MENABA CHARITABLE TRUST,AHMEDABAD V. THE ITO, WARD-1(EXEMPTIONS), AHMEDABAD

ITA 1361/AHD/2025

AI Insights

The case involves Menaba Charitable Trust, which appealed against the order of the CIT(A) that upheld the Assessing Officer's decision treating certain donations as anonymous under section 115BBC of the Income Tax Act, 1961. The Trust argued that it had provided sufficient details to identify the donors, and the absence of PAN or Aadhaar could not render the donations anonymous. The CIT(A) dismissed the appeal for non-prosecution and on merits, but the Tribunal found that the Trust was not given a fair opportunity to present its case due to the death of its accountant who managed tax-related affairs.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783768 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 26-06-2025
• Other Referred Cases: CIT v. B.N. Bhattacharjee [118 ITR 461 (SC)], Estate of Late Tukoji Rao Holkar v. CWT [223 ITR 480 (MP)], CIT v. Multiplan India (P.) Ltd. [38 ITD 320 (Del.)]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C DHARANI NATH
• Assessee Lawyers: RUSHIN PATEL
• Keywords: Set aside; Corroborative evidences; Principle of natural justice; Assessment record; Charitable institution
• Section: 11; 12

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “SMC“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ] ] BEFORE DR. BRR KUMAR, VICE PRESIDENT AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER आयकर अपील सं /ITA No.1361/Ahd/2025 िनधा \u000fरण वष\u000f /Assessment Year : 2017-18 Menaba Charitable Trust 26, Mahavir Jain Soc., Bapunagar Ahmedabad – 380 024 बनाम/ v/s. The ITO Ward-1 (Exemptions) Ahmedabad – 380 015 \u0013थायी लेखा सं./PAN: AAATM 2171 N (अपीलाथ\u0017/ Appellant) (\u0018\u0019 यथ\u0017/ Respondent) Assessee by : Shri Rushin Patel, AR Revenue by : Shri C Dharani Nath, Sr.DR सुनवाई की तारीख/Date of Hearing : 17/09/2025 घोषणा की तारीख /Date of Pronouncement: 06/11/2025 आदेश/O R D E R PER SIDDHARTHA NAUTIYAL, JM: The present appeal has been preferred by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 24/12/2024 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2017-2018. 2. The assessee raised the following grounds of appeal: “On the facts and circumstances of the case, as well as on legal and other grounds, the learned CIT(A) has erred in confirming the additions made by the Assessing Officer, wherein an addition of ₹32,74,493/- was made on account of alleged voluntary and corpus donations as anonymous as appellant failed to prove record of Printed from counselvise.com ITA No.1361/Ahd/2025 Menaba Charitable Trust vs. ITO Asst. Year : 2017-18 2 identity of donors liable to tax u/s115BBC(3), without any substantive basis or verification. The specific grounds are as under: 1.1 On the facts and in the circumstances of the case and in law, the delay of 123 days in filing the appeal be condoned. The appellant prays that the delay he condoned and appeal should be taken up for hearing. 1.2 The learned assessing officer has erred in law and on facts in making the addition of Rs.32,74,493/- to the total income of the appellant on account of treating donations as the 'anonymous donation' under section 115BBC of the Income Tax Act. 1.3 That the learned assessing officer has erred in making the addition on account of anonymous donation' despite the fact that appellant has satisfactorily proved the identity of donors as referred under section 115BBC of the Income Tax Act, 1961 by providing the details of the name, address, mode of payment of donation etc. 1.4 That the learned assessing officer has erred to consider that the sum of Rs. 32,74,493/- is beyond the purview of the exemption under section 11 and 12 of the Income Tax Act, 1961 on account of 'anonymous donations' despite the fact that any voluntary contribution received by a Charitable or religious trust shall be deemed to be income derived from property held under Trust to extent said contributions are used for charitable purposes even though assessee fails to disclose names and addressed of donors. 