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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
This appeal by the Assessee is directed against the order dated 10.05.2022 of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi for A.Y. 2011-12.
There is a delay of 131 days in filing the present appeal the assessee has filed the application for condonation of delay.
We have heard ld. Sr. Counsel of the assessee as well as Ld. DR on the contention of delay and careful perused the reasons
ITANo.398/Ind/2022 Radhakrishna Akshar Vikas Nyas explained in the application/affidavit. Ld. Sr. Counsel has submitted that the M.K. Sharma CA representing the assessee expired and therefore, due to said unfortunate demise of the CA the relevant documents crucial for preparation and filing of the appeal were not received within the anticipated time frame which has resulted in unavoidable delay. Ld. Sr. counsel has submitted that the delay of 131 days in filing the present appeal is due to unavoidable circumstances which were beyond the control of the assessee. Ld. DR has not objected to the contention of delay. Accordingly having considered the reasons explained by the assessee for delay in fling the appeal we are satisfied that the assessee was having a reasonable cause for delay in filing the present appeal and accordingly the same is condoned. The assessee has raised following grounds of appeal:
“1. The Ld. Assessing Officer has erred in law and on facts in making the addition of Rs. 37,89,000/- to the total income of the appellant on account of treating donations as the "anonymous donation" u/s. 115BBC of the Income Tax Act.
2. That the Ld. A.O has erred in making the addition on account of *anonymous donation" despite the fact that appellant has satisfactorily proved the identity of donors as referred u/s. 115BBC of the Income Tax Act, 1961 by providing the details of the name, address, occupation of donors, mode of payment of donation etc.
3. That the Id. A. O has erred to consider that the sum of Rs. 37,89,000/- is beyond the purview of the exemption u/s. 11 and 12 of the Income Tax Act, 1961 on account of "anonymous donations" despite the fact that any voluntary contribution received by a Charitable or religious trust shall be deemed to be income derived from property held under Trust to extent said contributions are used for charitable purposes even though assessee fails to disclose names
ITANo.398/Ind/2022 Radhakrishna Akshar Vikas Nyas and addressed of donors [refer - Commissioner of Income Tax v/s NBA Nahata charitable Trust, [2014] 43 taxmann.com 315 (Karnataka).
4. The Ld. A.O has erred in law and on facts in making the addition of Rs. 10,00,000/- to the total income of the appellant on account of treating unsecured loans as the unexplained cash credit u/s. 68 of the Income Tax Act, 1961.
5. That the Ld. A.O has failed to provide the reasonable opportunity to the appellant to establish the identity and credit worthiness of the lenders of unsecured loans to prove the genuineness of unsecured loans.
6. That the Ld. A.O has erred in, not considering the sum of Rs. 10,00,000/- as income, for calculating the application u/s.11 and 12 of the Income Tax Act, 1961 and if done so, it will not result into any taxable surplus and consequently no tax liability shall arise."
Ground no.1 to 3 are regarding addition made by the AO u/s 115BBC on account of anonymous donations. Ld. Sr. counsel has submitted that the assessee furnished the name and details of the donors as required u/s 115BBC(3) of the Act but the AO has disallowed the donations of more than Rs.50,000/- for want of PAN and Bank account statements of donors. He has referred to details of donors at page no.16 to 22 of the paper book and submitted that the assessee furnished the name and address of the donors as required by the AO. Whereas the AO has given the reasons for disallowance and treated donations as the “anonymous donation” u/s 115BBC(3) for want of PAN and bank account statement. He has contended that section 115BBC(3) requires name and address for identity of the donors and assessee satisfied the mandate by producing names and addresses of the donors and therefore, addition made by the AO on the ground that Page 3 of 10
ITANo.398/Ind/2022 Radhakrishna Akshar Vikas Nyas the assessee has not furnished the PAN and bank account of the donors is not in accordance with law and the same is liable to be deleted. He has relied upon judgment of Hon’ble Orissa High Court in case of People Forum v. CIT 295 taxman 433 and submitted that the Hon’ble High Court has held that the assessee furnished record of the identity indicating name and address of the persons making contribution as required under sub-section (3) of section 115BBC and accordingly the addition was deleted. He has relied upon the following decisions:
