2022 (12) TMI 848 - AT - Income Tax

Exemption u/s.11(1)(d) - Assessment of trust - corpus donations - Addition made towards anonymous donations and taxing the same u/s.115BBC of the Act - HELD THAT - AO issued notices/summons to 10/5 donors and 9/4 responded by admitting the making of corpus donations. He, however, made addition even qua those donors who he had not issued any notice even though the assessee had given their address. This approach is not proper. If the AO chose to issue notice u/s.133(6) and summons u/s.131 in respect of a few of them, he cannot draw an adverse inference in respect of others who he did not issue any notice. Genuineness of such other donors having made corpus donations has to be accepted. Going with the prescription of section 115BBC r.w.s.11(1)(d), only such corpus donations fall for consideration u/s 115BBC for which the assessee did not maintain and furnish address of the donors to the AO through the list. Therefore, set-aside the impugned order and remit the matter to the file of the AO for examining the list of corpus donors as given at page 350 onwards of the paper book and make addition only in respect of such donors whose addresses are not given. In carrying out this exercise, the AO will give adequate opportunity of hearing to the assessee. Only the donations as per page 350 onwards of the paper books, where address of the donors were not given, fall within the domain of section 115BBC and the rest are eligible for exemption u/s.11(1)(d) of the Act. Assessee appeal is allowed for statistical purposes.

Summary

Issues:
Appeal against addition of anonymous donations under section 115BBC of the Income-tax Act for the assessment year 2017-18.

Analysis:
1. The appeal was time-barred by 10 days, but the delay was condoned as the revenue did not object, and the appeal was admitted for disposal on merits.
2. All grounds raised by the assessee were against the confirmation of the addition of Rs.29,32,750 made towards anonymous donations and taxing them under section 115BBC of the Act.
3. The Assessing Officer (AO) observed corpus donations in the audit report, leading to the addition of Rs.32,26,560. The AO accepted the genuineness of some donations but added Rs.29.32 lakh. The CIT(A) upheld the assessment order, prompting the appeal.
4. Section 2(24)(iia) includes voluntary contributions as income for charitable trusts. Section 11 exempts voluntary contributions forming part of the corpus. Section 115BBC taxes anonymous donations. The judgment clarifies that corpus donations are not exempt from section 115BBC if the identity of donors is not maintained.
5. The assessee maintained a register of corpus donations but failed to provide addresses for all donors. The AO issued notices to some donors but made additions for others without notices. The judgment directed the AO to consider only donations without donor addresses for taxation under section 115BBC.
6. The judgment concluded that only donations lacking donor addresses, as per the provided list, fall under section 115BBC, while others are eligible for exemption under section 11(1)(d).
7. The appeal was allowed for statistical purposes, and the matter was remitted to the AO for proper examination based on the provided list of corpus donors without addresses.
8. The order was pronounced in the Open Court on 16th December 2022.