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July 23, 2022

When donor’s identity is established categorizing donation as anonymous is unsustainable

by CA Shivam Jaiswal in Income Tax, Legal Court Judgement

When donor’s identity is established categorizing donation as anonymous is unsustainable

Facts and Issues of the case

The assessee is a Trust running educational institutions in the name and style of Siddhartha Academy of General & Technical Education in and around Vijayawada. The assessee filed its return of income for the AY 2016-17 admitting total income of Rs. NIL. The case was selected for scrutiny and notice U/s. 143(2) and 142(1) were issued and served on the assessee. The assessee’s representative submitted the details as required by the AO. Based on the submissions made by  the  assessee’s  representative,  AO  noted that the assessee has received a corpus donation of Rs. 23,89,57,793/- out of which the assessee could not file the confirmation letters  for  Rs.  15, 44, 89,693/-. The Ld.  AO treated Rs. 14, 19, 66,693/- as anonymous donation U/s.  115BBC of the Act.  The AO also treated the amount of Rs.  82, 52,086/- credited to the income and expenditure account as an anonymous donation U/s. 115BBC of the Act.  

Observations by the Court

The Court has heard both the sides and perused the material available on record and the orders of the Authorities below.  We find merit in the arguments of the Ld.  AR that the submissions were made online in piecemeal due to size restrictions.  We also note from the paper book submitted by the Ld.  AR that the names and addresses of every donor are being submitted and available in records. We also note that the donations  were  made  either  by cheque  or  DD   or  through  other  banking  channels  only.  Further, we also observe that the assessee has published advertisements requesting for donations.    We  find  force  in  the  argument  of  the Ld. AR that section 115BBC requires  the  recipients  to  maintain record of identity, name and address of the person making such contribution.

It is  to  be  noted  that  anonymous  donation  has  been  defined 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 definition of anonymous donation therefore prescribed that the person receiving the donation is required to maintain identity indicating name and address of the contributor and such other particulars as may be prescribed. Since no other particulars have been prescribed under the provisions of the Act, the person receiving the

Donation is under obligation to maintain the identity of the donors indicating the name and address and other particulars only. In the instant case, the Ld.  AR has provided the details of 2300 donors along with the names and addresses of the donors before the AO. We find that the AO has failed to scrutinize the donations received from various donors.  We also find from the paper book filed by the Ld. AR that confirmation letters from the donors have been obtained and provided before the Ld. Revenue Authorities. Mere absence of PAN in the confirmation letters of  the  donors  does  not  give raise to  suspicion  that  they  are  anonymous  donations  as  the maintenance of name and address  details  of  the  contributors  is  a sufficient document as prescribed u/s. 115BBC of the  Act.  It is also seen from the order of the Ld. AO that he has not doubted the genuineness of the donations in the assessment order.    In  view  of  the above, we are of the  considered  view  that  the  assessee  has  established the identity of the donors as provided U/s. 115BBC of the Act and hence the donations received by the assessee cannot be categorized as anonymous donations and cannot be  subjected  to  tax  as  per  the provisions of section 115BBC of the Act. We therefore, find no infirmity in the order of the Ld. CIT (A) and no interference is required.


The categorization of donation as anonymous when donor’s identity is known is not allowed by the law.


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