2022 (6) TMI 667 - AT - Income Tax

Levy of tax on Anonymous donation u/s 115BBC - letters from the donors have been obtained and provided before the Ld. Revenue Authorities or not? - HELD THAT - We find merit in the arguments of the Ld. AR that the submissions were made online in piecemeal due to size restrictions. We also note from the paper book submitted by the Ld. AR that the names and addresses of every donor is being submitted and available in records. We also note that the donations were made either by cheque or DD or through other banking channels only. Further, we also observe that the assessee has published advertisements requesting for donations. We find force in the argument of the Ld. AR that section 115BBC requires the recipients to maintain record of identity, name and address of the person making such contribution. In the instant case, the Ld. AR has provided the details of 2300 donors along with the names and addresses of the donors before the AO. We find that the AO has failed to scrutinize the donations received from various donors. We also find from the paper book filed by the Ld. AR that confirmation letters from the donors have been obtained and provided before the Ld. Revenue Authorities. Mere absence of PAN in the confirmation letters of the donors does not give raise to suspicion that they are anonymous donations as the maintenance of name and address details of the contributors is a sufficient document as prescribed u/s. 115BBC of the Act. It is also seen from the order of the Ld. AO that he has not doubted the genuineness of the donations in the assessment order. Section 68 has no application in the instant case because the assessee has disclosed the donation as its income and applied the same for charitable purpose. In view of the above, we are of the considered view that the assessee has established the identity of the donors as provided U/s. 115BBC of the Act and hence the donations received by the assessee cannot be categorized as anonymous donations and cannot be subjected to tax as per the provisions of section 115BBC of the Act. - Decided against revenue.

Summary

Issues: Delay in filing appeal, Treatment of donations as anonymous, Compliance with section 115BBC of the Act

Delay in filing appeal:
The Revenue filed an appeal against the order of the Ld. CIT(A) with a delay of 135 days. The Tribunal condoned the delay based on the decision of the Hon'ble Supreme Court, excluding the period of limitation for filing appeals between specific dates. The Tribunal proceeded to adjudicate the case on its merits despite the delay.

Treatment of donations as anonymous:
The case involved an assessee, a Trust running educational institutions, which received a corpus donation but failed to file confirmation letters for a significant portion of the amount. The Ld. AO treated a substantial sum as anonymous donation under section 115BBC of the Act. The Ld. CIT(A) allowed the appeal after the assessee submitted confirmation letters from donors, numbering 2300, and provided evidence of filing these letters on the electronic portal of the department.

Compliance with section 115BBC of the Act:
The Revenue raised various grounds challenging the decision of the Ld. CIT(A), including issues related to the timing of submission of confirmation letters, lack of verification by the AO, and acceptance of the assessee's contentions. The Tribunal heard arguments from both sides and analyzed the provisions of section 115BBC, which require maintaining records of the identity of donors. The Tribunal noted that the assessee had provided details of donors, including names and addresses, to the Revenue Authorities, and the absence of PAN in confirmation letters did not render the donations anonymous. The Tribunal held that the donations were not anonymous as the identity of donors was established, and thus, the provisions of section 115BBC did not apply. Consequently, the Tribunal dismissed the appeal of the Revenue.

This comprehensive analysis of the judgment covers the issues of delay in filing the appeal, treatment of donations as anonymous, and compliance with section 115BBC of the Act, providing a detailed overview of the legal proceedings and the Tribunal's decision.