INCOME TAX ACT, 1961

Section 115BBC

Charitable trust - Anonymous donations under section 115BBC - No supportive evidence -

Assessee, a society registered under section 12AA was set-up with the object of promoting of educational objects. During the year under consideration, it received donations aggregating to Rs. 2,17,30,000 from total 4851 donors. An identical amount of Rs. 4,501 was received from each person. AO attempted to verify genuineness of the donations by issuing notice under section 133(6) to 26 persons/donors on random basis and most of the notices were returned un-served with the remarks 'Incomplete address or persons not known'. The assessee was called upon to explain the discrepancies by issue of Show-Cause Notice. In response to which, assessee merely stated that for want of sufficient time could not reach the concerned persons and pleaded inability to produce donors cause personal appearance before AO. Further, one person/donor, by name Babasaheb Raghunath Dhas, Sangli appeared before the AO in response to summons under section 131 who had denied to have made any donation to the appellant society and copy of the statement was also supplied to assessee-society for which no explanation was filed. In these circumstances, AO made addition of donations received of Rs. 2,17,30,000 as anonymous donations under section 115BBC. Held: Nothing was discernible to show that assessee-society had made any attempt to prove genuineness of the donations as well as identity and creditworthiness of donors. No attempt was made either before CIT(A) or before Tribunal to discharge onus of proving transaction of receipt of donations as genuine. Thus, transaction of receipt of donations was not normal and genuine. In the absence of any positive evidence from assessee, AO was justified in applying the test of human probabilities and drawing an adverse inference against assessee. Transaction of receipt of donation was a sham, a make believe story, a device adopted by assessee-society to bring on record the undisclosed income. Therefore, addition made by AO was sustained.

Relied:CIT v. Daulat Ram Rawatmull, (1973) 87 ITR 349 (SC) : 1973 TaxPub(DT) 323 (SC), CIT v. Durga Prasad More, (1969) 72 ITR 807 (SC) : 1969 TaxPub(DT) 0160 (SC), CIT v. P. Mohanakala (2007) 291 ITR 278 (SC) : 2007 TaxPub(DT) 1237 (SC), Asstt. CIT v. Anima Investment Ltd. (2000) 73 ITD 125 (Del-Trib) (TM) : 2000 TaxPub(DT) 1169 (Del-Trib), Asstt. CIT v. Arunodoi Apartments (P.) Ltd. (2002) 123 Taxman 48 (Gau-Trib), Rajesh Babubhai Damania v. CIT (2001) 251 ITR 541 : (2002) 122 Taxman 614 (Guj.) : 2001 TaxPub(DT) 0473 (Guj-HC) CIT v. Harikishan Jethalal Patel (1987) 168 ITR 472 (Guj-HC) : (1987) 33 Taxman 217 (Guj.) : 1987 TaxPub(DT) 1467 (Guj-HC), Karnataka Wakf Board v. State of Karnataka, AIR 1996 Karn. 55 at pages 63 & 64 and Zuari Leasing & Finance Corpn. Ltd. v. ITO (2008) 112 ITD 205 (Del-Trib) (TM) : 2008 TaxPub(DT) 1887 (Del-Trib).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2016-17

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