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2024 (7) TMI 836 - AT - Income TaxAssessment of trust - addition made u/s. 115BBC as anonymous donations - addition made doubting the genuineness of the donors - onus to prove - AO brought on record defects in maintaining records as per the provision of said section - CIT(A) deleted addition - CIT(A) held that the Assessee trust is existing solely for the purpose of education - assessee submitted complete details of donors from whom the assessee trust has received the donation along with their name, complete address, PAN Card details of the donors, Aadhar Card of the donors with respect of identification proof of donors - HELD THAT - The assessee has discharged the onus casted upon it and, therefore, if at all the AO is having any doubt, he should have been brought the evidence on record that the donations are not genuine. Once the assessee has filed all the details of the donors and enquiry made by the AO cannot doubt the donors. We also find that some of the donors appeared before the AO and stated that they had paid the donations. Some of them had filed confirmation stating that they paid donation to the assessee trust. A few of them did not appear before the AO. AO without giving opportunity to the assessee to produce the donors before the Assessing Officer, simply doubted the entire donation received by the assessee as not genuine. In our opinion, the AO was not correct in doubting the entire donations as not genuine. Anonymous donations - Assessee maintained the record of the identity and address of the persons who are making contribution and other particulars and, therefore, provisions of section 115BBC of the Act are not applicable. In the present case, the assessee has maintained identity of the donors i.e., complete details such as name, address, PAN card details, Aadhar details and, hence, provisions of section 115BBC of the Act are not applicable to the assessee Trust. We find that the assessee has given all the details of the donors including names, address, PAN card details, Aadhar details, etc. Thus, the assessee discharged onus casted upon it by producing all the details before the Assessing Officer. AO without following the procedure and without providing proper opportunity to the assessee, doubted the genuineness of the donations and invoked the provisions of section 115BBC of the Act, which is not correct. CIT(A) correctly deleted the addition. Assessee appeal allowed.
Issues Involved:
1. Deletion of addition made under Section 115BBC of the Income Tax Act as anonymous donations. 2. Justification of the Assessee Trust's existence solely for educational purposes. 3. Examination of the procedural correctness and sufficiency of evidence provided by the assessee. Issue-wise Detailed Analysis: 1. Deletion of Addition Made Under Section 115BBC of the Income Tax Act as Anonymous Donations: The Revenue challenged the deletion of an addition of Rs. 12,63,03,550/- made under Section 115BBC, arguing that the assessee failed to maintain proper records of donors as required by the section. The Assessing Officer (AO) noted defects in maintaining records, such as incomplete addresses and lack of PAN details. The AO treated these as anonymous donations and taxed them accordingly. The assessee, a registered Public Charitable Trust, provided detailed records of 23,135 donors during appellate proceedings, which were verified by the AO. The AO issued summons to 205 randomly selected donors, with 89 attending and confirming donations, 76 submitting written replies, and 28 neither attending nor replying. The AO found some inconsistencies but did not allow the assessee to cross-examine the donors who denied making donations. The learned CIT(A) concluded that the provisions of Section 115BBC were not applicable as the assessee maintained records of donor identities, including names, addresses, PAN, and Aadhar details. The CIT(A) emphasized that without adverse corroborative evidence, the AO's suspicion was insufficient to categorize the donations as anonymous. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had discharged its onus by providing detailed donor information. 2. Justification of the Assessee Trust's Existence Solely for Educational Purposes: The Revenue questioned whether the assessee trust existed solely for educational purposes, as the AO noted multiple objectives beyond education. The assessee argued that its primary activities were educational, supported by government grants, and thus eligible for exemption under Section 10(23C)(iiiab). The CIT(A) found no evidence from the AO to contradict the assessee's claim of being an educational institution. The Tribunal agreed, noting that the AO did not provide any documentary evidence to show that the trust violated conditions for claiming the exemption. The Tribunal upheld the CIT(A)'s finding that the trust's primary purpose was educational, and it was substantially financed by the government. 3. Examination of the Procedural Correctness and Sufficiency of Evidence Provided by the Assessee: The AO's procedural approach was scrutinized, particularly the handling of donor verification. The AO's remand report indicated that out of 205 donors, 89 confirmed donations in person, 76 confirmed in writing, and 28 did not respond. The AO doubted the donations based on a few denials and the perceived connection of donors to the trust. The CIT(A) and the Tribunal emphasized the need for the AO to allow cross-examination of donors who denied making donations. The Tribunal noted that the AO's suspicion alone was insufficient without concrete evidence. The Tribunal also highlighted that the assessee provided comprehensive donor details, fulfilling the requirements of Section 115BBC. The Tribunal concluded that the AO's invocation of Section 115BBC was incorrect, as the assessee maintained proper records of donor identities. The Tribunal upheld the CIT(A)'s decision to delete the addition, finding no procedural or evidentiary faults in the assessee's submissions. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition made under Section 115BBC. The Tribunal found that the assessee trust maintained sufficient records of donor identities and existed solely for educational purposes, thus qualifying for the claimed exemptions. The Tribunal emphasized the importance of procedural fairness and the need for concrete evidence to support allegations of anonymous donations.
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