PEOPLES FORUM V. COMMISSIONER OF INCOME TAX (EXEMPTION)

ITA/62/2022

AI Insights

The case involves an appeal by the Peoples Forum against the order of the Income Tax Appellate Tribunal (ITAT), Cuttack Bench, which upheld the revision order by the Commissioner of Income Tax. The revision order treated a substantial donation received by the assessee as anonymous, thus taxable at a higher rate under section 115-BBC of the Income Tax Act, 1961. The primary contention was whether the Assessing Officer (AO) had adequately verified the donations' details during the initial assessment. The appellant argued that all required details were provided, while the respondent maintained that the AO did not verify the relationships, creditworthiness, and genuineness of the donations.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 672627 (HC-ORISSA)
• Appeal Type: Others
• Pronouncement Date: 04-08-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: RADHESHYAM CHIMANKA
• Assessee Lawyers: CHITRASEN PARIDA
• Keywords: Anonymous donation; Assessment; Income Tax; Revision order; Revision order; Donor identity
• Section: 263; 2(24)(iia); 13(7); 115-BBC

Judgement Text

" Page 1 of 6 IN THE HIGH COURT OF ORISSA AT CUTTACK ITA No.62 of 2022 (Through Hybrid mode) Peoples Forum …. Appellant -versus- Commissioner of Income Tax …. Respondent Learned advocates appeared in this case: For petitioner : Mr. Chitrasen Parida, Advocate For opposite party : Mr. Radheshyam Chimanka, Advocate (Senior Standing Counsel, I.T) CORAM: JUSTICE ARINDAM SINHA JUSTICE G. SATAPATHY ----------------------------------------------------------------------------------- Dates of hearing : 01.08.2023 Date of judgment : 04.08.2023 ----------------------------------------------------------------------------------- 1. Appellant (assessee) seeks to prefer this appeal against order dated 15th June, 2022 in ITA no.44/CTK/2021 for assessment year 2016-17, made by the Income Tax Appellate Tribunal (ITAT), Cuttack Bench. // 2 // ITA no.62 of 2022 Page 2 of 6 2. Mr. Parida, learned advocate appears on behalf of appellant(assessee). He submits, without minimum inquiry and on the eve of expiry of the period of limitation, the Commissioner interfered with the assessment under section 263 in Income Tax Act, 1961. His client preferred appeal to the Tribunal but by impugned order dated 15th June, 2022, the Tribunal upheld the revision order. He draws attention to definition of ‘anonymous donation’, given in section 2(24)(iia) and submits, sub-section (3) in section 115-BBC requires the assessee to maintain record of identity indicating name and address of the donors and such other particulars as may be prescribed. There has not been any further prescription. He demonstrates from reply dated 27th March, 2021 given by his client, as had enclosed therewith detailed list of donors along with complete addresses and amount of donations. In the circumstances, it cannot be said the Assessing Officer (AO) did not verify, leading to finding of erroneous assessment requiring revision. 3. Mr. Chimanka, learned advocate, Senior Standing Counsel appears on behalf of respondent (revenue) and draws attention to revision order dated 30th March, 2021, paragraph 9. He relies upon a passage therein, reproduced below. // 3 // ITA no.62 of 2022 Page 3 of 6 “9. During the review of assessment considering the assessee’s reply by the commissioner, the following things were observed; As per the Receipt & Payment account for the year ending 31.03.2016, as well as Balance Sheet as at 31.03.2016, the assessee has received donation for corpus fund of Rs.3,45,60,000/-. In respect of said donation, the AO has not verified the relationship between donors and trust, credit worthiness of donors, date and mode of payment of donation and genuineness of donation etc. during the course of scrutiny assessment. Hence, the donation of Rs.3,45,60,000/- is required to be treated as anonymous donation and taxable at the rate of 30% u/s 115BBC in accordance with the provisions of law.” xxx xxx xxx (emphasis supplied) He submits further, the Commissioner also relied on section 13(7) to hold that anonymous donation is not eligible for deduction under sections 11 and 12. 4. We admit the appeal on the substantial question of law as below. // 4 // ITA no.62 of 2022 Page 4 of 6 Where the AO has not verified relationship between donors and the trust, credit worthiness of donors, date or mode of payment of donation and genuineness of donation etc., is the assessment erroneous on it being prejudicial to the interest of revenue, requiring interference in revision under section 263? 5. We have not been shown that there has been further prescription regarding recipients of donation to maintain record of further particulars in addition to identity, name and address of the person making the contribution, as provided under sub-section (3) of section 115-BBC. Section 2(24)(iia) gives definition of anonymous donation. Appellant (assessee) must first be shown to have received anonymous donation. 6. We have perused the assessment order and found the AO said, inter alia, as reproduced below. “During the course of assessment proceedings the assessee produced the relevant documents as per questionnaire through e-proceeding. The Books of account including bank statements, audit report, statement of income and the ledgers furnished for verification were examined. Considering the submissions made and after verification of the documents submitted by the assessee the total income // 5 // ITA no.62 of 2022 Page 5 of 6 of the assessee trust is hereby accepted. Accordingly, the total income of the assessee is determined at Rs. Nil.” (emphasis supplied) As aforesaid, the Commissioner in the revision order had reproduced assessee’s reply to the show-cause notice, where in paragraph 3.2 the assessee said it had again enclosed therewith, detailed list of donors along with their complete address and amounts of donations given by them as annexure-1. The paragraph is reproduced below. “3.2. That thereafter the Ld. Assessing Officer complied all the details filed by the assessee with the books of account and other documents impounded which were found to be in order, therefore did not make any additions or did not treated the corpus donations as anonymous donation and passed the assessment order u/s. 143(3) by accepting the returned income. For your kind perusal again herewith we are enclosing the detailed list of the donor along with their complete address and the amount of donations given by them as Annexure-1” (emphasis supplied) The Commissioner went on to only say, the assessee’s reply had been considered but not found tenable. In the circumstances, we did not find a dispute regarding disclosure of identity of donors, their // 6 // ITA no.62 of 2022 Page 6 of 6 addresses and the amount of donations they had made to the assessee. This fact is sufficient for compliance of requirement under section 115-BBC(3), in claiming exemption of the donations from being chargeable to income tax. 7. Facts found by the Commissioner and the Tribunal clearly show that the assessee had furnished record of the identities indicating name and address of persons making the contributions. Revenue has not been able to demonstrate further requirement by prescribed particulars, as mentioned under sub-section (3) in section 115-BBC. As such, we answer the question in the negative and in favour of appellant (assessee). 8. The appeal is allowed. The orders of Tribunal and the Commissioner are set aside and quashed. 5. ( Arindam Sinha ) Judge ( G. Satapathy ) Judge Prasant Digitally Signed Signed by: PRASANT KUMAR SAHOO Reason: Authentication Location: OHC Date: 04-Aug-2023 18:32:27 Signature Not Verified "