ITAT Upholds Addition made u/s.115BBC of Income Tax Act as Anonymous Donations due to Defects in Maintaining record by Public Trust Society [Read Order]

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) upheld the addition made under section 115BBC of the Income Tax Act, 1961 as Anonymous donations due to defects in maintaining record by the public trust society.

The assessee, Everest Education Society, is a public trust registered under the Bombay Public Trust Act 1950 and is also registered under Section 12A of the Income Tax Act and under Section 80G of the Income Tax Act.

Assessee filed return of income pursuant to notice under Section 142(1) of the Income Tax Act During the scrutiny proceedings assessee failed to prove the identification of 7145 individual donors and the genuineness of cash donations received by it. Therefore, the AO made an addition on the entire amount of cash donations under Section 115BBC of the Income Tax Act and held it was an anonymous donation.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)] who gave partial relief to the assessee by restricting the ‘Anonymous’ donation to ₹82,600/-.

Before the bench, Kishore Phadke, the counsel for the assessee argued that the appellant had maintained records as required under law, the CIT(A) has rightly restricted the ‘Anonymous’ donation only to the extent attributable to unidentified donors i.e. ₹82,600/-.

Ramnath Murkunde, the department representative, contended that the assessee could not substantiate the details regarding the address and name of the cash donars.

The tribunal observed that assessee failed to prove the address and name of the persons who donated cash to assessee society. Further, it was also found that most of the persons listed in the donor list given by the assessee society do not represent complete name and most of the person listed as donors with incomplete and vague address.

Hence, a bench consisting of two members, G. D. Padmashali (Accountant Member) S. S. Godara (Judicial Member) observed that assessee society failed to maintain the identity of the person indicating full name and full address. Therefore, all cash donation transactions are sham.

To Read the full text of the Order CLICK HERE

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