITA No. 4623/Del/2012
Date of Judgement/Order : 16/05/2019
Related Assessment Year : 2009-10
Courts : All ITAT (6160) ITAT Delhi (1402)

Shree Shiv Vankeshawar Educational & Social Welfare Trust Vs ACIT (ITAT Delhi)

Admittedly the assessee has received a donation of INR 16265000/– from 1038 individuals and ld CIT (A) has noted that same is credited to the income and expenditure account of the assessee, However ld AO has noted that same is credited as Corpus Donation. During the course of assessment proceedings the assessee produced multiple details with respect to the various donors which establish the identity of those donors. The learned assessing officer on examination of the various details with respect to these donors and stated that there are several infirmities in the details furnished by the assessee, he made an addition of the about some u/s 68 of the income tax act and also applying the provisions of section 1 15BBC of the act. The learned CIT – A has categorically recorded a finding that above donation is normal donation which has been offered by the assessee as income. The claim of the AO is that same is a corpus donation. Corpus donation is never credited to the income and expenditure account of the trust whereas the normal donation is credited to the income and expenditure account as income. If a normal donation is doubted by the AO about its genuineness, and identity of the donors, the addition cannot be made u/s 68 of the income tax act in the case of the trust as it has already been offered as an income.

The anonymous donations will not be covered if donations received by any trust or institution created or established wholly for religious purposes or donations received by any trust or institution created or established for both religious as well as 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 institution run by such trust or institution. Sub-section (3) defines “anonymous donation” to mean any voluntary contribution referred to in section 2(24)(iia), where a person receiving such contribution does not maintain a record consisting of the identity of the person making such contribution indicating the name and address of the person and such other particulars as may be prescribed. We asked whether the central board of direct tax as prescribed any particulars which is required to be maintained by the assessee trust, the answer was no. We also did not find any such prescription about what kind of particulars the assessee trust is required to maintain. Therefore, it is apparent that at present the simple requirement is maintaining the name and address of the donors. In the present case, the assessee has already given much more detail then the name and address of the donors. Therefore with respect to the donation from 1038 persons the assessee has shown their name and address along with other particulars. It is not the case of the revenue that assessee has not maintained and provided these details to the assessing officer. In view of this we do not find that the donation received by the assessee falls into the definition of anonymous donation. Hence on the applicability of the provisions of section 115BBC of the income tax act we find that the learned CIT – A has correctly reached the conclusion that the donation received by the assessee is not an anonymous donation as provided under section 115 BBC of the act. Therefore on this count also we uphold the order of the learned CIT – A.

FULL TEXT OF THE ITAT JUDGEMENT

1. This appeal is filed by the learned Assistant Commissioner Of Income Tax, Circle – 2, Meerut against the order of the learned Commissioner Of Income Tax (Appeals), Meerut dated 04/06/2012 for Assessment Year 2009-10 wherein the addition made by the learned assessing officer of INR 16265000/– made u/s 68 read with Section 1 15BBC of the Income Tax Act is deleted.

2. The learned AO has raised the following grounds of appeal:-

“1. Whether in the facts and circumstances of the case the Ld. CIT (A) has erred in law in deleting the addition of Rs. 1,62,65,000/- made by the A.O. u/s 68 read, with section 11 5BBC of the IT Act, 1961 ignoring the following facts and law in particular: –

(a) That the signatures on the confirmations and affidavits of the donors filed during the course of assessment proceedings were

(b) That the handwriting expert engaged by the AO in the course of assessment proceedings opined that the signatures of the donors on the confirmations did not tally with the signatures on the affidavits.

(c) That assessee also failed to prove the genuineness of the transactions and creditworthiness of the donors and assessee did not discharge the onus cast on it u/s 68 of IT Act, 1961. Reliance is placed on the following case laws:-

I. CIT Vs. Ashok Timber Industries (Cal) 125 ITR 336

II. Basantipur Tea Co. (P) Ltd. Vs. CIT (Cal) 180 ITR 261

III. CIT v/s Korlay Trading Co. Ltd. (Cal.) 232 ITR 820.

IV. “Krishan Kumar Jhanb v/s ITO and Anr (Punjab & Haryana) 17 DTR 249”

V. M/s Sejai International Ltd v/s CIT Meerut (All.) Appeal No.306 of 2010.

VI. CIT Vs Durga Prasad More, 82 ITR 540(SC)

VII. CIT Vs P. Mohnakala, 291 ITR 278 (SC)

VIII. CIT Vs Sumati Dayal, 214, ITR 801 (SC)

IX. ITO Vs Diza Holdings Pvt. Ltd. 255 ITR 573 (Kerla)

2. Whether in the facts and circumstances of the case the Ld. CIT (A) has erred in law in holding that the section 115 BBC of the I. T. Act 1961 inserted by the Finance Act 2006 w.e.f. 01/04/2007 was not applicable to the case despite clear mandatory provisions contained therein to tax entire such amount under the pretext that the donations were declared in terms of section 11,12 and 13 of the I. T. Act 1961

3. In the facts and circumstances of the case the order of the Commissioner of Income-tax (Appeals) may be set aside and that of the AO restored.”

