When details are maintained donations cannot be called anonymous u/s 115BBC merely for notices u/s 133(6) returned unserved
ABCAUS Case Law Citation:
ABCAUS 2772 (2019) (02) ITAT
Important Case Laws Cited/relied upon by the parties
DIT (Exemptions) vs. Keshav Social & Charitable Trust
M/s. Vaishnavi Educational Society Versus The DCIT
The assessee was before the ITAT challenging the action of the lower authorities in treating the impugned donations as anonymous donation u/s 115BBC of the Act.
The appellant assessee was a society which was granted registration u/s. 12AA of the Income Tax Act, 1961 (the Act). The assessee society also enjoyed recognition u/s 80G of the Act.
As per the Memorandum, the assessee society has been established to run colleges with an object to enhance the standard of education.
During the course of assessment proceedings, the assessee was called upon to furnish information regarding donations received along with names, addresses, bank accounts and copy of confirmations from the donors.
The assessee submitted details of the donors/ donations. However, as some details as desired by the Assessing Officer (AO) were not filed and the AO proceeded to issue notices u/s 133(6) of the Act to the various donors to confirm the donations.
However, most of the notices were returned un-served. Thereafter, the assessee was asked to produce the donors but the assessee did not produce the donors.
Accordingly, the AO concluded that the donations were neither genuine nor voluntary. The AO proceeded to hold the donations as being fictitious and unexplained cash credits and proceeded to add it to the income of the assessee u/s 68 of the Act in view the deeming provisions of Section 115 BBC of the Act.
The assessee’s appeal before the CIT (Appeals) was also dismissed.
Before the Tribunal, the assessee submitted that as per sub section (3) of section 115BBC, donation can be called anonymous only when the person receiving the 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.
It was further submitted that the assessee had duly maintained particulars of the names and addresses of the donors and the same has not been disputed by the Assessing Officer. It was also submitted that no other particulars have so far been prescribed by the Act. It was also submitted that apart from this no other onus was to be discharged by the assessee in this regard.
It was also pointed out that the assessee had duly shown the donations as income and the expenditure as application of income. It was also emphasized that the donations were not from bogus entities as all the donor companies were registered companies which were on the Roll of the Registrar of the Companies.
The Tribunal opined that Section 68 of the Act had no application to the facts of the assessee because the assessee had duly disclosed the donations as its income and also the application of the donations for charitable purposes.
Regarding invoking of section 115BBC, the Tribunal pointed out that the Hon’ble High Court had helf that when complete list of donors was not filed or the donors were not produced, it does not necessarily lead to the inference that the assessee was trying to introduce un-accounted money by way of donation receipts.
It was further observed that the Coordinate Bench of the ITAT had held that where the names of the donors along with their addresses were furnished before the Investigation Wing of the department and were also recorded in the books produced by the assessee before the AO, such donations cannot be classified as anonymous donations as per the provisions of section 115BBC(3) of the Act. It was further held that the only requirement u/s. 115BBC (3) is that the names and addresses of the donor should be maintained.
In the present case, the Tribunal noted that the assessee had not only disclosed its donations, but had also submitted a list of donors. The AO proceeded to treat the same as anonymous donations only for the reason that the notices u/s 133(6) of the Act were returned unserved and the assessee did not produce the donors when it was called upon to do so.
The Tribunal opined that since the donations were duly treated as income by the assessee, section 68 could not have been invoked in view of the judgment of the Hon’ble High Court. Further, the assessee’s case also does not fall in the mischief of section 115BBC because as per sub section (3), anonymous donations are those donations for which no details of the donors are maintained by the assessee.
The Tribunal held that that since the assessee had maintained the details of donors, the donations could not be called anonymous and provisions of section 115 BBC could not be invoked in the facts and circumstances of the case.
