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2015 (9) TMI 548 - ITAT LUCKNOW

2015 (9) TMI 548 - ITAT LUCKNOW - [2015] 42 ITR (Trib) 393 (ITAT [Luck]) - Anonymous donations - addition u/s 68 as unexplained cash credits - assessee trust - invoking provisions of section 115BBC - CIT (A) deleted addition on account of donations, not found explained by the Assessing Officer - Held that:- Though the Revenue has taken a plea that for anonymous donation, provisions of section 115BBC of the Act can be invoked but in the instant case where the assessee has filed various documents .....

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as adjudicated the issue in the light of various judicial pronouncements. Accordingly we confirm his order.- Decided against revenue. - ITA No. 776/LKW/2014 - Dated:- 17-6-2015 - Sunil Kumar Yadav, J And A. K. Garodia, AM, JJ. For the Petitioner : Shri Punit Kumar, DR For the Respondent : Shri K R Rastogi, CA ORDER Per : Sunil Kumar Yadav This appeal is preferred by the Revenue against the order of the ld. CIT(A), inter alia, on the following grounds:- 1.1. The Ld. CIT (A) has erred in deleting .....

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ircular No.-14 as referred to by CIT (A) in his order). In the "same spirit AO taxed the donations since creditworthiness of the alleged donors and genuineness of transactions were not satisfactorily explained, even though the donations might have been applied for charitable purpose and donations might not be anonymous strictly as per definition. 2. During the course of hearing, the ld. counsel for the assessee has invited our attention to the fact that the impugned issue is squarely covere .....

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nded that the assessee has received donation from various persons which was disallowed by the Assessing Officer by making addition under section 68 of the Income-tax Act, 1961 (hereinafter called in short "the Act") having ignored the fact that the assessee has taken the entire receipts of donation to its income and the same was applied for charitable purposes. Therefore, no addition is called for under section 68 of the Act. 3. The ld. CIT(A) has appreciated these facts in the light o .....

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permissible in the case of charitable society where donation was taken as income in its account. 4. The ld. D.R. has placed reliance upon the order of the Assessing Officer with the submission that wherever the assessee has received any donation from the donors, he is required to prove the creditworthiness of the donors besides proving the identity. 5. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that undisputedly the assessee has .....

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arious judgments of the different High Courts including the jurisdictional High Court. The relevant observations of the ld. CIT(A) are extracted hereunder for the sake of reference:- "4. I have considered the matter/The appellant trust is registered u/s 12A of the Act. There is no dispute that the entire voluntary donations of ₹ 2,09,41,0007- has been disclosed by the appellant trust as income in the Income and Expenditure account of one of its divisions, Saraswati Aviation Academy (A .....

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f Income Tax (Exemption) v. Keshav Social and Charitable Foundation, [2005] 278 ITR 152 (Delhi): The assessee, a charitable trust, was engaged in the activity of providing medical advice to the poor and needy in various parts of the State. Duringthe relevant previous year, the assessee was asked to furnish the details of donations received by it. However, the Assessing Officer, on finding that the assessee was unable to satisfactorily explain the donations and the donors were fictitious persons, .....

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the order of Commissioner (Appeals) was upheld by the Tribunal. On appeal it was held: To obtain the benefit of the exemption under section 11, an assessee is required to show that the donations were voluntary. In the instant case, the assessee had not only disclosed its donations, but had also submitted a list of donors. The fact that the complete list of donors was not filed or that the donors were not produced, did not necessarily lead to the inference that the assessee was trying to introdu .....

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l disclosure of income by the assessee and also application of the donations for charitable purposes. It was not in dispute that the objects and activities of the assessee were charitable in nature, since it was duly registered under the provisions of section 12A. [Para 11] For the aforesaid reasons, there was no merit in the appeal and no substantial question of law arose from order of the Tribunal. Therefore, the appeal was to be dismissed. [Para 12] The Hon'ble jurisdictional Allahabad Hi .....

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re of the donation for whatever purpose and that the registration under Section 12A is continuing and valid, exemptions cannot be denied. b. Director of Income Tax v. Hans Raj Samarak Society, [2013] 35 taxmann.com 642 (Delhi). Section 68, read with section 11, of the Income-tax Act, 1961 - Cash credits [In case of charitable trust] - Assessment year 2006-07 - assessment year disallowed deduction under section 11 on finding unaccounted money by way of anonymous donation on purchase of capital as .....

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ection 68 has no application to the facts of the impugned case. 4.1 I also find that despite the fact that section 68 has no application to the facts of the case the appellant trust has duly discharged its onus to prove the identity and capacity of the donors and genuineness of the transactions with them. On perusal of the details and reasons recorded by the AO it is noted that addition u/s 68 as unexplained cash credits has been made by the AO on mere suspicion without conducting proper enquiri .....

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ed to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment. In view of the above it is held that the addition of ₹ 1,66,30,000/- as unexplained cash credit has been made by the AO without any material or evidence which cannot be sustained. 4.2 During the appellate proceedings it was also submitted that the provisions of section 115 BBC of the Act were not violated by the .....

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r institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23 C) 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 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 dona .....

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her 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 contribution does not maintain a record of the identity indicating the name and address of .....

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the donation does not maintain records of identity indicating the name and address of the contributor and such other particulars as may be prescribed. No other particular has been prescribed tinder this provision. The Board Circular No. 14 reported in 288 ITR (St.) 9 has explained these provisions which were introduced by the Finance Act, 2006 w.e.f. assessment year 2007-08, which is as under: "25.1 Income of wholly charitable or religious trusts or institutions as well as partly charitable .....

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rust or institution referred to in subclause (v) of clause (23C) of section 10, is exempt from incometax subject to the fulfilment of conditions specified in the said clause. 25.2 With a view to prevent channelisation of unaccounted money to these institutions by way of anonymous donations, a new section 115BBC has been inserted to provide that any income of a wholly charitable trust or institution by way of anonymous donation shall be included in its total income and taxed at the rate of 30 per .....

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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 maybe prescribed." 25.3 Anonymous donation has 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 contribut .....

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