3. The brief facts of the case shows that assessee is a society which was duly registered under the societies registration act 1960 and also under section 12 double a of the income tax act. The trust was created registered on 18/10/2007 and is running in educational Inst under the name and style of Shri Shiv Venkateswara Education and Social Welfare Trust at Meerut . It filed its return of income on 30/9/2009 declaring nil income. During the course of assessment proceedings the learned assessing officer asked the assessee to prove the identity, creditworthiness, genuineness of the donors. The assessee submitted that the most of the donors are villagers from the neighboring periphery of the Institution ranging from INR 1000 – 18,000 and is received in cash. The assessee submitted the identity proof of voter ID cards, the copy of concerned company in the respective confirmation of these donors. Assessee also submitted that all the details except the copy of the bank accounts of these donors are submitted. The learned assessing officer on examination of the detail found that assessee has received corpus duration of INR 16265000/– during the year from 1038 donors. The assessee has submitted the confirmation letters from some of the donors an affidavit of the donors and identity of the donors. On the examination of the above documents the learned assessing officer analyzed the details of 1038 donors. He noted that there are several discrepancies in the details filed by the assessee. On the basis of the examination of the documents submitted by the assessee the learned assessing officer noted that confirmation of USD 36 have been signed by only 3 persons and the signature of these persons were sent to the handwriting expert who also confirmed the above fact. Based on these facts the learned assessing officer noted that the assessee has made above story and tried to explain the undisclosed credits by giving the sake of donation from various donors. He further noted that the confirmation furnished by the donors are also full of contradictions which is est from the fact that the person whose name is given in the confirmation has not signed the documents but some other person assigned 8. Further in many of the confirmations the amount of donation differed from the amount of confirmation and even from the affidavits filed by the donors. It was further noted that the donors and stated to have donated the amount on different dates but the total donations has been shown by the assessee as cash in hand on 31/3/2009. The learned AO further noted that it is out of the imagination that when the assessee was having bank accounts then why the assessee would retain this amount as cash in hand as on the close of the year. Therefore he held that the so-called donation is for assessees undisclosed money. Based on this the learned AO held that deposits by way of donation are nothing but the unexplained cash credit in terms of the provisions of section 68 read with the provisions of section 115 BBC of the income tax act and accordingly they are rendered to the income of the assessee under the head income from other sources. The learned assessing officer further denied the benefit of section 11 and 12 of The Income Tax Act. Consequently the assessment order u/s 143 (3) of The Income Tax Act was passed on 30/12/2011.

4. The assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned CIT – A. The learned CIT appeal noted that assessee has placed an application under rule 46A of the income tax act wherein they submitted the confirmation and the evidences received from the donors. The assessing officer was also granted an opportunity to make representation. The learned CIT –A held that that these are not the corpus donations but in fact the donation which are duly recorded and assessee has shown as its income in the audit report. He therefore held that the entire discrepancy noted by the learned assessing officer remains of no consequences and the assessee has himself shown these items as income in the income and expenditure account. He therefore held that provisions of section 68 invoked by the learned AO are incorrect. He otherwise held that even provisions of section 1 15BBC also cannot be invoked treating the above donation as anonymous donation because assessee has undoubtedly maintain the entire record of the donation The learned CIT also relied upon the decision of the coordinate bench 16 taxmann.com103 and deleted the entire addition. He further directed the learned AO to allow exemption u/s 11 as claimed by the assessee since application of the income of more than 85% has also been achieved by the assessee. Aggrieved by the order of the learned CIT – A the AO is in appeal before us.

5. The learned departmental representative vehemently supported the order of the learned assessing officer and submitted that all the donations received by the assessee are bogus. He further submitted that as assessee has failed to maintain proper record with respect to the donations showing the names and address of the donors, and voluntary contribution received by it it is rightly chargeable to tax as anonymous donation within the meaning of section 11 5BBC of the act. He relied on the decision of coordinate bench in 151 TTJ 260 (Agra) which has been affirmed by the honourable Allahbad High Court in ITA number 31 of 2013.

