SHANTI NIKETAN TRUST,DELHI vs. ADDL. CIT, GHAZIABAD

PER SUDHANSHU SRIVASTAVA, J.M.: This appeal is filed by the assessee against order dated

03.03.2015 passed by the Ld. CIT (Appeals), Muzaffarnagar for

assessment year 2010-11.

which was granted registration u/s. 12AA of the Income Tax Act,

1961 (hereinafter called the Act) vide order dated 17.04.2009 with

effect from 01.05.2008. The assessee society also enjoys

2 ITA NO. 4109/Del/2015 (Shanti Niketan Trust)

recognition u/s 80G of the Act. As per the Memorandum, the

assessee society has been established to run colleges with an

object to enhance the standard of education. The return of income

for the year under consideration was filed declaring nil income.

Subsequently, the case was selected for compulsory scrutiny.

During the course of assessment proceedings, the assessee was

required to furnish information regarding donations received along

with names, addresses, bank accounts and copy of confirmations

from the donors. The assessee submitted details of the donors/

donations. However, as some details as desired by the Assessing

Officer (AO) were not filed, the AO proceeded to issue notices u/s

133(6) of the Act to the various donors to confirm the donations.

However, most of the notices were returned un-served. Thereafter,

the assessee was asked to produce the donors but the assessee did

not produce the donors. Accordingly, the AO concluded that the

donations were neither genuine nor voluntary. The AO proceeded

to hold the donations as being fictitious and unexplained cash

credits and proceeded to add an amount of Rs. 99,50,000/- to the

income of the assessee u/s 68 of the Act in view the deeming

provisions of Section 115 BBC of the Act. In addition, the AO also

made in addition of Rs. 45,44,814/- being depreciation said to be

claimed by the assessee. The assessee’s appeal before the Ld. CIT

3 ITA NO. 4109/Del/2015 (Shanti Niketan Trust)

(Appeals) was also dismissed. Now, the assessee is before the ITAT

and has challenged the action of the lower authorities in treating

the impugned donations as anonymous donation u/s 115BBC of

the Act. The assessee is also challenging the action of the lower

authorities in adding back the depreciation of Rs. 45,44,814/- to

the income of the assessee.

assessee, drew our attention to the provisions of Section 115BBC

of the Income Tax Act and submitted that as per sub section (3),

donation can be called anonymous only when the person receiving

the 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. It

was further submitted that the assessee has duly maintained

particulars of the names and addresses of the donors and the same

has not been disputed by the Assessing Officer. It was also

submitted that no other particulars have so far been prescribed by

the Act. It was also submitted that apart from this no other onus

was to be discharged by the assessee in this regard. He also drew

our attention to the income and expenditure account of the society

and pointed out that the assessee has duly shown the donations as

income and the expenditure as application of income. It was also

4 ITA NO. 4109/Del/2015 (Shanti Niketan Trust)

emphasized that the donations were not from bogus entities as all

the donor companies were registered companies which were on the

Roll of the Registrar of the Companies.

3.1 With respect to the depreciation, which has been added back

by the lower authorities, it was submitted that this action was

incorrect as the assessee had not claimed the depreciation amount

as application of income and, therefore, the amount of depreciation

could not have been added back.

placing reliance on the concurrent findings of the lower authorities,

submitted that the fact remained that the donors were not

produced before the Assessing Officer and, therefore, the AO was

correct in adding back the amount to the income of the assessee.

the material available on record. It is seen that the AO has invoked

section 68 of the Act read with section 115BBC to hold that the

donations were anonymous. In our considered view, Section 68 of

the Act has no application to the facts of the assessee because the

assessee has duly disclosed the donations as its income. There

was, thus, a full disclosure of income by the assessee and also the

application of the donations for charitable purposes. It is not in

dispute that the objects and activities of the assessee are charitable

5 ITA NO. 4109/Del/2015 (Shanti Niketan Trust)

in nature since it is duly registered under the provisions of

section12A. Further, the AO has invoked provisions of section

115BBC to hold that the impugned donations were anonymous.

However, the Hon’ble Delhi High Court in the case of DIT

(Exemptions) vs. Keshav Social & Charitable Trust (278 ITR 152)

observed that the fact that complete list of donors was not filed or

that the donors were not produced, does not necessarily lead to the

inference that the assessee was trying to introduce un-accounted

money by way of donation receipts. The Hon’ble Court further

observed that as the assessee had disclosed the donation as

income, the provisions of section 68 cannot be applied.

5.1 The Hyderabad Bench of the ITAT in the case of M/s.

Vaishnavi Educational Society Versus The Deputy CIT Central

Circle, Tirupati reported in 2014 (11) TMI 350 - ITAT HYDERABAD

held that where the names of the donors along with their addresses

were furnished before the Investigation Wing of the department and

were also recorded in the books produced by the assessee before

the AO, such donations cannot be classified as anonymous

donations as per the provisions of section 115BBC(3) of the Act. It

was further held that the only requirement u/s. 115BBC (3) is that

the names and addresses of the donor should be maintained.

6 ITA NO. 4109/Del/2015 (Shanti Niketan Trust)

5.2 In the present appeal, the assessee had not only disclosed its

donations, but had also submitted a list of donors. The AO

proceeded to treat the same as anonymous donations only for the

reason that the notices u/s 133(6) of the Act were returned un-

served and the assessee did not produce the donors when it was

called upon to do so. However, since the donations were duly

treated as income by the assessee, section 68 could not have been

invoked in view of the judgment of the Hon’ble Delhi High Court in

the case of DIT (Exemptions) vs. Keshav Social & Charitable Trust

(supra). Further, the assessee’s case also does not fall in the

mischief of section 115BBC because as per sub section (3),

anonymous donations are those donations for which no details of

the donors are maintained by the assessee. Thus, it follows that if

the details are maintained, the donations cannot be called

anonymous donation and provisions of section 115BBC cannot be

invoked. In the instant appeal, undisputedly, the details were

maintained by the assessee but the addition was made on account

of non-furnishing of confirmation letters/non-production of the

donors before the AO. We are of the considered view that since

the assessee has maintained the details of donors, the donations

cannot be called anonymous and provisions of section 115 BBC

cannot be invoked in the given facts and circumstances of the case.

7 ITA NO. 4109/Del/2015 (Shanti Niketan Trust)

If provision of section 115BBC cannot be invoked, the impugned

addition cannot be sustained. Accordingly, we set aside the order of

the Ld. CIT (A) on the issue and direct the AO to delete the

addition.

5.3 As far as the second issue regarding adding back of

depreciation is concerned, we note that the averment of the Ld. AR

is correct that depreciation has not been claimed as an application

of income by the assessee and, therefore, there is no question of

adding back the same to the income of the assessee. The assessee

succeeds on this ground also and while setting aside the order of

the Ld. CIT (A) on this issue, we direct the AO to delete this

addition also.

Sd/- Sd/- (G.D.AGRAWAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER

Dated: 07.01.2019 *BR*