TMI Blog2012 (10) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... PER A.L. GEHLOT, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order dated 31.03.2011 passed by the ld. CIT(A)-I, Agra for the A.Y. 2007-08. 2. The effective ground raised in the appeal is in respect of addition of Rs.27,96,200/- sustained by the CIT(A) out of the addition of Rs.68,99,943/- made by the Assessing Officer (A.O.) on account of anonymous donation/undisclosed income. 3. The brief facts of the case are that the assessee is a society registered with the Registrar of Societies U.P. on 01.06.2006. The society was granted registration under section 12AA of the Income Tax Act, 1961 ( the Act hereinafter). The objects of the society is charitable purpose by running school/institution for imparting of education, help the poor and orphans, protection of environment etc. During the assessment proceedings the A.O. noticed that the assessee has shown voluntary contribution received from 2700 donors amounting to Rs.68,99,943/-. In order to verify the genuineness of the donors, the A.O. issued summons under section 131 of the Act and letters calling information under section 133(6) of the Act. The reply of donors and relevant observation has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. that a sample survey may be made by sending letters to them on the address given in the list provided by the assessee. In compliance to the direction of CIT(A), the A.O. submitted his report vide letter dated 23.02.2011 which has been reproduced by the CIT(A) at page nos.11 12 of CIT(A) s order. The report submitted by the A.O. was in Hindi. On the basis of the A.O. s repot, the CIT(A) noted that the sample survey done in cases of 667 persons, the A.O. concluded that about 53% donors were found to have either refused to give the donation or they could not be traced out to verify whether they have given donation or not. The CIT(A) sent the A.O. s report to the assessee for its comments. The assessee disputed number of donors in the category of donation more than Rs.4,000/- stating that they are 502 in number and not 530 as noted by the A.O. in the remand report. Before the CIT(A), the assessee filed confirmation from 102 more donors who have given donation more than Rs.4,000/- stating that the A.O. refused to accept these confirmation letters. It was also stated that remaining donors could have also been produced if the A.O. had given time. Regarding those letters which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, the list which the assessee filed before the CIT(A) along with the written submission dated 16.03.2010, the CIT(A) found that in most of the cases, full addresses are not given. Before the CIT(A), it was also submitted by the assessee that the people of this country belie in secret donation (Gupt Dan), therefore, it not possible to give correct name and address of all the donors. The CIT(A) observed that such Gupt Dan are prevalent at least in case of religious trusts where people give donation as per their faith but the concept of Gupt Dan cannot be accepted in case of educational trust specially when it is being claimed by the assessee that these donations are received as corpus donation with specific purpose for making the building of educational institution. The CIT(A) further observed that generally in the name of Gupt Dan unaccounted money are being channelized to such institutes and, therefore, with a view to prevent channelization of unaccounted money to these institutes by way of anonymous donations, a new section 115BBC has been inserted in the Income Tax Act, 1961 by the Finance Act w.e.f 01.04.2007. 5. The CIT(A) on the basis of verification carried out by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been made on day to day basis looking to the writing on the slip book which prima-facie was found by the AO to have been written in a single sitting. Though it was claimed that these donations were collected by arranging camps in nearby villages but details of dates and places where these camps were organized could not be furnished by the appellant. While organizing such camps, certain expenditure are required to be incurred on the persons who are sent to manage such camps and for creation of necessary logistic for organizing such camps but no such expenses are shown to have been Incurred by the appellant. On the basic of verification so far carried out by the AO in case of the persons who are claimed to have given donation more than Rs.4000/, numbering 502, it has been found that out of 502 donors listed out by the appellant, verification could be made only from 359 persons (257 verified by the AO + 102 confirmations filed before me) and thus the appellant was able to get the necessary verification made in case of 71.5% such donation (359/502X100) and hence about 28.5% such donors remained unverified. As per the categorized list of all the donation furnished by the Ld. AR in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efused to have given donation during sample survey, it would be quite reasonable to estimate 46% of the donation shown by the appellant as being unaccounted/unexplained money because the appellant has failed to get all its donations shown to have been taken from 2700 persons verified because the list of donors being with incomplete or wrong addresses and hence not fully verifiable. 46% of total amount of donation below Rs.4000 of Rs.47,41,243/- comes to Rs.21,80,971/-. Therefore, out of the donations of Rs.47,41,243/-, shown to have been taken from donors who are claimed to have' given donation below Rs.4000/-, amount of Rs.21,80,971/- is found to be unaccounted money on estimate basis on the basis of sample survey done by the AO and considering the circumstances that the appellant failed to get all the donations shown by it verified. 7.4 In view of my findings about the donations above Rs.4,000/- and below Rs.4,000/- in para 7.1 7.3, total amount of donations found to be in form of unaccounted/unexplained money which could not be verified due to persons refusing to have given donation or their address were not complete or wrong or they could not be produced for verification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A) directed the A.O. to treat donation amount of Rs 27,96,200/- as anonymous donation out of total amount of Rs.68,99,643/- shown by the assessee and tax this amount of anonymous donation as per the provisions of section 115BBC of the Act. 8. The ld. Authorised Representative reiterated the submissions made before the CIT(A) and submitted that section 115BBC is applicable to anonymous donation only. Ld. Authorised Representative submitted that the assessee received donations from named persons and not from anonymous persons. Ld. Authorised Representative referred a list of donors of which copy has been placed at page nos. 6 to 53 of assessee s Paper Book. Ld. Authorised Representative referred the order of I.T.A.T., Agra Bench in assessee s case in ITA Nos.399 400/Agr/2007, order dated 06.02.2009 and submitted that the I.T.A.T while giving direction to CIT to grant registration under section 12AA and 80G(5) observed that though majority of the donors confirmed having given the donations, merely because seven persons have denied having given the donations of 2700 donor, the genuineness of trust is not lost. Ld. Authorised Representative submitted that the assessee has furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been defined in the new section to mean any voluntary contribution referred to in section 2(24) (iia) of the Act, 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. Consequential amendments have been made in section 10(23C) and section 13 to provide that any income by way of any anonymous donation which is taxable under section 115 BBC shall be included in the total income of the assessee. Section 115BBC is applicable from assessment year 2007-08 onwards. 11. To appreciate the issue we would like to reproduce section 115BBC as under:- 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 subclause (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, incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s [which may be approved by the prescribed authority], having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States; or (iv) any trust (including any other legal obligation) or institution wholly for public religious purposes or wholly for public religious and charitable purposes [which may be approved by the prescribed authority], having regard to the manner in which the affairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the objects thereof; (v) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approve by the prescribed authority; or (vi) any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. The sub-section (3) of section 115BBC has explained the meaning of anonymous donation clearly that such institution is required to maintain records of identity indicting the names and addresses of the persons making the donations or contributions. On a perusal of records, we do not find that the assessee has maintained such records of identity indicting names and addresses of the donors. After sample examination carried out by the Revenue Authorities, it was found that in some cases the assessee has proved identity indicating the names and addresses of the donors. Therefore, to that extent, it can be said that the there was no anonymous donation. The burden is on the assessee to explain that the assessee has maintained records of identity indicting names and addresses of the persons of such contribution or donation. Since the assessee has failed to maintain such records, under the circumstances, it is clearly a case covered by anonymous donation. On account of failure of the assessee and in the absence of other alternative calculation or determination of amount of anonymous donation, we agree with the CIT(A) estimating such anonymous donation on the basis of sample ..... X X X X Extracts X X X X X X X X Extracts X X X X
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