1.5 Your appellant craves leave to allow addition, alteration, deletion and withdrawal of any of the grounds before the appeal is finally disposed off.” 3. The brief facts of the case are that the assessee, a registered charitable trust engaged in providing education, shelter, and medical assistance to differently abled and underprivileged girl children, filed its return of income for Assessment Year 2017–18 on 31.10.2017 declaring Nil income. The case was selected for scrutiny under CASS for the purpose of verifying the correctness of donations received. During the assessment proceedings, the Assessing Officer (AO) called for details of all donations received, including the names, addresses, PAN, and supporting evidence to establish the identity of the donors, as required under section 115BBC(3) of the Act, 1961. The Assessing Officer noted that the assessee furnished a list containing the Printed from counselvise.com ITA No.1361/Ahd/2025 Menaba Charitable Trust vs. ITO Asst. Year : 2017-18 3 names and addresses of the donors but failed to provide complete details or identity proofs such as PAN, Aadhaar, or confirmation letters for donations amounting to Rs. 47,64,786/-. The AO observed that the assessee had not maintained proper records to show the identity of certain donors as required by law and that the details furnished by the assessee were incomplete and could not be verified. Therefore, in the absence of proper identification of the donors, the AO held that such donations constituted anonymous donations within the meaning of section 115BBC of the Act. The AO accordingly invoked section 115BBC(1)(i) and (ii) and treated the amount of Rs. 47,64,786/- as anonymous donations and accordingly, levied tax at the prescribed rate. The AO finalized the assessment at a total income at Rs. 32,74,493/-, being the taxable portion of the anonymous donations after applying the relevant provisions. 4. Aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. In its statement of facts, the assessee contended that it had furnished sufficient details such as the names and addresses of all donors and that as per section 115BBC(3) of the Act, only the name and address were required to be maintained in the records of the trust. The assessee submitted that the term “record of identity” used in the section had not been further defined or prescribed by the CBDT, and therefore, absence of PAN or Aadhaar details could not by itself render the donations anonymous. The assessee also submitted that the AO made the addition without issuing a show-cause notice and without granting proper opportunity of hearing, resulting in violation of natural justice. The assessee contended that since the donations were duly recorded in the books of account and credited either to the income and expenditure account or to the Printed from counselvise.com ITA No.1361/Ahd/2025 Menaba Charitable Trust vs. ITO Asst. Year : 2017-18 4 corpus fund, they could not be treated as anonymous within the meaning of section 115BBC of the Act. The CIT(A), however, noted that despite issue of multiple statutory notices under section 250 of the Act, the assessee failed to file written submissions or attend the hearings. The CIT(Appeals) issued several notices between January 2021 and December 2024, but no effective compliance was made by the assessee, who kept seeking adjournments. The CIT(A) held that the assessee had shown no diligence in prosecuting its appeal and therefore treated the appeal as not maintainable for want of prosecution. The CIT(A) placed reliance on the decisions of CIT v. B.N. Bhattacharjee [118 ITR 461 (SC)], Estate of Late Tukoji Rao Holkar v. CWT [223 ITR 480 (MP)], and CIT v. Multiplan India (P.) Ltd. [38 ITD 320 (Del.)], wherein it was held that mere filing of an appeal is not sufficient, and failure to pursue it diligently justifies its dismissal for non-prosecution. Notwithstanding the dismissal of the assessee’s case on account of non-prosecution, the CIT(A) also examined the case on merits. After considering the assessment records, the CIT(A) observed that the assessee had not produced complete identity details or confirmation from donors for the donations aggregating to Rs. 47,64,786/-. The CIT(A) therefore concurred with the AO’s finding that mere disclosure of names and addresses without corroborative evidence such as PAN or other identification proof could not establish the genuineness of the donors. The CIT(A) noted that section 115BBC of the Act was introduced to curb the practice of introducing unaccounted money in the guise of charitable donations and that the assessee’s failure to produce identity records squarely attracted the provisions of the said section. Consequently, the CIT(A) held that the AO was justified in treating the donations as anonymous and in taxing the same under section 115BBC. Accordingly, the CIT(A) dismissed the appeal both for non-prosecution and on merits, holding Printed from counselvise.com ITA No.1361/Ahd/2025 Menaba Charitable Trust vs. ITO Asst. Year : 2017-18 5 that the assessee had failed to discharge the onus of proving the identity of donors and the genuineness of donations. The order of the Assessing Officer was thus upheld in full. 5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. 