Donations were not anonymous as receiver maintained name & address of doners

Donations can not be said anonymous u/s 115BBC as receiver of donation has to maintain identity of the donors to the extent of name and address only. No addition can be made for anonymous donation on the ground that confirmations from donors had not been filed – ITAT

ABCAUS Case Law Citation:
ABCAUS 3776 (2023) (06) ITAT

In the instant case, the revenue had challenged the order passed by Commissioner of Income Tax (Appeals), in deleting the addition u/s 115BBC of the Income Tax Act, 1961 (the Act) towards anonymus donation.

The respondent assessee trust was a charitable organization registered u/s 12AA of Act. It filed its return of income for the year under consideration declaring total income at ‘Nil’.

Case of assessee was selected for scrutiny through CASS followed by issuance of notice u/s 143(2) & 142(1) of the Act. During the course of assessment proceedings, the Assessing Officer noted from the income & expenditure account that the assessee had shown large amount of donation income.

The Assessing Officer asked the assessee to submit relevant details in respect of the genuineness of the donations, to which compliance was made by the assessee and a list containing names of 1371 persons was furnished who had made the donations.

The Assessing Officer noticed that none of the donations exceeded Rs.20,000/-. For further verification, out of the 1371 persons whose names were provided by the assessee, the Assessing Officer issued letters/summons to 109 persons seeking confirmation of donation to the assessee.

However, the same remained unserved or persons denied to have known or given donation to the assessee. Resultantly, the Assessing Officer held the claim of the assessee of having received the amount of donation, as baseless and bogus and treated the same as anonymous donation under section 115BBC of the Act and assessed the income accordingly.

Before the ITAT, the assessee contended that the Assessing officer sent letters only to 109 persons seeking confirmation of donation to the assessee and most of them have confirmed the same either personally or by registered post. A list of details of donor along with their confirmation and postal receipts were also filed before the CIT(A). It was further submitted that as per Section 115BC of the Act, the receiver of donation has to maintain identity of the donors to the extent of name and address only and that no addition can be made for anonymous donation on the ground that confirmations from donors had not been filed.

The Tribunal observed that the fact that the assessee is a charitable trust and its only source of income is from charitable activities and it is wholly and exclusively engaged in carrying out charitable activities, had not been disputed by the Assessing Officer. The accounts of the assessee have been duly audited and an audit report in Form 10B was duly filed showing the receipt of the donations and their application for charitable purposes.

The Tribunal further noted that Section 115BBC of the Act specifically defines an “anonymous donation” as any voluntary contribution where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed. Further no other particulars have been prescribed under this proviso.

The Tribunal also noted that the assessee in the present case has duly complied with the requisites by maintaining the records of the donors in the form of their names and addresses thereby not making them anonymous donations and resultantly not attracting the rigours of the Section 115BBC of the Act.

The Tribunal observed that Assessing Officer had conducted due verifications and enquiry at his end but has failed to point out anything constructive leading to the conclusion that the donations in question were anonymous.

Further the Tribunal observed that the CIT(A) had given a finding that When the appellant was confronted with the observations made by the A.O. that letters sent to 109 persons were either not complied with till the completion of assessment proceedings or the person denied having given the donation, the appellant submitted that as the matter was getting barred by limitation the A.O. did not wait for the replies and in most of the notices compliance was made subsequent to the completion of assessment proceedings and the same are on assessment record. The appellant also provided a copy of a few of these confirmations along with his submission made during these proceedings.

So far as applicability of provisions of section 68 of the Act is concerned, CIT(A) had concluded that it has been held by various Tribunals and High Courts that once donation received was taken as income of the appellant which was applied for charitable purposes, provisions of section 68 of the Act cannot be invoked.

The Tribunal held that CIT(A) had passed a reasoned order after considering all the elements and ingredients involved in the present case.

Accordingly, the Tribunal dismissed the appeal of the Revenue.

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