M/s. Gian Sagar Educational and Charitable Trust, Chandigarg vs. DCIT, Central Circle 29, New Delhi order dated 19.10.2023 in ITANo.3801/Ind/2016 2. DCIT(E) Bhopal v. Mayank Welfare Society, Indore dated 29.10.2021 in ITANo.232/Ind/2017 3. Income Tax Officer, Ward-1, Exemption vs. Aishwarya Foundation Patna dated 03.05.2023 passed in ITANo.103/Pat/2020) 4. People Forum v. CIT 295 taxman 433
On the other hand, Ld. DR has submitted that the details provided by the assesse are not satisfactory to ascertain identity of the donors and therefore, the AO asked the assesse to furnish PAN and Bank account statement of the donors to establish the identity of the donors. He has further contended that the assessee has given incomplete address of the donors as a common address is shown in a bunch of donors which is incomplete. He referred to the list of ITANo.398/Ind/2022 Radhakrishna Akshar Vikas Nyas donors as produced by the assessee and pointed out that there are several instances where the address is incomplete and same address is given for a bunch of donors. Therefore, the details produced by the assessee are not complete to ascertain identity of the donors. He has relied upon orders of the authorities below.
We have considered rival submission as well as relevant material on record. The AO has made the addition of donors of above Rs.50,000/- in para 5 as under: “5. Vide order sheet entry dated 13.02.2014 the assessee was asked to furnish the list of donors along with amount and mode of receipt of donations. Assessee furnished the same on 20.02.2014. On 25.02.2014 the assessee was required to furnish PAN No.. address and Bank accounts of the donors. On 03.03.2014 the assessee furnished a list of donors with address only. PAN no. of very few donors were provided and no bank accounts of the donors were furnished. Considering the huge list of 495 donors, vide order sheet entry dated 03.03.2014 the assessee was required to furnish the PAN Nos., addresses as a proof of identity of the donors of Rs. 50,000/- and above and he was also required to furnish the creditworthiness of the donors. The assessee was also required to furnish bank statement of the donors as a proof of genuineness of transaction. Next hearing was fixed on 14.03.2014. The assessee was also show caused as to why the donations received by him should not be treated as anonymous donations u/s 115BBC of the Income-tax Act in absence of furnishing the required documents.”
7. It is clear that the AO has considered the donations as anonymous for want of PAN and bank account statement. The provisions of section 115BBC(3) requires maintenance of record of ITANo.398/Ind/2022 Radhakrishna Akshar Vikas Nyas the identity indicating the name and address of the persons making contribution/donation. For ready reference sub-para (3) of section 115BBC is quoted as under: “(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 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.]”
Therefore, the anonymous donation is defined as any voluntary contribution referred to in section 2(24)(iia) 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. The assessee produced name and address of the donors but the AO has treated the donations in respect of person who contributed more than Rs.50,000/- for want of PAN and bank account statements. As it is clear from section 115BBC(3) that the statute does not require the assessee to keep PAN and bank account statement of the donors but requires only maintaining record of identity indicating name and address of the person making contribution/donation. In the case in hand the assessee has furnished the list of donors giving name and address but the AO was not satisfied with the detail furnished by the assessee and asked the assessee to furnish the PAN and bank account statement of the some of the donors where the assessee has not furnished. Accordingly in the facts and circumstances of the case when section 115BBC(3) does not require specific documents to be maintained by ITANo.398/Ind/2022 Radhakrishna Akshar Vikas Nyas the assessee except maintaining record of identity maintaining name and address then the addition made by the AO is not in accordance with the provisions of section 115BBC of the Act. The Hon’ble Orissa High Court in case of Peoples Forum vs. Commissioner of Income Tax 295 taxman 433 has considered an identical issue in para 5 to 7 as under: “5. We have not been shown that there has been further prescription regarding recipients of donation to maintain record of further particulars in addition to identity, name and address of the person making the contribution, as provided under sub-section (3) of section 115-BBC. Section 2(24)(iia) gives definition of anonymous donation. Appellant (assessee) must first be shown to have received anonymous donation.