6. At the outset, we note that there is a delay of 118 days in filing of the present appeal. The assessee has filed an application supported by an affidavit explaining the reasons for the delay. The assessee has submitted that the accountant of the assessee trust, who was handling all income tax-related matters and communication, unfortunately passed away on 26.01.2024. The other office bearers of the trust, being elderly and not conversant with electronic filing and e-proceeding systems, were unaware of the pending appellate proceedings and the subsequent order passed by the CIT(A). It was only during the course of the audit for Financial Year 2024–25, initiated in June 2025, that the management came to know that the order had been passed by the CIT(A) on 24.12.2024. Thereafter, the assessee immediately consulted its tax advisor and filed the appeal before this Tribunal on 26.06.2025. 7. Considering the reasons stated in the affidavit, we are satisfied that the delay in filing the appeal was due to bona fide and unavoidable circumstances beyond the control of the assessee. The delay in our considered view cannot be said to be willful, negligent, or lacking in good faith. Following the ratio laid down by the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Others [1987] 167 ITR 471 (SC) and N. Balakrishnan v. M. Krishnamurthy [(1998) 7 SCC 123], we are inclined to Printed from counselvise.com ITA No.1361/Ahd/2025 Menaba Charitable Trust vs. ITO Asst. Year : 2017-18 6 adopt a liberal approach and hold that sufficient cause has been shown for condoning the delay. Accordingly, the delay of 118 days in filing the present appeal is condoned, and the appeal is admitted for adjudication on merits. 8. On merits, we find that the learned CIT(Appeals) has passed the impugned order ex parte without granting effective opportunity of hearing to the assessee. The record reveals that though multiple notices were issued electronically, there was no effective compliance from the assessee’s side due to the demise of its accountant who was solely managing tax-related affairs. The assessee’s explanation that it remained unaware of the proceedings and order due to this unforeseen event appears to be reasonable and credible. It is well settled that no person should be condemned unheard and that justice must not only be done but also be seen to have been done. In these circumstances, we are of the considered opinion that the assessee was prevented by sufficient cause from participating in the proceedings before the CIT(A). Therefore, in the interest of natural justice and fair play, we deem it appropriate to set aside the impugned order passed by the CIT(A) and remit the matter back to his file for de-novo consideration. The CIT(A) is directed to decide the appeal afresh in accordance with law after affording due and adequate opportunity of hearing to the assessee. The assessee, in turn, is directed to cooperate in the appellate proceedings and furnish all requisite details and evidences in support of its claim. 9. We make it clear that we have not expressed any opinion on the merits of the addition made by the Assessing Officer, and all issues are left open for adjudication by the learned CIT(A) in accordance with law. Printed from counselvise.com ITA No.1361/Ahd/2025 Menaba Charitable Trust vs. ITO Asst. Year : 2017-18 7 10. The appeal of the assessee is thus allowed for statistical purposes. Order pronounced in the Open Court on 06/11/2025 at Ahmedabad. Sd/- Sd/- (DR. BRR KUMAR) VICE PRESIDENT (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 06/11/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की \"ितिलिप अ#ेिषत/Copy of the Order forwarded to : 1. अपीलाथ$ / The Appellant 2. \"%थ$ / The Respondent. 3. संबंिधत आयकर आयु& / Concerned CIT 4. आयकर आयु& ) अपील ( / The CIT(A)- (NFAC), Delhi 5. िवभागीय \"ितिनिध , अिधकरण अपीलीय आयकर , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स%ािपत \"ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by H-JM on his computer) : 03.11.2025 2. Date on which the typed draft is placed before the Dictating Member. : 03.11.2025 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 6.11.25 7. Date on which the file goes to the Bench Clerk. : 6.11.25 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : Printed from counselvise.com "