Section 11(1)(d) of the Income-tax Act 1961 – Since assessee had produced books of account, original receipt books of corpus fund and confirmation letters from the donors, the donations received constituted corpus fund of the Society.
Facts
For the relevant assessment year, the Assessing Officer taxed the entire amount of Rs. 154.67 lakh of donations received by the Trust on the grounds that:
a. None of the donation receipts were signed by the donors.
b. The donation receipts were self made evidence furnished in support of the corpus fund collected and
c. As per section 11(1) of the Income Tax Act, there must be a specific direction from the donors in respect of their donations that it should be for the purpose of the corpus.
The CIT(A) deleted the addition made by the Assessing Officer. Since there was a difference of opinion between the members of the Tribunal, the matter was referred to the Third Member u/s. 255(4).
Held
The Third Member, agreeing with the Judicial Member, held in favour of the assessee-trust. The Third Member noted as under :
The assessee has produced complete books of account along with original receipt book of corpus fund wherein complete names and addresses of the donors were recorded and the column “corpus fund” has been duly “ticked” and signed by the employees of the trust.
It was for the Assessing Officer to make or not to make further inquiry in the facts and circumstances of the case, with regard to the genuineness of the donation claimed by the assess-trust to have been received by it towards its “corpus fund”.
The Tribunal, as a second appellate authority, could not direct the Assessing Officer to make detailed inquiry for the reason that the issue of “inquiry” is not before the Tribunal.
The Assessing Officer has not made any detailed inquiry further and added the amount of corpus fund as income in the hands of the assessee on the plea that such receipts were prepared by the employees of the trust and in none of the receipts, signatures of the donors was available. This approach of the Assessing Officer in finalising the assessment of the assessee is not in accordance with law.
In view of the fact that the CIT(A) has accepted declarations from all the 60 donors of the corpus fund certifying that they have donated towards corpus fund of the assessee-society and the Revenue has not raised any ground of appeal against the admission of these declarations produced by the assessee before the CIT(A), the amount in question has to be held as constituting corpus fund of the assessee-society.
