Dy. Commissioner of Income Tax (Exemption), Lucknow V. M/s Shri Ramswaroop Charitable Trust, Lucknow

ITA 565/LKW/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6358 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 26-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEELA CHOPRA
• Keywords: Charitable institution
• Section: 68; 11; 12A; 12AA; 43; 20

Judgement Text

I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘B’, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA No.565/Lkw/2019 Assessment Year:2015-16 Dy. C.I.T. (Exemptions), Lucknow Vs. M/s Ramswaroop Charitable Trust B-987, Sector-A, Mahanagar, Lucknow. PAN:AAJTS5262R (Appellant) (Respondent) O R D E R PER T. S. KAPOOR, A.M. This is an appeal filed by the Revenue against the order of learned CIT(A) dated 11/07/2019 pertaining to assessment year 2015-2016. In this appeal the Revenue has raised the following grounds: “1. That the learned CIT(A) has erred in law and facts by deleting the addition of Rs.17,98,55,214/- made on account of “unexplained cash credits” as the assessee could not establish the identity and capability of donor by providing any documentary evidence and also could not prove genuineness of donation received. Appellant by Smt. Sheela Chopra, CIT (D.R.) Respondent by Shri K. R. Rastogi, C. A. Shri Shubham Rastogi, C.A. Date of hearing 02/11/2021 Date of pronouncement 15/12/2021 I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 2 2. That the order of the learned CIT(A) be cancelled and the order of the Assessing Officer be restored.” 2. Learned CIT (D.R.), at the outset submitted that the assessee had received huge donations in cash and was not able to prove creditworthiness and genuineness of the donors therefore, the Assessing Officer has rightly made the addition u/s 68 of the Act and which the learned CIT(A) has wrongly deleted. Learned CIT (D.R.) in this respect invited our attention to the order of the Assessing Officer where the Assessing Officer has noted that the assessee did not comply with the directions of the Assessing Officer in furnishing complete information. The learned CIT (D.R.) further brought to our notice that the assessee had directly credited the corpus to the balance sheet and did not include in the income and therefore, the Assessing Officer has rightly made the addition and learned CIT(A) has ignored these vital facts while deleting the addition. 3. Learned counsel for the assessee, on the other hand, submitted that the Assessing Officer has wrongly noted that the assessee had not declared the donations as income of the assessee and in this respect our attention was invited to the computation of income placed at page 185 of the paper book wherein in the computation of income the assessee had added back the entire donations received during the year to its income and therefore, it was submitted that this finding of the Assessing Officer is not in accordance with the facts. It was further submitted that in the earlier years, under similar facts and circumstances, similar additions were made by the Assessing Officer and learned CIT(A) had deleted the same and on an appeal filed by the Revenue before this Tribunal, the Tribunal had dismissed the appeal of the Revenue and in this respect our attention was invited to pages 14 to 36 and 37 to 50 of the paper book where the orders of Tribunal I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 3 for assessment year 2013-14 and 2014-15 were placed. Learned counsel for the assessee further submitted that as per the requirements of the section 115BBC, the assessee had submitted complete details showing name of donor, address of donor and receipt number of donors and therefore, the assessee had discharged its onus as per the provisions of the law and therefore, it was prayed that learned CIT(A) has rightly appreciated the facts of the case and has rightly deleted the addition and it was prayed that the appeal of the Revenue may be dismissed. 4. We have heard the rival parties and have gone through the material placed on record. We find that it is undisputed fact that the assessee is registered u/s 12AA of the Act. During the year under consideration the assessee had received corpus donations amounting to Rs.22,52,62,714/- out of which Rs.17,98,55,214/- were received in cash from various persons, the list of donors is placed at pages 10 to 183 of the paper book. The list contains the names of the persons, receipt numbers, address and amount received and therefore, the assessee has furnished the complete details as required u/s 115BBC(3) of the Act. The learned CIT(A) has rightly appreciated the facts and has rightly deleted the addition after noting down the complete facts and after relying on the orders of the Tribunal in the earlier years in the case of the assessee itself. The Tribunal in assessment year 2013-14 vide order dated 08/03/2019 and in assessment year 2014-15 vide order dated 28/06/2019 has dismissed the appeals of the Revenue under similar facts and circumstances. For the sake of completeness, the findings of the Tribunal in assessment year 2014-15 are reproduced below: “15. Arguing ground No. 5, Learned D. R. submitted that the Assessing Officer had made the addition on account of anonymous donations as the assessee could not establish the identity and capability/financial status of the donors and learned I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 4 CIT(A) was not justified in deleting the addition made by the Assessing Officer. 