6. The learned authorised representative vehemently supported the order of the learned CIT – A.

7. We have carefully considered the rival contention and perused the orders of the lower authorities. Admittedly the assessee has received a donation of INR 16265000/– from 1038 individuals and ld CIT (A) has noted that same is credited to the income and expenditure account of the assessee, However ld AO has noted that same is credited as Corpus Donation. During the course of assessment proceedings the assessee produced multiple details with respect to the various donors which establish the identity of those donors. The learned assessing officer on examination of the various details with respect to these donors and stated that there are several infirmities in the details furnished by the assessee, he made an addition of the about some u/s 68 of the income tax act and also applying the provisions of section 1 15BBC of the act. The learned CIT – A has categorically recorded a finding that above donation is normal donation which has been offered by the assessee as income. The claim of the AO is that same is a corpus donation. Corpus donation is never credited to the income and expenditure account of the trust whereas the normal donation is credited to the income and expenditure account as income. If a normal donation is doubted by the AO about its genuineness, and identity of the donors, the addition cannot be made u/s 68 of the income tax act in the case of the trust as it has already been offered as an income. The identical issue arose before the Honble Delhi High Court in the director of income tax exemption vs Keshav social and charitable foundation 278 ITR 152 wherein the Honble High Court held that

11. Section 68 of the Act has no application to the facts of the case because the assessee had in fact disclosed the donations of Rs. 18,24,200 as its income and it cannot be disputed that all receipts, other than corpus donations, would be income in the hands of the assessee. There was, therefore, full disclosure of income by the assessee and also application of the donations for charitable purposes. It is not in dispute that the objects and activities of the assessee were charitable in nature, since it was duly registered under the provisions of section 12A of the Act.’

8. Therefore on reading of the above decision of the honourable Delhi High Court it is clear that when an income is credited to the income and expenditure account by the assessee trust then provisions of section 68 does not apply. Honourable High Court recognized that the situation may be different in case of corpus donation. As in the present case the amount of donation as held by the learned CIT – A is normal income already offered by the trust, these fact has never been controverted by the learned departmental representative, respectfully following the decision of the Hon’ble Delhi High Court, we uphold the decision of the learned CIT – A that the addition u/s 68 of the above donation cannot be made.

9. The 2nd issue that arises even if the nation is credited to income and expenditure account of the assessee, whether a normal donation or a corpus donation, cannot be termed as anonymous donation u/s 1 15BBC of the income tax act. In order to tax unaccounted money being contributed to wholly or partly charitable or religious trusts or institutions by way of anonymous donations, section 115BBC was inserted by the Finance Act, 2006, with effect from April 1, 2007, i.e., with effect from the assessment year 2007-08, to provide that any income by way of anonymous donations received by the following entities shall be included in the total income and taxed at the rate of 30 per cent. :

(i) any trust or institution referred to in section 11 ;

(ii) any university or other educational institution referred to in section 10(23C)(iiiad) and (vi) ;

(iii) any hospital or other institution referred to in section 10(23C)(iiiae) and (via) ;

(iv) any fund or institution referred to in section 10(23C)(iv) ;

(v) any trust or institution referred to in section 10(23C)(v) ;

10. The anonymous donations will not be covered if donations received by any trust or institution created or established wholly for religious purposes or donations received by any trust or institution created or established for both religious as well as 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 institution run by such trust or institution. Sub-section (3) defines “anonymous donation” to mean any voluntary contribution referred to in section 2(24)(iia), where a person receiving such contribution does not maintain a record consisting of the identity of the person making such contribution indicating the name and address of the person and such other particulars as may be prescribed. We asked whether the central board of direct tax as prescribed any particulars which is required to be maintained by the assessee trust, the answer was no. We also did not find any such prescription about what kind of particulars the assessee trust is required to maintain. Therefore, it is apparent that at present the simple requirement is maintaining the name and address of the donors. In the present case, the assessee has already given much more detail then the name and address of the donors. Therefore with respect to the donation from 1038 persons the assessee has shown their name and address along with other particulars. It is not the case of the revenue that assessee has not maintained and provided these details to the assessing officer. In view of this we do not find that the donation received by the assessee falls into the definition of anonymous donation. Hence on the applicability of the provisions of section 115BBC of the income tax act we find that the learned CIT – A has correctly reached the conclusion that the donation received by the assessee is not an anonymous donation as provided under section 115 BBC of the act. Therefore on this count also we uphold the order of the learned CIT – A.

11. In view of this appeal filed by the learned AO does not merit any consideration and hence same is dismissed.

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