2021 (7) TMI 143 - AT - Income Tax

Exemption u/s 11 denied - anonymous donations - trust is also duly registered u/s. 12AA - HELD THAT - Transaction of the receipt of the donations is not normal and genuine and militate about the claim of appellant society the transaction of receipt of donations is genuine. It is settled position of law that the burden of proving the genuineness of transaction of receipt of donation is always on the assessee. This burden can be discharged by him be leading necessary evidence or from the circumstantial evidence. In the absence of any positive evidence from the assessee, the AO as well as the appellate authority would be justified applying the test of human probabilities and can draw an adverse inference against the assessee. In present case, it is highly improbable that an organization can receive donation of identical amount of ₹ 4,501/- from total 4851 persons. Therefore, it is fit case to apply the test of human probabilities. No pleadings were made before us as to how it was prevented from filing the correct details before the lower authorities as well as before us. The only plea made before us was that in view of the voluminous of record the information cannot be filed in physical form. Only in order to verify this genuineness of this claim we had called for a remand report from the Assessing Officer pursuant to which the appellant society had filed a new set of information different from what was filed at the time of original assessment proceedings. This conduct of the assessee made us to believe that the information filed during the original assessment proceedings is not correct or incomplete. We are inclined to believe that the appellant society deliberately adopted the dilatory tactics before the assessing authority with a view to not to enable the AO to carry out the verification so as to satisfy himself about genuineness of the donations received. It is settled principle of law that the assessee-company cannot be given a second innings to make good its case. We are of the considered opinion that the transaction of receipt of donation is a sham, a make believe story, a device adopted by the appellant society to bring on record the undisclosed income of the appellant society. Therefore, we do not see any reason to interfere with the orders of the lower authorities. - Decided against assessee.

Issues Involved:
1. Confirmation of total income assessment by CIT(A).
2. Classification of voluntary donations as anonymous under Section 115BBC.
3. Failure to prove genuineness and identity of donors.
4. Qualification for exemption under Section 10(23C)(iiiab) and Section 12A.
5. Procedural fairness and opportunity to present evidence.

Detailed Analysis:

1. Confirmation of Total Income Assessment by CIT(A):
The appellant trust challenged the confirmation by the CIT(A) of the Assessing Officer's decision to assess the total income at ?2,17,20,000/-, as opposed to the declared Nil income. The appellant argued that the addition was arbitrary, illegal, and bad-in-law.

2. Classification of Voluntary Donations as Anonymous under Section 115BBC:
The primary contention was regarding the classification of ?2,17,30,000/- as anonymous donations under Section 115BBC of the Income Tax Act, 1961. The trust argued that the donors were well-wishers from rural villages, and the donations were for educational activities. The trust claimed that the donors' details were provided, but the Assessing Officer arbitrarily held 133 donations as anonymous without proper inquiry.

3. Failure to Prove Genuineness and Identity of Donors:
The Assessing Officer found that the trust failed to prove the genuineness and identity of the donors. Despite providing some details, the trust did not comply with multiple notices and only responded when the assessment was nearing its deadline. Notices sent to donors returned un-served, and one donor denied making any donation. The CIT(A) upheld the Assessing Officer's findings due to the trust's failure to substantiate the donations' genuineness.

4. Qualification for Exemption under Section 10(23C)(iiiab) and Section 12A:
The appellant argued that as an educational trust substantially financed by the government, its income qualified for exemption under Section 10(23C)(iiiab). The trust also claimed registration under Section 12A and argued that the donations were from well-wishers in rural areas, which should have been considered for exemption.

5. Procedural Fairness and Opportunity to Present Evidence:
The appellant contended that it was not given sufficient opportunity to present evidence and that the lower authorities did not consider the confirmations and identifications provided. The trust argued that the Assessing Officer and CIT(A) did not allow adequate time to furnish necessary confirmations from donors.

Tribunal's Findings:
The Tribunal examined the submissions and found that the trust adopted dilatory tactics by not responding to notices and filing information late. The improbability of receiving identical donations from 4851 persons and the failure to provide complete donor details led to the conclusion that the donations were not genuine. The Tribunal noted that the trust did not discharge its burden to prove the genuineness of the donations and upheld the lower authorities' decisions.

The Tribunal dismissed the appeal, emphasizing that the trust's conduct during assessment and remand proceedings indicated an attempt to avoid verification. The Tribunal cited legal precedents to support its decision not to grant a second opportunity to the trust to make its case.

Conclusion:
The appeal was dismissed, and the Tribunal upheld the addition of ?2,17,30,000/- as anonymous donations under Section 115BBC. The trust's failure to prove the genuineness and identity of donors, along with procedural lapses, led to the dismissal of the appeal.

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