16. Learned A. R., on the other hand, supported the order of learned CIT(A) and submitted that the issue involved in the present appeal is duly covered in favour of the assessee in assessee’s own case for the assessment year 2013-14 by the order of Lucknow Bench of the Tribunal in I.T.A. No.557/Lkw/2017. Learned D. R. even though relied on the order of the Assessing Officer but did not disagree that the issue is not covered in favour of the assessee by the order of Lucknow Bench of the Tribunal. 17. We have heard the rival parties and have gone through the material placed on record. We noted that the issue involved in the present appeal is duly covered in favour of the assessee in assessee’s own case for the assessment year 2013- 14 by the order of this Bench of the Tribunal in I.T.A. No.557/Lkw/2017 wherein vide para 20 and 21 of its order, the Tribunal has held as under: “20. Now in Ground No.3, we find that assessee in total had accepted donation of Rs.16,18,36,650/-. During the assessment proceeding, the details including names and addresses of donation were filed before the Assessing Officer. A copy of which is placed at Paper Book Pages 45 to 134. The AO had not doubted the identity of the donor and genuineness of the transaction. As per sub Section (3) of 115BBC, ‘anonymous donation’ mean voluntary contribution where a person receiving such contribution does not maintain a record of identity indicating the name and address of the person making such contribution. In view of these facts, we find that only requirement u/s 115BBC of the Act is the name and address of the donor has to be maintained which the assessee had maintained. We further find that the assessee had declared entire receipt of donations in the total income as is apparent for computation placed at page 43 which had already been made part of this order and had utilized the entire amount for charitable purposes as the total application of funds is more than fee receipt I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 5 and voluntarily contribution. The ld. CIT(A) has rightly allowed relief to the assessee by holding as under: 6.1.2 After examining the assessment order and written submission of the appellant, the following facts emerge. • During the year under consideration the appellant trust received donations of Rs.16,18,36,650/-. • The AO allowed donations to the extent of Rs. 7,69,08,761/- and made addition of the balance donations of Rs. 8,49,27,592/- u/s 68 of the Act. • Donations were received through three modes namely Cheque/RTGS/Cash Books of accounts with supporting records were produced before the AO. • The AO has not doubted the identity of donor, the genuineness of transaction or the capacity of donor. However, an addition of Rs.8,49,27,592/- was made U/s 68 of the Act. • These donations had already been shown as income of the appellant. • The appellant produced books of accounts like ledger accounts, bank statements etc to explain the details of donors. Anonymous donations are covered u/s 115BBC of the Act discussed in following paragraphs of this order. The AO has made addition u/s 68 of the Act. 6.1.3 In order to prevent channelization 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 any anonymous donation shall be included in its total income and taxed at the rate of 30%. Anonymous donation to wholly religious trusts or institutions will not be taxed. 6.1.4 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 contribution and such other particulars as may be prescribed. To be excluded from the definition of anonymous donations the person receiving the donation I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 6 is required to maintain the record of identity indicating the name and address of contributor and such other particulars as may be prescribed. Since no other particulars have been prescribed under the provisions the person receiving the donation is under obligation to maintain the identity of donors indicating the name and address. On perusal of the details filed by appellant it is seen that the appellant has furnished the names and addresses of donors. In view of above it is held that appellant has established the identity of donors as provided u/s 115BBC of I.T. Act, 1963and the donations received by the appellant cannot be categorised as anonymous donations and cannot be subjected to tax as per provisions of sec 115BBC of IT. Act, 1961. The AO had not doubted the identity of the donor or genuineness of