MADHVI RAKSHA SANKALP,MUMBAI vs. INCOME TAX OFFICER(E) WARD 2(1), MUMBAI

The present appeals filed by the assessee are directed against the respective orders passed by the CIT(A)-6, Mumbai, dated 26.03.2018 for A.Y. 2013-14 and A.Y. 2014-15, which in turn arises from the assessment orders passed under Sec. 143(3) of the Income Tax Act, 1961 (for short ‗Act‘) for the said respective years. As a common issue is involved in the aforementioned appeals, therefore, the same are being taken up and disposed off together by way of a consolidated order. We shall first advert to the appeal of the assessee for A.Y. 2013-14. The assessee has assailed the impugned order before us on the following grounds of appeal:

On the facts and under the circumstances of the case and in law, the learned CIT (Appeals) erred in upholding the action of the AO of invoking the provisions of Section 115BBC of I.T. Act, without appreciating the fact that the AO has not sent any notice u/s 133(6) on the addresses mentioned in the donation letter. The appellant crave leave to add, to alter to delete the above groundof appeal if necessary.‖ 2. Briefly stated, the assessee which is a trust engaged in the charitable activity in the field of education is registered with the Directorate of Income Tax (exemption), Mumbai under Sec.12A of the Act. Also, the trust is registered with the Charity Commissioner, Mumbai. The assessee had filed its return of income for A.Y. 2013-14 on 25.09.2013, and after claiming exemption under Sec.11 had declared its total income at Rs. Nil. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec.143(2) of the Act.

During the course of the assessment proceedings it was observed by the A.O that the assessee trust had shown addition of Rs.7,19,23,720/- towards its corpus during the year. On a perusal of the details furnished by the assessee in the course of the assessment proceedings, it was observed by the A.O, that the bifurcated details of the corpus donations received by the assessee during the year were as under:

Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, the CIT(A) was not persuaded to subscribe to the contentions advanced by the assessee and upheld the disallowance made by the A.O under Sec.115BBC r.w. Sec. 11(3) of the Act. The CIT(A) while concluding as hereinabove observed, that though the Tribunal while disposing off the appeal of the assessee for A.Y. 2010- P a g e | 4 & 2520/Mum/2018 AYs. 2013-14 & 2014-15 Madhvi Raksha Sankalp Vs. Income Tax Officer (E) Ward 2(1) 11 had ‗set aside‘ the issue for proper verification and examination by the A.O, however, that by itself would not mean that the questioned donations were either not covered under Sec. 115BBC or that the same were genuine in any manner.

The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized Representative(for short ‗A.R‘) for the assessee at the very outset of the hearing of the appeal submitted that the issue involved in the present appeal was squarely covered by the order of the Tribunal in its own case for A.Y. 2010-11. It was submitted by the ld. A.R, that the view taken by the Tribunal had thereafter been followed in its own case in A.Y. 2011-12 and A.Y 2012-13. In order to buttress his aforesaid contention the ld. A.R took us through the aforesaid respective orders of the Tribunal. Per contra, the Ld. Departmental representative (for short ‗D.R‘) did not rebut the said claim of the assesses counsel.

