The Assessing Officer has added our cash donations under s.68 as unexplained credits. Is s.68 the right provision at all for a charitable trust's donations?
Not where the donor is identified and confirms, and not under s.68 for the amount he cannot prove either. The Pune Tribunal deleted the addition for the donation whose donor had confirmed it on oath and stated his source, holding the burden had shifted to the Revenue. For the donation the trust could not prove, it did not sustain the s.68 addition; it treated the sum as an anonymous donation and applied s.115BBC, so that only the excess over the Rs 1 lakh limb of the threshold — Rs 10,000 out of Rs 1,10,000 — was taxable.
Decided by the ITAT (Dr. Manish Borad, Accountant Member and Vinay Bhamore, Judicial Member) on 2025-05-16, reported as ITA No. 1429/PUN/2024 (ITAT Pune), assessment year 2021-22. It bears on section 68, section 115BBC, section 11 of the Income Tax Act 1961, in Charitable Trusts & Exemption and Cash Credits & Unexplained Money matters.
The choice of provision changes the tax by an order of magnitude. Section 68 taxes the whole receipt at the s.115BBE rate; s.115BBC taxes only the aggregate anonymous donations above the higher of five per cent of total donations or Rs 1 lakh, at 30 per cent. For a small trust with modest cash collections that difference is the whole dispute.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The society is a charitable trust registered under the Bombay Public Trusts Act 1950 by a certificate dated 30 May 2011. For assessment year 2021-22 the Assessing Officer added Rs 2,51,000 said to have been received from Dr. Bhagwan Nivrutti Elmane and Rs 1,10,000 said to have been received from Mr. Bhagwan Dnyanoba, both cash donations, treating them as unexplained cash credits under s.68. For the first donor the trust filed a confirmation with PAN and Aadhaar, and a statement had been recorded from him on 9 December 2022 under s.131(1)(b) by the Income Tax Officer, Verification Unit-1(1)(2), Nashik, in which he stated that he had income from agriculture and from personal coaching and had given Rs 2,51,000 in cash to the trust. For the second donor there was only a confirmation letter and no statement was taken by the Assessing Officer. The donations had been applied for charitable purposes, which was not in dispute, and the return and audit report had been filed. On appeal the society partly succeeded before the National Faceless Appeal Centre, Delhi, which confirmed these two additions.
The appeal was partly allowed. As to Rs 2,51,000, once the donor had confirmed the donation and admitted its source, the burden of proof stood discharged and shifted to the Revenue; if the Revenue was not satisfied it should have acted against the donor for a false statement, and in the absence of such action the nature and source stood explained, so the addition under s.68 was deleted (para 7). As to Rs 1,10,000, the trust being unable to prove the donation, s.115BBC could be invoked; since the donation had been applied for charitable purposes, s.115BBC(1)(i)(B) applied and only the amount in excess of Rs 1 lakh could be taxed at 30 per cent, so Rs 10,000 alone was taxable (para 9).
On the first donation the Tribunal worked from the material in the paper book — the confirmation at page 10 with PAN and Aadhaar, and the s.131(1)(b) statement at pages 13 and 14 in which the donor identified his sources and admitted the payment — and held that the assessee had done what the law required, so that the onus moved to the Revenue, which had taken no step against the donor (para 7). On the second donation it found nothing beyond a confirmation letter and no statement recorded, so the trust had not proved the donation; it recorded that the amount had nonetheless been applied to charitable purposes and that this was not disputed (para 8). It then read s.115BBC and applied sub-section (1)(i)(B) to the facts, taxing only the excess over Rs 1 lakh (para 9).
We therefore are of the considered view that out of Rs.1.10 lakh only Rs.10,000/- can be subjected to tax as per the provisions of section 115BBC of the Act as we have treated Rs.1.10 lakh of cash donation as anonymous donation.
