AGRAWAL SABHA,AURANGABAD vs. INCOME-TAX OFFICER, EXEMPTION WARD,, AURANGABAD

आदेश / ORDER PER R.S. SYAL, VP : This appeal by the assessee arises out of the order dated 25-08-2022 passed by the National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act.) in relation to the assessment year 2017-18.

2 ITA No. 793/PUN/2022 Agrawal Sabha Aurangabad

confirmation of addition of Rs.29,32,750/- made towards

anonymous donations and taxing the same u/s.115BBC of the Act.

filed its return declaring total income at Nil. During the course of

assessment proceedings, the Assessing Officer (AO) observed that

the Audit report indicated corpus donation of Rs.32,26,560/-

received under the head “Building Fund”. The assessee was called

upon to furnish necessary details of the corpus donations. The AO

recorded that the assessee did not furnish any details, which led to

the making of addition of Rs.32,26,560/-. The assessee contended

before the ld. CIT(A) that all the necessary details, as called for by

the AO, were duly furnished. The ld. CIT(A) required the AO to

examine the assessee’s contention and furnish a remand report. In

the remand report dated 29-06-2022, the AO observed that out of

total donations of Rs.32.26 lakh, donations amounting to Rs.20.30

lakh were received through cheques and the remaining amount of

Rs.11.96 lakh in cash. The AO carried out verification in respect

of 16 donors - consisting of 10 donors from whom donations were

received by cheques by means of notices u/s.133(6); and 6 donors

3 ITA No. 793/PUN/2022 Agrawal Sabha Aurangabad

from whom the donations were received in cash by means of

summons u/s.131. Written replies were furnished by 9 persons out

of total 10 persons to whom notices were issued u/s.133(6); and 4

persons attended out of 5 persons who were summoned u/s.131.

All such persons admitted to have given corpus donations. The AO

accepted the genuineness of the corpus donations to the extent of

Rs.1,80,000/- out of cheque payments; and Rs.1,13,810/- out of

cash payments on the basis of replies/attendance. Remaining

amount of Rs.29.32 lakh was added. The ld. CIT(A) echoed the

assessment order. Aggrieved thereby, the assessee has come up in

appeal before the Tribunal.

material on record. Section 2(24)(iia) provides that `income’

includes voluntary contributions received by a trust created wholly

or partly for charitable or religious purposes etc. Thus `income’

primarily includes voluntary contributions both towards corpus and

non-corpus donations. Section 11 deals with income from property

held for charitable or religious purposes. Clause (d) sub-section (1)

of section 11 provides that income in the form of voluntary

contributions made with a specific direction, that they shall form

4 ITA No. 793/PUN/2022 Agrawal Sabha Aurangabad

part of the corpus of the trust or institution, shall not be included in

the total income of the previous year of the person in receipt of

such amount. On an analysis of section 11(1)(d) in conjunction

with section 2(24)(iia), it becomes overt that corpus donations are

also otherwise part of `income’, but qualify for exemption u/s.11 at

the threshold by virtue of the operation of clause (d) of section

11(1) of the Act. Section 115BBC has the caption: ‘Anonymous

donations to be taxed in certain cases’. Sub-section (1) of this

provision provides that where the total income of an assessee,

being a person in receipt of income on behalf of any university or

other educational institution etc., includes any income by way of

anonymous donation, the income-tax shall be calculated at the

rates prescribed under this provision. The term ‘anonymous

donation’ has been defined in sub-section (3) of section 115BBC

to mean “any voluntary contribution referred to in sub-clause (iia)

of clause 24 of section 2, where a person receiving such

contribution does not maintain a record of the identity indicating

the name and address of the person making such contribution and

such other particulars as may be prescribed”. No `such other

particulars’, as referred to in the provision, have been prescribed so

5 ITA No. 793/PUN/2022 Agrawal Sabha Aurangabad

far. Thus, the person receiving any contribution needs to maintain

a record only of the identity indicating name and address of the

person making such contribution, so as to thwart the application of

sub-section (3) and the consequential sub-section (1) of section

115BBC. When we read section 115BBC in juxtaposition to

section 2(24)(iia), it becomes ostensible that the writ of

‘anonymous donation’ extends to all types of voluntary

contributions - whether corpus or non-corpus; and corpus

donations are not immune from the rigor of section 115BBC just

because of the role of section 11(1)(d) of the Act. The requisite

conditions of maintaining record of the identity indicating the

name and address of a person making contribution, as prescribed

u/s 115BBC, also need to be satisfied anent to corpus donation in

the same manner as the non-corpus. Failure to comply with such

conditions exposes even the corpus donation to the mischief of

section 115BBC of the Act.

assessee maintained a separate register for corpus donations and

also furnished a list of corpus donations to the AO, as has been

given at page 350 onwards of the paper book. Such list has

6 ITA No. 793/PUN/2022 Agrawal Sabha Aurangabad

columns, such as, Sl. No.; Name of the donor; Receipt No.;

Amount; and address. It can be seen from this list that the assessee

furnished address of some of the donors but failed to furnish

address of the others. The 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. I, 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

7 ITA No. 793/PUN/2022 Agrawal Sabha Aurangabad

not given. In carrying out this exercise, the AO will give adequate

opportunity of hearing to the assessee.

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.

Order pronounced in the Open Court on 16th December, 2022.

Sd/- (R.S.SYAL) उपा�य�/ VICE PRESIDENT पुणे Pune; �दनांक Dated : 16th December, 2022 Satish आदेश की �ितिलिप अ�ेिषत/Copy of the Order is forwarded to: अपीलाथ� / The Appellant; 1. ��थ� / The Respondent 2. 3. The CIT(A) concerned 4. The Pr.CIT concerned 5. DR, ITAT, ‘SMC’ Bench, Pune गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

8 ITA No. 793/PUN/2022 Agrawal Sabha Aurangabad

Date 1. Draft dictated on 15-12-2022 Sr.PS 2. Draft placed before author 16-12-2022 Sr.PS 3. Draft proposed & placed before - JM the second member 4. Draft discussed/approved by - JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.

*