We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. Admittedly, the issue involved in the present case as to whether the donations received by the assessee under the head ―Yogeshwar Krishi‖ are in the nature of anonymous donations, or not, had came up before a coordinate bench of the Tribunal viz. ITAT ―B‖ bench, Mumbai in the assesses own case for A.Y. 2010-11. The Tribunal while disposing off the said issue had restored the matter to the file of the A.O for making necessary verifications, observing as under: ―8. We have considered rival contentions and also perused the material available on record. We have observed that the assessee-trust is registered u/s 12A of 1961 Act with DIT(E), Mumbai bearing No. TR/25225 and also registered with Charity Commissioner, Mumbai. We have observed that the assessee has shown additions to corpus donations to the tune of Rs. 2,42,26,508/-. The assessee has submitted in paper book filed with the tribunal copies of some of such direction letters of donation issued by the donors whereby instructions are issued by the donors that the donations shall form part of the corpus of the trust. The said letters of donations P a g e | 5 & 2520/Mum/2018 AYs. 2013-14 & 2014-15 Madhvi Raksha Sankalp Vs. Income Tax Officer (E) Ward 2(1) are placed in paper book page 35-123. The names of the donors were given in the said letters but the addresses and PAN of the donors were not given. These are standard letters which are identical for all the donors. The said letters contained the name of village/taluka/district and State of the donor but the addresses, father‘s name and PAN of the donors are not there. Another peculiar feature is that it is a common direction letter issued by multiple donors ranging from 2-5 donors and Demand draft/Pay order mentioned in said common donation letter are also same being consolidated amount covered for the donation in the said letter as donated by 2-5 donors. We find that assessee is not a religious trust hence the amount is hit by provisions of Section 115 BBC of the Act and the onus is on the assessee to prove that it is covered by exceptions to chargeability to tax as is provided by provisions of Section 115BBC of 1961 Act, namely that the assessee maintained a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed or else it is a religious trust. Section 115BBC of 1961 Act is reproduced hereunder: “[Anonymous donations to be taxed in certain cases. 115BBC. (1) Where the total income of an assessee, being a person in receipt of income on behalf of any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or any hospital or other institution referred to in sub-clause (iiiae) or sub-clause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub- clause (v) of clause (23C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any anonymous donation, the income-tax payable shall be the aggregate of— (i) the amount of income-tax calculated on the income by way of any anonymous donation, at the rate of thirty per cent; and (ii) (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). The following clauses (i) and (ii) shall be substituted for the existing clauses (i) and (ii) of sub-section (1) of section 115BBC by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010 : (i) the amount of income-tax calculated at the rate of thirty per cent on the aggregate of anonymous donations received in excess of the higher of the following, namely:— (A) five per cent of the total donations received by the assessee; or (B) one lakh rupees; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the aggregate of anonymous donations received. (2) The provisions of sub-section (1) shall not apply to any anonymous donation received by— (a) any trust or institution created or established wholly for religious purposes; (b) any trust or institution created or established wholly for religious and charitable purposes other than any anonymous donation made with a specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by such trust or institution. (3) For the purposes of this section, ―anonymous donation‖ means any voluntary contribution referred to in sub-clause (iia) of clause (24) of section 2, where a person receiving such P a g e | 6 ITA Nos.2519 & 2520/Mum/2018 AYs. 2013-14 & 2014-15 Madhvi Raksha Sankalp Vs. Income Tax Officer (E) Ward 2(1) 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.]‖ The assessee in the instant case could not provide addresses, father‘s name and PAN of the donors and the assessee is also not a religious trust to be covered under exception. The assessee has come forward with a request that if an opportunity is given to the assessee, the assessee can produce the donors before the AO as directed by the AO. It is also submitted that PAN and addresses of all the donors for verification by the A.O. will also be furnished for verification by the AO. Considering the factual matrix of the case, keeping in view the provisions of Section 115BBC of 1961 Act and in the interest of justice and fair play, we are of considered view that this matter needs to be set aside and restored to the file of the A.O for necessary enquiry and verification of the said donations so received by the assessee as to genuineness and also for verifying compliance of the relevant section 115BBC of 1961 Act. The onus as well burden of proof is entirely on the assessee to provide to the AO all relevant details as contemplated under section 115BBC of 1961 Act to the satisfaction of the AO as to compliance of Section 115BBC of 1961 Act and as to genuineness of the said donation. The assessee is directed to furnish PAN, addresses and all other relevant details of all the said donors before the AO to satisfy mandate of Section 115BBC of 1961 Act. The assessee is directed to produce before the AO donors, 25% in numbers for donation up-to Rs 20,000/- and 10% in number for donations above Rs.20,000/- to satisfy the AO about compliance of mandate of Section 115BBC of the Act and genuineness of the such donations. The selection of donors shall be on random basis at the sole discretion of the AO, which short listed list of donors shall be supplied by the AO to the assessee for necessary compliance as per our above directions. If so required for ensuring compliance of Section 115BBC of 1961 Act and for establishing genuineness of the said donations of Rs. 2,42,26,508/-, the AO can enhance the number of persons to be produced by the assessee before him higher than minimum stipulated by us as above. Similarly, with respect to the denial of the exemption amount to the tune of Rs. 1,35,70,000/- for 15% of income being set aside for accumulation to be spent for charitable purposes in the next year as provided u/s 11(1) of 1961 Act. The assessee had stated that the trust was actively considering launching of projects in the next year after plans are finalized and the amount so aside was spent in the next year. In our considered view and in the interest of justice and fair play, this claim of the assessee that the said amount was kept for launching of project next year after plans are finalized and was spent in the next year accordingly also need verification and as such the matter is set aside and restored to the file of the A.O. for proper verification with respect to the contentions of the assessee to be decided by the AO in accordance with law. Needless to say that proper and adequate opportunity of being heard shall be provided by the AO to the assessee in accordance with principles of natural justice in accordance with law. The evidences and contentions of the assessee in its defense shall be admitted by the AO in set aside proceedings in the interest of justice. We order accordingly.‖ We find that as the facts and the issue involved in the present case remains the same as were there before the Tribunal in the assesses own case for A.Y. 2011-12, therefore, we find no reason to take a different view and respectfully follow the same. Accordingly, in terms of our aforesaid observations the matter is restored to the file of the A.O for making necessary verifications in the backdrop of the P a g e | 7 & 2520/Mum/2018 AYs. 2013-14 & 2014-15 Madhvi Raksha Sankalp Vs. Income Tax Officer (E) Ward 2(1) directions which were given by the Tribunal while restoring the appeal of the assessee to the file of the A.O for A.Y. 2011-12 in ITA No. 2746/Mum/2014; dated 26.04.2017.

The appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations. A.Y. 2014-15

We shall now advert to the appeal of the assessee for A.Y. 2014- 15. Briefly stated, the assessee had filed its return of income for A.Y. 2014-15 on 19.09.2014 along with its income and expenditure account, balance sheet, and audit report in Form No. 10B, declaring its total income at Rs.1,59,810/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec.143(2) of the Act.

During the course of the assessment proceedings it was observed by the A.O that the assessee trust had claimed to have received voluntary contributions of Rs.5,24,82,401/- which were shown under the head ―Yogeshwar Krishi‖. A perusal of the details furnished by the assessee revealed that nowhere the amount of donations given by the persons was mentioned. In fact, it was noticed by the A.O that a copy of the ―Yogeshwar Krishi‖ filed by the assessee revealed the names, dates and signature of the priests. As the names and complete addresses along with the PAN of the donors making the contributions was not discernible from the records, therefore, the A.O characterised the said voluntary contributions of Rs.5,24,82,401/- as anonymous donations. Accordingly, as per the Sec. 13(7) r.w.s 115BBC of the Act, the A.O declined the assesses claim for exclusion of the aforesaid amount from its income under Sec.11 of the Act.

The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We find that as the facts and the issue involved in the present appeal remains the same as were there before us in the appeal of the assessee for the immediately preceding year i.e A.Y. 2013-14 in , therefore, our order passed hereinabove in the said year shall apply mutatis mutandis for disposal of the present appeal. Accordingly, in terms of our aforesaid observations the matter is restored to the file of the A.O for making necessary verifications in the backdrop of the directions which were given by the Tribunal while restoring the appeal of the assessee to the file of the A.O for A.Y. 2011-12 in dated 26.04.2017.

The appeal of the assessee is allowed for statistical purposes.