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Handle my notice → Ask a CA on WhatsAppNot where the donor is identified and confirms, and not under s.68 for the amount he cannot prove either. The Pune Tribunal deleted the addition for the donation whose donor had confirmed it on oath and stated his source, holding the burden had shifted to the Revenue. For the donation the trust could not prove, it did not sustain the s.68 addition; it treated the sum as an anonymous donation and applied s.115BBC, so that only the excess over the Rs 1 lakh limb of the threshold — Rs 10,000 out of Rs 1,10,000 — was taxable. This was decided by the ITAT (Dr. Manish Borad, Accountant Member and Vinay Bhamore, Judicial Member) and bears on section 68, section 115BBC, section 11 of the Income Tax Act 1961. It is reported as ITA No. 1429/PUN/2024 (ITAT Pune), assessment year 2021-22. The choice of provision changes the tax by an order of magnitude. Section 68 taxes the whole receipt at the s.115BBE rate; s.115BBC taxes only the aggregate anonymous donations above the higher of five per cent of total donations or Rs 1 lakh, at 30 per cent. For a small trust with modest cash collections that difference is the whole dispute. If it applies to you, the first step is this: For every cash donation you can, obtain a written confirmation with PAN and Aadhaar, and preserve any statement recorded from the donor by the Department — a statement under s.131 admitting the donation and its source was decisive here.
The society is a charitable trust registered under the Bombay Public Trusts Act 1950 by a certificate dated 30 May 2011. For assessment year 2021-22 the Assessing Officer added Rs 2,51,000 said to have been received from Dr. Bhagwan Nivrutti Elmane and Rs 1,10,000 said to have been received from Mr. Bhagwan Dnyanoba, both cash donations, treating them as unexplained cash credits under s.68. For the first donor the trust filed a confirmation with PAN and Aadhaar, and a statement had been recorded from him on 9 December 2022 under s.131(1)(b) by the Income Tax Officer, Verification Unit-1(1)(2), Nashik, in which he stated that he had income from agriculture and from personal coaching and had given Rs 2,51,000 in cash to the trust. For the second donor there was only a confirmation letter and no statement was taken by the Assessing Officer. The donations had been applied for charitable purposes, which was not in dispute, and the return and audit report had been filed. On appeal the society partly succeeded before the National Faceless Appeal Centre, Delhi, which confirmed these two additions. The matter was decided on 2025-05-16 by the ITAT (Dr. Manish Borad, Accountant Member and Vinay Bhamore, Judicial Member). On those facts the ITAT held as follows. The appeal was partly allowed. As to Rs 2,51,000, once the donor had confirmed the donation and admitted its source, the burden of proof stood discharged and shifted to the Revenue; if the Revenue was not satisfied it should have acted against the donor for a false statement, and in the absence of such action the nature and source stood explained, so the addition under s.68 was deleted (para 7). As to Rs 1,10,000, the trust being unable to prove the donation, s.115BBC could be invoked; since the donation had been applied for charitable purposes, s.115BBC(1)(i)(B) applied and only the amount in excess of Rs 1 lakh could be taxed at 30 per cent, so Rs 10,000 alone was taxable (para 9).
On the first donation the Tribunal worked from the material in the paper book — the confirmation at page 10 with PAN and Aadhaar, and the s.131(1)(b) statement at pages 13 and 14 in which the donor identified his sources and admitted the payment — and held that the assessee had done what the law required, so that the onus moved to the Revenue, which had taken no step against the donor (para 7). On the second donation it found nothing beyond a confirmation letter and no statement recorded, so the trust had not proved the donation; it recorded that the amount had nonetheless been applied to charitable purposes and that this was not disputed (para 8). It then read s.115BBC and applied sub-section (1)(i)(B) to the facts, taxing only the excess over Rs 1 lakh (para 9). In the words reproduced by the source cited on this page: "We therefore are of the considered view that out of Rs.1.10 lakh only Rs.10,000/- can be subjected to tax as per the provisions of section 115BBC of the Act as we have treated Rs.1.10 lakh of cash donation as anonymous donation."