the transaction in the assessment order. However, an addition u/s 68 of the Act was made. 6.1.5 Reliance is also placed on decision of Hon'ble ITAT Bench A in ITO-2(3), Lucknow Vs. M/s Saraswati Educational Charitable Trust in ITA no 776/LKW/2014 Dated 17.06.2015 were in the facts on the issue of anonymous donations are similar to the appellant's case. Reliance was placed on decision of Hon'ble Delhi bench of ITAT in case of Hans Raj Samarak Society Vs. ADIT 16 Taxman 103. As per the decision the receiver has the obligation to maintain the identity indicating the name and address only and nothing more. No other particular has been prescribed under the provision. No other word can be read in Sec-115BBC(3) other than words finding place therein. Reliance is also placed on decision of Hon'ble Delhi High Court which confirmed the decision of Hon'ble ITAT in case of DIT(E) Delhi Vs. Hans Raj Samarak Society{2013) 35 Taxman642(Delhi). 6.1.6 The registration u/s 12A of the Act of the Trust has been restored by the Hon'ble ITAT Lucknow Bench in I.T.A. No. 44 &45/LKW/2016 vide order dated 07.04.2017. There is no dispute that the appellant has shown entire donation of Rs.84927592/- as income for educational purpose in the computation chart. The I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 7 Income so disclosed has been applied for charitable purpose as per provisions of Section 11 of the Act. The appellant in the course of assessment proceeding has submitted the complete details of donors giving their name and address. The appellant trust has duly discharged its onus as cast upon it by furnishing the name and address of the donors. The A.0. has not doubted the identity of the donor and genuineness of the transaction. The Provisions of Section 115BBC with regard to anonymous donation are also not violated by the appellant trust as details of donors with their name and address were duly furnished before the Ld. A. 0. Anonymous Donation has been defined in Section 2(24)(iia) of the Act to mean any voluntary contribution 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. The assessee has submitted the complete particulars of the Donor giving their name and address and it can be held that the appellant has established the identity of the donors as required u/s 115 BBC of the Act and donation cannot be categorized as anonymous donation. Further, Section 68 has no application to the facts of the instant case because the assessee has disclosed the donation as its income and applied the same for charitable purpose. In my considered opinion addrng part of the donation as Cash Credit u/s 68 of I. T, Act to the total income of the appellant amounted to double addition which is not permissible. Reliance is placed on the following judgements :- 1 [2013] 33 Taxmann.com 642 (Delhi) High Court of Delhi in the case of Director of Income Tax Vs. Hans Raj Samarak Society. Section 68, read with section 11, of the Income-tax Act, 1961-Cash'credits [In case of charitable trust] - Assessment year 2006-07 - Assessing Officer disallowed deduction under section 11 on finding unaccounted money by way of anonymous donation on purchase of capital assets - Tribunal observed that donation received by assessee was not anonymous donation because receipts I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 8 were issued by assessee which were i^^ custody of Department - Whether Tribunal was justified in holding that section 68 could not be applied, as "donations had already been shown by assessee as income - Held, yes [Para 4] [In favour of assessee] 2 Vaishnavi Educational Society Vs. Deputy Commissioner of Income Tax Reported in 114 DTR 224. Charitable Trust - Anonymous donations maintenance of record of identity of donors - names of the donors along with their addresses were furnished before the Investigation Wing of the Department and were also recorded in the books produced by the assessee before the A. 0. - Hence, such donations cannot be classified as 'anonymous donations' as per the provisions of section 115BBC (3) only requirement under s. 115 BBC(3) is that the names and addresses of the donors are to be recorded (CIT(A) has wrongly applied the provisions of section 68 in the case of the Assessee by stating that the recipient society should also be in a position to identity the donors and establish the capacity to give a donation of the amount mentioned against their names - Hans Raj Samarak Society Vs. Assistant Director of Income Tax (2012) 69 DTR (Del) 123 ©2011)133 ITD 530(Del) relied on, 3 [2014] 42 Taxmann.com 361 (Allahabad), High Court of Allahabad, in the case of Commissioner of Income Tax, Ghaziabad Vs. Uttaranchal Welfare Society. Shri Nikhil Agarwal, appearing for the respondent-assessee has relied on DIT (Exemption) v. Keshav Social & Charitable Foundation [2005] 278 ITR 152/146 Taxman 569 (Delhi) in which following S. RM. M. CT. M.Tiruppani Trust v. CIT [1998] 230 ITR 636/96 Taxman 635 (SC) it was held that under Section 11 (1) every charitable or religious trust is entitled to deduction of certain income from its total income of the previous year. The income so exempt is the income which is applied by the charitable or religious trust to its charitable or religious purposes in India. This is, of course, subject to accumulation up to a specified maximum which was 25 per cent. In that case it was found, as in the present case that the assessee had applied more than 75% of the donations for I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 9 charitable purposes as per its objects. The Delhi High Court further held that Section 68 of the Act has no application in such case where the assessee had disclosed donations as its income. It was also not disputed that all receipts, other than corpus donations, would be income in the hands of the assessee. If there is Full disclosure of the donation for whatever purpose and that the registration under Section 12-A is continuing and valid, exemptions cannot be denied. 4 [2005] 278 ITR 152 (Delhi) In the Delhi High Court in the case of Director of Income Tax (Exemption) Vs. Keshav Social and Charitable Foundation. The assessee, a charitable trust, was .engaged in the activity of providing medical advise to the poor and needy in various parts of the State. During the 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, held that the assessee had tried to introduce unaccounted money in its books by way of donations and, therefore, the amount was to be treated as cash credit under section 68. On that basis, the benefit under section 11 was denied to the assessee. On appeal, the Commissioner (Appeals) held that treating donation as income under section 68 was not correct the assessee had disclosed the donations as its income and had spent 75 per cent of the amount for charitable purposes. On the revenue's appeal, the order of Commissioner (Appeals) was upheld by the Tribunal. On appeal : 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 introduce unaccounted money by way of donation receipts. That was more particularly so in the facts of the case where admittedly, more than 75 per cent of the donations I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 10 were applied for charitable purposes. [Para 10] Further section 68 had no application to the facts of the instant case because the assessee had in fact disclosed the donations as its income and it could not be disputed that all receipts, other than corpus donations, would be income in the hands of the assessee. There was, therefore, full 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] Further Hon'ble I.T.A.T. Lucknow Bench in the appeal of Saraswati Educational Charitable Trust in I.T.A. No. 776/LKW/2014 has considered a similar issue and has held as under :- "6. 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 to prove the identity of the donors, these donations cannot be called to be anonymous. So far as applicability of provisions of section 68 of the Act is concerned, it has been held by various High Courts including the jurisdictional High Court that once donation received was taken as income of the assessee which was applied for charitable purposes, provisions of section 68 of the Act cannot be invoked. Since we do not find any infirmity in the order of the Id. CIT(A), we confirm the same as he has adjudicated the issue In the light of various judicial pronouncements. Accordingly we confirm his order. In the result, appeal of the Revenue stands dismissed. " ln view of the above, and respectfully following the decision of Hon'ble Jurisdictional High Court in the case of Uttaranchal Welfare Society (supra) and the. Order of Hon'ble Lucknow Bench in the appeal of Saraswati Educational Charitable Trust, the addition of Rs.8,57,31,152/- is hereby deleted. As a result the ground of appeal no. 3 and 4 I.T.A. No.565/Lkw/2019 Assessment Year:2015-16 11 are allowed. 21. In view of above facts, we do not find any infirmity in the order of the ld. CIT(A), Ground No.3 is dismissed.” 5. In the present case before us, the assessee had filed before the Assessing Officer complete list of donors indicating therein names, addresses and receipt numbers. The list of such donors is placed in paper book pages 10 to 183. The assessee has included such donations to its total income in the computation of income, a copy of which is placed in paper book page 185. Therefore, the facts and circumstances in the present year are in pari materia to the facts in the earlier years. 6. Therefore, respectfully following the aforesaid findings of the Tribunal in earlier years in the case of the assessee itself, we do not find any infirmity in the order of learned CIT(A) and uphold the same. 6. In the result, the appeal of the Revenue stands dismissed. (Order pronounced in the open court on 15/12/2021) Sd/. Sd/. ( A. D. JAIN ) ( T. S. KAPOOR ) Vice President Accountant Member Dated:15/12/2021 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Assistant Registrar