The assessee is a charitable trust running Gaushala which is registered u/s 12A of the T Act. The case for AY 2018-19 was selected for scrutiny assessment. It was asked to give details of all voluntary contributions (Donations) received. Complete list showing receipt of donations in Cash and through banking channels was submitted. While framing assessment the donations received in cash has been added as unexplained credit and added u/s 68 charging income tax u/s 115BBE. The donations were received in small amounts ranging from Rs. 11 to Rs.2,000. For each donation the trust issued receipt to donors. The list submitted had all the details of donors i.e. name, address, date of receipt etc. An appeal has been preferred before CIT(A). Kindly guide how to take up the matter before CIT(A). Also provide relevant case laws. Thanks

Reply: The Finance Act 2017 has amended the provisions of section 80G (5D) wef AY 2018-19 providing that “No deductions shall be allowed under this section in respect of donation of any sum exceeding two thousand rupees unless such sum is paid by any mode other than cash.” Thus a person donating more than Rs. 2,000/- in cash on or after 01.04.2017 shall not be entitled to claim benefit of such deduction under section 80G. It is further to be noted that this limit is for donor and not for donee.

The taxability of anonymous donation is covered by the provisions of section 115BBC of the Income Tax Act 1961 attracting tax liability @ 30% depending on the status of trust being charitable or religious i.e. if a trust is a religious trust it need not pay tax per above section 115BBC whereas if it is a charitable trust the anonymous donations are taxable @30% (if anonymous donation exceeds- Rs. 1,00,000 or 5% of total donations whichever is higher).

Collection Boxes (Golaks) are generally placed at temples, gurdwaras, mosque, church etc. for collection of donations and contributions. Charitable Trusts owning hospitals, schools etc. also have donation boxes at these institutions. At times, some of the donation boxes have an inscription or a sign nearby stating that the donation made in that particular box would be for a particular capital purpose, or that it is for the corpus of the trust. The issue here is whether these donations are voluntary contributions or will form part of corpus of fund and whether these receipts can be taxable as anonymous donations u/s 115BBC.

You can refer following case laws:-

• Gurudev Siddha Peeth vs. ITO 59 taxmann.com 400
• DCIT vs. All India Pingalwara Charitable Society 67 taxmann.com 338
• Shree Mahadevi Tirath Sharda Ma Seva Sangh vs. ADIT 133 TTJ 57(Chd.) (UO).
• Prabodhan Prakashan vs. ADIT 50 ITD 135.