2023 (5) TMI 1300 - AT - Income Tax

Addition u/s 69A r.w.s. 115BBE - amount received by the assessee as donation - assessment of trust - HELD THAT - Section 69A can be applied only in those cases where the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery, or valuable article is not recorded in the books of account, if any, maintained by him for any source of income. In this case whatever may be the amount received by the assessee as donation in various forms, were duly entered in the books of accounts and tallied with bank statement also. Assessee s books were subject to audit and duly audited accounts were produced before the authorities for verification. Rather, amount tried to be covered u/s. 69A was pointed out by the department from assessee s own books of accounts and bank statements. Since otherwise also assessee was not found with any money, bullion, jewellery, or other valuable article conditions prescribed in section 69A can t be applied. Thus we are of the considered view that section 69A has no applicability in the present case, hence section 115BBE of the Act . Accordingly, Ground Nos. 1 2 raised by the assessee is allowed. Interest claimed on Corpus fund - We set aside the matter back to AO for verification with a direction that if interest so claimed by the assessee pertains to corpus fund, then the same has to be allowed as accretion to corpus fund, otherwise it will be deemed to be the income of the assessee subject to the benefits available in section 12A. Anonymous donations received - As reverting to the definition of anonymous donations under sub-section (3) of section 115BBC, it is found that it has been mentioned that anonymous donations means voluntary contributions where the person receiving such contributions does not maintain a record of the identity indicating the name and address of the person making such contribution and charitable trust as in the case of the assessee, it is generally not only difficult but also not possible to maintain such type of record. A perusal of the entire section 115BBC shows that the provisions of said section are not applicable to the institutions like that of assessee-trust as the same are meant to check the inflow of unaccounted/black money into the system with a modus operandi to make out as a part of the accounts of the institutions like university, medical institutions where the problem relating to the receipt of capitation fees, etc. is generally highlighted. Under such circumstances, there is no justification on the part of the Commissioner (Appeals) in taxing the offerings received in the hundis/donation boxes as income of the assessee u/s 115BBC.

Summary

Issues Involved:

1. Determination of total income and disallowance of deductions.
2. Applicability of Section 69A and Section 115BBE of the Income Tax Act.
3. Verification of interest claimed pertaining to corpus fund.
4. Applicability of Section 115BBC regarding anonymous donations.

Summary:

1. Determination of Total Income and Disallowance of Deductions:
The assessee, a charitable trust registered under Section 12A of the Income Tax Act, filed its return of income declaring NIL income. The Assessing Officer (AO) assessed the income at Rs. 2,88,96,000/-, treating certain cash deposits as unexplained money under Section 69A and chargeable to tax under Section 115BBE. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed the addition under Section 69A, leading to the enhancement of assessed income to Rs. 7,75,34,410/-.

2. Applicability of Section 69A and Section 115BBE:
The Tribunal examined whether Section 69A, which pertains to unexplained money, could be applied. It concluded that Section 69A is applicable only when the money is not recorded in the books of account. In this case, the donations were duly recorded in the books and bank statements, and the books were audited. Therefore, Section 69A and consequently Section 115BBE could not be applied. The Tribunal relied on various judicial pronouncements to support its decision, including cases like *DCIT v. M.C. Hospital* and *CIT v. Uttaranchal Welfare Society*.

3. Verification of Interest Claimed Pertaining to Corpus Fund:
Regarding the interest claimed by the assessee, the Tribunal directed the AO to verify if the interest pertains to the corpus fund. If so, it should be allowed as an accretion to the corpus fund; otherwise, it should be deemed income subject to the benefits available under Section 12A.

4. Applicability of Section 115BBC Regarding Anonymous Donations:
The Tribunal discussed the provisions of Section 115BBC, which pertains to the taxation of anonymous donations. It noted that the assessee, being a religious and charitable trust, received donations in donation boxes from numerous devotees. The Tribunal emphasized that it is generally not possible for such institutions to maintain records of each donor. It concluded that the provisions of Section 115BBC are not applicable to the assessee-trust, as they are meant to check the inflow of unaccounted money into institutions like universities and medical institutions. The Tribunal relied on cases such as *CIT (E) v. Bhagwan Shree Laxmi Naraindham Trust* to support its view.

Conclusion:
The Tribunal allowed the appeal of the assessee for statistical purposes, directing the AO to verify the interest claimed and concluding that Sections 69A and 115BBE were not applicable in this case. The provisions of Section 115BBC were also deemed inapplicable to the assessee's donations.