2022 (10) TMI 1220 - AT - Income Tax

Assessment of trust - Unverifiable donation - unverifiable/ bogus contribution to corpus fund - addition made by AO by invoking the provisions of section 68 and section 115 BBC - CIT(A) deleted addition accepting genuineness and creditworthiness of the of the donors - HELD THAT - CIT(A) while deleting the addition has noted that if a person receives donation and maintains the record of identity and address of the donors and then such donation cannot be considered to be anonymous donation as defined in subsection (3) of Section 115BBC of the I.T. Act, 1961. He further held that requirement of Section 115BBC is not at par with onus on the assessee-trust casted under section 68 i.e., to prove creditworthiness of the donors. He has given a finding that since the assessee-trust has maintained and disclosed name and address of the donors during the assessment proceedings and which were accepted by the A.O. in the original assessment order, therefore, the provisions of Section 115BBC would not be applicable to the facts of the case. CIT(A) further noted that details of the names and addresses of the donors has not been proved to be wrong or those persons have not donated to the assessee-trust. He, therefore, held that for these reasons also the donation received by the assessee-trust cannot be considered to be anonymous donation by virtue of sub-section (3) of Section 115BBC of the I.T. Act, 1961. Before us, no fallacy in the findings of the CIT(A) has been pointed out by the Revenue. In such a situation, we find no reason to interfere with the order of the Ld. CIT(A) and thus, the grounds raised by the Revenue are dismissed.

Summary

Issues:
Cross-appeals by Revenue and Assessee-Trust against Ld. CIT(A)'s order for A.Y. 2008-2009.

Analysis:
The Assessee, a Trust registered under section 12AA of the I.T. Act, filed a return of income for A.Y. 2008-09 declaring total income at Rs.NIL. Initially, the assessment was framed by the A.O. under section 143(3) of the I.T. Act, determining total income at Rs.16,30,38,330/- after set off of losses. An application under section 154 of the I.T. Act was made seeking allowance of deduction for further application of income, which was accepted. However, the Ld. CIT, in exercise of revisional powers under section 263, cancelled the assessment and directed a fresh assessment, disallowing relief for set off of losses. The A.O. then passed a new assessment order under section 263 read with section 143(3) determining total taxable income at Rs.22,53,53,785/- under section 115BBC of the I.T. Act.

The Revenue's appeal challenged the Ld. CIT(A)'s deletion of additions on account of unverifiable donations and contributions to corpus fund, invoking sections 68 and 115BBC of the Act. The Assessee-Trust's appeal contended that the orders passed were illegal and erroneous. The Revenue's appeal was dismissed by the Tribunal as the Ld. CIT(A) had correctly noted that the donations were not anonymous, and the provisions of Section 115BBC were not applicable due to proper donor identification maintained by the Assessee-Trust.

Regarding the Assessee-Trust's appeal, the Tribunal partially allowed it for statistical purposes. The issue revolved around a donation of Rs.1.46 crores allegedly received from a specific entity. The A.O. noted discrepancies in donor details, leading to treating the donation as anonymous under section 115BBC. The Assessee-Trust provided documents confirming the donations, which the A.O. did not investigate further. The Tribunal remitted the issue back to the A.O. for fresh adjudication, directing necessary verification and enquiries. The Assessee-Trust was instructed to cooperate with the A.O. for a fair decision.

In conclusion, the Revenue's appeal was dismissed, and the Assessee's appeal was partly allowed for statistical purposes, emphasizing the need for proper verification and investigation in donation-related matters to ensure fair assessments and compliance with legal provisions.