6. We have perused the assessment order and found the AO said, inter alia, as reproduced below.
"During the course of assessment proceedings the assessee produced the relevant documents as per questionnaire through e- proceeding. The Books of account including bank statements, audit report, statement of income and the ledgers furnished for verification were examined. Considering the submissions made and after verification of the documents submitted by the assessee the total income of the assessee trust is hereby accepted. Accordingly, the total income of the assessee is determined at Rs. Nil."
[Emphasis Supplied]
As aforesaid, the Commissioner in the revision order had reproduced assessee's reply to the show-cause notice, where in paragraph 3.2 the assessee said it had again enclosed therewith, detailed list of donors along with their complete address and amounts of donations given by them as annexure-1. The paragraph is reproduced below. "3.2. That thereafter the Ld. Assessing Officer complied all the details filed by the assessee with the books of account and other documents impounded which were found to be in order, therefore did not make any additions or did not treated the corpus donations as anonymous donation and passed the assessment order u/s. 143(3) Page 7 of 10
ITANo.398/Ind/2022 Radhakrishna Akshar Vikas Nyas by accepting the returned income. For your kind perusal again herewith we are enclosing the detailed list of the donor along with their complete address and the amount of donations given by them as Annexure-1"
[Emphasis Supplied] The Commissioner went on to only say, the assessee's reply had been considered but not found enable. In the circumstances, we did not find a dispute regarding disclosure of identity of donors, heir addresses and the amount of donations they had made to the assessee. This fact is sufficient for compliance of requirement under section 115-BBC(3), in claiming exemption of the donations from being chargeable to income tax.
Facts found by the Commissioner and the Tribunal clearly show that the assessee had furnished record of the identities indicating name and address of persons making the contributions. Revenue has not been able to demonstrate further requirement by prescribed particulars, as mentioned under sub-section (3) in section 115-BBC. As such, we answer the question in the negative and in favour of appellant (assessee).”
Accordingly in the facts and circumstances of the case and following judgment of Hon’ble Orissa High Court (supra) the addition made by the AO is not sustainable and the same is deleted.
Ground no.4 to 6 regarding addition made by the AO u/s 68 on account of unsecured loans. At the time of hearing Ld. Sr. Counsel has submitted that the entire loan amount is utilized for charitable purpose and therefore, it satisfied the conditions of section 11 of the Act and consequently the same cannot be taxed. He has referred to the income and expenditure account at page no.11 of the paper book and submitted that the entire receipt including unsecured loans has been applied for charitable purpose
ITANo.398/Ind/2022 Radhakrishna Akshar Vikas Nyas and for achieving objects of the assessee. Ld. Sr. counsel has thus contended that no addition on this account is justified. He has referred to the details of application of income including loan amount at page no.3 of the paper book and submitted that there is deficit of Rs.2.8 crores as on 31.03.2011 which means the assessee has incurred more than the total receipt during the year under consideration.
On the other hand, ld. DR has submitted that the AO in para 6 has given specific finding on this issue that the assessee has failed to satisfy the conditions of proving identity and creditworthiness of the loan creditors as well as genuineness of the transactions. He has relied upon the orders of the authorities below.
We have considered rival submission as well as relevant material on record. The AO treated the unsecured loan as unexplained cash credit u/s 68 of the Act and consequently denied the benefit of section 11 of the Act. On appeal the CIT(A) has confirmed addition made by the AO. The assessee has now contended that entire receipt including the loan in question has been applied for charitable purpose and therefore, no addition can be made on account of unsecured loans. At the outset, we note that the authorities below have not considered this aspect of the matter as to whether the assessee has applied this amount of loan for charitable purpose and consequently the benefit of section 11
ITANo.398/Ind/2022 Radhakrishna Akshar Vikas Nyas would be available to the assessee of not. In the facts and circumstances of the case we set aside this issue to the record of the AO for proper verification of the relevant fact regarding the utilization of the loan amount as well as details and evidences to be produced by the assessee to satisfy the identity and creditworthiness of the creditors as well as genuineness of the transactions. Needless to say the assessee be given an appropriate opportunity of hearing before passing fresh order
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 21.02.2024.