2020 (4) TMI 535 - AT - Income Tax

Exemption u/s 11 withdrawn - Anonymous donation - assessee trust has failed to substantiate the donation so received through any credible and verifiable evidence - HELD THAT - Assessing Officer has recorded a finding that the assessee could not furnished complete address or identify the persons from whom the donations have been received, the receipt books appears to be fabricated without any address of the persons from whom the donations have been received and number of opportunities have been provided to the assessee-trust to furnish postal address and identification of the persons as well as the purpose of the donation and prima facie the list appears to have been prepared on the basis of voter list or any other records of the census department. Complete name of the Donors is not mentioned nor the details about their father and the address where they were residing were furnished - AO that all these donations have been received of same amount i.e. ₹ 5,000/- from innumerable people which we find practically improbable that each of the donors have donated equivalent amount not a rupee more nor a rupee less - assessee trust has failed to substantiate the donation so received through any credible and verifiable evidence in terms of complete name and address of the donors and purpose of the donation and therefore, the provisions of Section 13(7) r/w 115BBC have been rightly invoked by the Assessing officer and confirmed by the ld. CIT(A). In the result, we do not find any merit and justification in the grounds of appeal so taken by the assessee-trust. - Appeal of the assessee-trust is dismissed.

Summary

Issues:
1. Confirmation of order passed by Ld. AO u/s 143(3) without considering assessee's submission.
2. Treatment of donation as "Anonymous donation" and denial of exemption u/s 11 of the Income Tax Act, 1961.
3. Disallowance made for non-production of complete address of donors.

Issue 1:
The appeal was filed against the order of ld. CIT(A)-III, Jaipur for the assessment years 2012-13. The matter was listed for multiple hearings, but the assessee did not appear, leading to an ex-parte hearing. The Assessing Officer observed discrepancies in the donation amounts declared by the assessee. While some donations were accepted, a significant amount was treated as anonymous due to lack of proper documentation and justification. The AO invoked Section 13(7) and Section 115BBC to tax the anonymous donations at the Maximum Marginal Rate. The ld. DR argued that the assessee failed to provide evidence to counter the AO's findings. The Tribunal found no merit in the grounds of appeal and dismissed the appeal.

Issue 2:
The Assessing Officer found that the assessee could not provide complete addresses or identities of donors for a substantial donation amount. The AO deemed the donation as anonymous due to fabricated receipt books and lack of verifiable details. The assessee claimed that all donations were from villagers for education development, but the AO found discrepancies in the donation pattern, raising doubts about the genuineness of the donations. The Tribunal upheld the AO's decision to treat the donations as anonymous and apply Section 115BBC, denying exemption u/s 11 of the Income Tax Act.

Issue 3:
The ld. CIT(A) confirmed the AO's decision to disallow the donation amount due to incomplete donor details. The AO noted that despite multiple opportunities, the assessee failed to provide necessary information to verify the donations. The Tribunal agreed that the assessee did not substantiate the donations with credible evidence, leading to the invocation of Section 13(7) and Section 115BBC. As a result, the appeal of the assessee was dismissed, upholding the lower authorities' decision.

This detailed analysis of the judgment covers all the issues involved, providing a comprehensive understanding of the legal aspects and decisions made by the authorities.