2014 (1) TMI 1664 - AT - Income Tax

Additions made u/s 68 on unexplained corpus donations - CIT(A) deltd the addition - Held that - The issue of addition u/s 68 of the Act on account of corpus donation is squarely covered by the order of the Tribunal pertaining to assessment year 2005-06 in which corpus donation was introduced under similar circumstances and the Tribunal has deleted the additions having observed that once a particular credit or donation is already declared by the assessee the same cannot be added again. - Decided in favour of assessee. Addition u/s 69 on unexplained investment in the institute building on D.V.O. s report - CIT(A) deltd the addition - Held that - Undisputedly the reference to D.V.O. was made without rejecting the books of account of the assessee therefore in the light of judgment of Hon ble Apex Court in the case of Sargam Cinema (2009 (10) TMI 569 - Supreme Court of India ) the D.V.O. s report cannot be relied for determining the cost of investment in the property. In the case of Sargam Cinema (supra) their Lordships have categorically held that the Assessing Authority could not have referred the matter to D.V.O. without rejecting the books of account and therefore reliance placed on the report of the D.V.O. was misconceived - Decided in favour of assessee. ddition u/s 68 on account of unexplained corpus donation - the Revenue authorities have also applied the provision of section 115BBC of the Act - Held that - As per sub section (3) unanimous donation are those donations for which no details of donors are maintained by the assessee. If the details are maintained the donations cannot be called unanimous donation and provisions of section 115BBC cannot be invoked. In the instant case undisputedly the details were maintained by the assessee but the addition was made on account of non furnishing the confirmation letters. We are of the considered view that only those donations can be called unanimous for which details are not maintained. If it is properly maintained it cannot be called unanimous donation. Since the assessee has maintained the details of donors the donations cannot be called unanimous donation and provision of section 115BBC cannot be invoked in the given facts and circumstances of the case. If provision of section 115BBC cannot be invoked the addition made u/s 68 are to be deleted in the light of the order of the Tribunal in assessee s case for assessment year 2005-06 - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition under Section 68 of the Income Tax Act on account of unexplained corpus donations.
2. Addition under Section 69 of the Income Tax Act on account of unexplained investment in the institute building based on the D.V.O.'s report.
3. Validity of the reopening of assessments.
4. Application of Section 115BBC regarding anonymous donations.

Issue-wise Detailed Analysis:

1. Addition under Section 68 of the Income Tax Act on account of unexplained corpus donations:
The Revenue challenged the deletion of additions made under Section 68 by the CIT(A), who had relied on a previous order for the assessment year 2005-06 where similar additions were deleted. The Tribunal found that the issue was covered by its earlier decision and the judgment of the Hon'ble jurisdictional High Court, which held that once a particular credit or donation is already declared by the assessee, it cannot be added again. The Tribunal confirmed the CIT(A)'s order, stating that the corpus donation once declared by the assessee cannot be added again under Section 68.

2. Addition under Section 69 of the Income Tax Act on account of unexplained investment in the institute building based on the D.V.O.'s report:
The CIT(A) deleted the additions made under Section 69, observing that the reference to the D.V.O. was made without rejecting the books of account. The Tribunal upheld this decision, citing the judgment of the Hon'ble Apex Court in the case of Sargam Cinema Vs Commissioner of Income-tax [2010] 328 ITR 513 (SC), which held that the Assessing Officer could not refer the matter to the D.V.O. without rejecting the books of account. Thus, the D.V.O.'s report could not be used for making additions under Section 69.

3. Validity of the reopening of assessments:
The assessee challenged the validity of the reopening of assessments, arguing that it was based on the cancellation of registration under Section 12AA(3), which was later reversed by the Tribunal. The CIT(A) held the reopening valid but deleted the additions on merit. The Tribunal did not find it necessary to address the reopening's validity, as the assessee got relief on merit in both years.

4. Application of Section 115BBC regarding anonymous donations:
For the assessment years 2007-08 and 2008-09, the assessee argued that the additions under Section 68 were not applicable as the donations were not anonymous under Section 115BBC. The Tribunal noted that Section 115BBC, introduced by the Finance Act, 2006, was applicable from the assessment year 2008-09. According to Section 115BBC(3), anonymous donations are those for which no records of the donor's identity are maintained. The Tribunal found that the assessee had maintained donor details, and the addition was made due to non-furnishing of confirmation letters. Thus, the donations could not be termed anonymous, and Section 115BBC could not be invoked. Consequently, the Tribunal deleted the additions under Section 68 for both assessment years.

Conclusion:
In conclusion, the Tribunal dismissed the Revenue's appeals and allowed the assessee's appeals, confirming that the additions under Sections 68 and 69 were not sustainable and that the provisions of Section 115BBC regarding anonymous donations were not applicable in this case.