ITAT Delhi Deletes ₹15.96 Crore Addition Against Charitable Society Over Allegedly Non-Genuine Donations

The Income Tax Appellate Tribunal (ITAT) has deleted a ₹15.96 crore addition made against ARVR Education Societya charitable society after rejecting the tax department's claim that corpus donations received by the charitable society from four parties were unexplained cash credits rather than genuine voluntary contributions.

A Delhi bench comprising Judicial Member Satbeer Singh Godara and Accountant Member Naveen Chandra framed the central issue as, “The first and foremost question which arises for the tribunal's apt adjudication herein is as to whether such a disallowance of corpus donation claim raised under section 11(1)(d) of the Act could attract section 68 unexplained cash credit additions or not.”

In answering that question, the tribunal relied on the Delhi High Court's ruling in DIT v. Keshav Social Charitable Foundation, which it said supported the view that where donations are disclosed and applied for charitable purposes, addition as unexplained cash credits was not warranted.

Applying that reasoning, the tribunal held, “We thus find merit in the assessee's instant sole substantive ground to rejected the Revenue's vehement submissions supporting the impugned section 68 unexplained cash credit additions of Rs.15.96 crores in its hands as per their lordship's detailed discussion. Ordered accordingly.”

The dispute concerned donations received in assessment year 2013-14, which the tax department said were not genuine because the assessee had failed to establish the identity, genuineness, and creditworthiness of the donors.

The authorities also relied on a memorandum of understanding between the society and Rajiv Jain & Family to contend that the contributions were not voluntary, saying the arrangement contemplated the allotment of two management seats in the trust in return for the contribution.

The education society argued that the donations were received through banking channels and were supported by confirmations, bank details, bank statements reflecting RTGS transactions, banker certificates, and MCA master data of the corporate donors. It also contended that the funds had been utilized for charitable purposes.

The tribunal noted there was no dispute that the taxpaying entity was a charitable society enjoying registration under sections 12A and 80G and that it had claimed the receipts as corpus donations supported by documentation.

The tribunal accordingly allowed the appeal and deleted the addition.

For Assessee: Advocates Saubhagya Agarwal, Rajkumar

For Department: Amisha S Gupt, CIT(DR)