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2012 (10) TMI 27 - AT - Income TaxAnonymous donation/undisclosed income - assessee is a society registered u/s 12AA - Held that - Merely filing list of donors containing names and addresses/incomplete addresses does not satisfy the conditions laid down in section 115BBC(3). The sub-section (3) of section 115BBC has explained the meaning of anonymous donation clearly that such institution is required to maintain records of identity indicting the names and addresses of the persons making the donations or contributions. Receipt of donation with specific direction - held that - in view of sub-clause (2) of that section 115BBC it is relevant to note that the assessee has failed to produce any evidence based on which it can be said that the donation was for a specific direction particularly when the donation was found as anonymous donation - against assessee.
Issues Involved:
1. Addition of Rs. 27,96,200/- out of Rs. 68,99,943/- made by the Assessing Officer on account of anonymous donation/undisclosed income. 2. Verification and genuineness of the donors. 3. Applicability of Section 115BBC of the Income Tax Act, 1961. 4. Opportunity for the assessee to furnish full details of donors. 5. Whether donations received were from named persons or anonymous. Detailed Analysis: Addition of Rs. 27,96,200/- out of Rs. 68,99,943/- on Account of Anonymous Donation/Undisclosed Income: The assessee, a registered society, received voluntary contributions amounting to Rs. 68,99,943/- from 2700 donors. The Assessing Officer (A.O.) treated this amount as income from undisclosed sources due to lack of verification and genuineness of the donors and taxed it in the status of an Association of Persons (A.O.P.). The CIT(A) sustained an addition of Rs. 27,96,200/- based on sample verification and estimation, which was challenged by the assessee. Verification and Genuineness of the Donors: During assessment proceedings, the A.O. issued summons and letters to verify the genuineness of the donors. Some donors refused to acknowledge the donation, some were untraceable, and others did not respond. The A.O. noted that all receipts were prepared in a single sitting without proper signatures, and affidavits filed by donors appeared cyclostyled. The CIT(A) directed the A.O. to verify donors who gave more than Rs. 4,000/- and suggested a sample survey for donors who gave less than Rs. 4,000/-. The A.O. reported that 53% of donors either refused or were untraceable. The CIT(A) accepted confirmations from 102 additional donors provided by the assessee but found that 28.5% of donations above Rs. 4,000/- and 46% of donations below Rs. 4,000/- remained unverified. Applicability of Section 115BBC of the Income Tax Act, 1961: Section 115BBC imposes tax on anonymous donations received by charitable institutions. The CIT(A) observed that the concept of "Gupt Dan" (secret donation) is not applicable to educational trusts and noted that unaccounted money is often channeled through such donations. The CIT(A) bifurcated the donations into two categories: donations above Rs. 4,000/- and donations below Rs. 4,000/-. Based on verification, the CIT(A) found Rs. 6,15,229/- and Rs. 21,80,971/- respectively as unverified, totaling Rs. 27,96,200/-, which was liable to be taxed under Section 115BBC. Opportunity for the Assessee to Furnish Full Details of Donors: The assessee claimed that they were not given sufficient opportunity to furnish full details of donors. The CIT(A) noted that the matter had been under examination since July 2007, and ample opportunities were given. Despite this, the assessee failed to provide complete addresses for many donors. The CIT(A) allowed joint hearings and accepted confirmations with identity proofs but did not accept further requests for additional time. Whether Donations Received Were from Named Persons or Anonymous: The assessee argued that donations were received from named persons, not anonymously, and thus Section 115BBC should not apply. The CIT(A) distinguished the case from precedents cited by the assessee, noting that the identity of donors for Rs. 27,96,200/- could not be established. The Tribunal upheld the CIT(A)'s findings, emphasizing that merely filing a list of names and incomplete addresses does not satisfy the conditions of maintaining records of identity as per Section 115BBC(3). Conclusion: The Tribunal confirmed the CIT(A)'s order, holding that the assessee failed to maintain proper records of donors' identities as required under Section 115BBC. The addition of Rs. 27,96,200/- as anonymous donations was upheld, and the appeal filed by the assessee was dismissed.
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