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Facts
The assessee, a registered trust, received a voluntary corpus donation of Rs. 26,25,000/- which was accounted for in its financial statements. The AO rejected the explanation and treated the donation as income under Section 68 of the Act.
Held
The Tribunal held that the documentary evidence provided by the assessee, including receipts and KYC documents of the donor, satisfactorily explained the identity, genuineness, and creditworthiness of the donation.
Key Issues
Whether the corpus donation received by the assessee can be added as income under Section 68 of the Act when identity, genuineness, and creditworthiness of the donor are satisfactorily explained?
Sections Cited
68, 115BBE, 10(23C)(iiiad)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC’’ : NEW DELHI
Asstt. Year : 2017-18 The Sai Man Education Society, vs. ITO, Ward Exemption 2(3), D-18/4, Saket Gali, Govind Pura, Civic Centre, New Delhi East Delhi, Delhi – 110 051 (PAN: AABTT0655M) (Appellant) (Respondent) Appellant by : Sh. Nitin Goyal, CA Respondent by : Shri Manoj Kumar, Sr. DR. Date of Hearing 03.09.2025 Date of Pronouncement 12.09.2025 ORDER This appeal has been filed by the Assessee against the order dated 20.03.2025 passed by the NFAC, Delhi for the assessment year 2017-18. Assessee has raised as many as 5 grounds, but only argued the ground relating to sustaining the of Rs.26,25,000/- u/s. 68 of the Act and charging the Tax @60% and surcharge @25%, on the addition made u/s. 68 of the Act, u/s. 115BBE of the Act.
Brief facts of the case are that the assessee, The Sai Man Education Society is a registered trust under section 10(23C)(iiiad) of the Income Tax Act, 1961. engaged in managing educational activities. During the assessment year 2017-18 the assessee received a voluntary corpus donation of Rs. 26,25,000/- from P.R. systems via banking channels and duly accounted for in the financial statements. The appellant has submitted the required information and documents in support of donation but the AO has rejected all the explanation and documents and treated the donation of Rs. 26,25,000/- as receipt liable to be taxed u/s. 68 of the Act. Against the same, assessee preferred the appeal before the Ld. CIT(A), who affirmed the action of the AO by noting that assessee could not produce the explicit directions during the course of assessment proceedings but later on submitted a receipt dated 05.12.2016 which was not accepted by the AO. Aggrieved, assessee filed the appeal before the Tribunal.
During the hearing, Ld. AR has submitted that Ld. CIT(A) erred in confirming the addition of Rs. 26,25,000/- under section 68 of the Act, whereas the assessee explained the transaction and the AO made the addition without a speaking order disregarding the details / information submitted by appellant and addition is based on surmises and conjectures and deserve to be deleted. He further submitted that sustaining the treatment of corpus donation as income under section 68 rather than treating the same as “voluntary contribution other than corpus” and that too without any basis is not tenable. It was the further contention that charging the tax @60% and surcharging @25% on the addition made u/s. 115BBE of the Act is also not tenable, in view of the Taxation Laws (Second Amendment) Act, 2016 enacted on 15/12/2016. Ld. DR relied upon the orders of the authorities below.
I find that during the hearing Ld.AR has filed a Paper Book containing total pages 46 and drew my attention towards the Paper Book page no. 9-10 which are the copy of receipts issued to donor of the amount in 2 | P a g e dispute; Paper Book Page 11-16 are the KYC documents of donor (PAN, Voter Card, Passport, address page of bank statement, copy of telephone bills for address proof and Page no. 26 copy of certificate issued by donor stating donation as “corpus”, which has been reproduced by the AO in his assessment order at page no.
He further filed the copy of certified copy of Consolidated Balance sheet as at 31.3.2017 wherein, Rs. 26,25,000/- has been shown as corpus fund being received during the year and also copy of Consolidated Receipt and Payment account for the year ending 31.3.2017 showing Rs. 26,25,000/- being Capital account (corpus fund). The copy of two receipts issued to donor which establishes the payment of Rs. 20,00,000/- & Rs. 6,25,000/- received through banking channel on 16.11.2016 and 18.11.2016 respectively received from M/s PR Systems, B-702, Gandenia Green, Vashundhara, Ghaziabad UP 201012 having PAN No. AKKCPR7372Q as donation / corpus fund in favour of the assessee namely the Sai Man Education Society, D-18/4, Saket Gali, Old Govindpura, Delhi – 110 051. The aforesaid documentary evidences are reasonable and sufficient to establish that the assessee has received corpus fund of Rs. 26,25,000/- (received Rs. 20,00,000/- on 16.11.2016 and Rs. 6,25,000/- on 18.11.2016), which have been duly accounted in the financial statements of the assessee and hence, the onus of the assessee to prove the identity, genuineness and creditworthiness of the person who has made the donation has been satisfactory explained, hence, the question of making addition in the hands of the assessee does not arise. In view of this factual matrix, the addition of Rs. 26,25,000/- deserve to be deleted. I hold and direct accordingly. 3 | P a g e Resultantly, the ground raised by the assessee is allowed. So far as assessee’s assessment u/s. 115 BBE of the Act is concerned, in view of Hon’ble Madras High Court in SMILE Microfinance Ltd. vs. ACIT in WP(MD) no. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue against the department that the law applies to the transaction on or after 01.04.2017 only, however, the instant appeal is relating to assessment year 2017-18.
In the result, the instant assessee’s appeal is allowed. Order pronounced in the Open Court on 12.09.2025.