It was decided by the ITAT on 2025-05-16 and is reported as ITA No. 1429/PUN/2024 (ITAT Pune), assessment year 2021-22. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 68, section 115BBC, section 11, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was partly allowed. As to Rs 2,51,000, once the donor had confirmed the donation and admitted its source, the burden of proof stood discharged and shifted to the Revenue; if the Revenue was not satisfied it should have acted against the donor for a false statement, and in the absence of such action the nature and source stood explained, so the addition under s.68 was deleted (para 7). As to Rs 1,10,000, the trust being unable to prove the donation, s.115BBC could be invoked; since the donation had been applied for charitable purposes, s.115BBC(1)(i)(B) applied and only the amount in excess of Rs 1 lakh could be taxed at 30 per cent, so Rs 10,000 alone was taxable (para 9). It arises in Charitable Trusts & Exemption and Cash Credits & Unexplained Money matters, on section 68, section 115BBC, section 11 of the Income Tax Act 1961, and was decided by Dr. Manish Borad, Accountant Member and Vinay Bhamore, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where the Revenue disbelieves a confirming donor, point out that it took no action against the donor for a false statement; the Tribunal drew that inference expressly. For donations you cannot substantiate, do not simply concede s.68. Argue that the receipt is a voluntary contribution and that s.115BBC is the provision that governs it. Compute the s.115BBC threshold from your own figures before you argue: it is the higher of five per cent of the total donations received in the year and Rs 1 lakh, and only the aggregate anonymous donations above that are taxed. This order does not record the year's total donations and applies the Rs 1 lakh limb without discussing the five per cent limb, so it does not decide which limb is the higher in any other case. Record and prove that the donations were applied to the trust's charitable objects; the Tribunal noted that application was not in dispute when it applied s.115BBC(1)(i)(B).
Still good law. No later treatment was located. This is a Tribunal decision on small sums, and the proposition that an unproved cash donation to a charitable trust falls to be taxed under s.115BBC rather than under s.68 was not, so far as could be traced, the subject of any High Court ruling; treat it as persuasive rather than settled. The Tribunal applied the Rs 1 lakh limb of the s.115BBC(1) threshold; the order does not record the year's total donations and does not discuss the five per cent limb, so no view is recorded here on which limb would have been the higher on these facts. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order does not record the total donations the society received in the year, or its gross receipts. The threshold in s.115BBC(1) — the higher of five per cent of the total donations received and Rs 1 lakh — therefore cannot be worked out from the order alone: the Tribunal applied the Rs 1 lakh limb without discussing the alternative, and a reader must work the threshold from his own figures rather than carrying Rs 1 lakh across from this order. Registration under s.12A or s.12AB is not established by the text read either; what the order records is registration under the Bombay Public Trusts Act 1950. Since s.115BBC applies to trusts and institutions referred to in s.11 or s.10(23C), that is a gap worth noting, and no assumption about income-tax registration is made here. Paragraph 8 sets out the text of s.115BBC as reproduced from the Act; nothing from that extract is quoted here. The appellate order under s.250 was passed by the National Faceless Appeal Centre, Delhi, and its date is printed in the order as 03.05.2014, evidently a typing error for 2024. The sums involved are small and the order is short, so the reasoning should be treated as an application of the sections rather than a general ruling on the relationship between s.68 and s.115BBC. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was partly allowed. As to Rs 2,51,000, once the donor had confirmed the donation and admitted its source, the burden of proof stood discharged and shifted to the Revenue; if the Revenue was not satisfied it should have acted against the donor for a false statement, and in the absence of such action the nature and source stood explained, so the addition under s.68 was deleted (para 7). As to Rs 1,10,000, the trust being unable to prove the donation, s.115BBC could be invoked; since the donation had been applied for charitable purposes, s.115BBC(1)(i)(B) applied and only the amount in excess of Rs 1 lakh could be taxed at 30 per cent, so Rs 10,000 alone was taxable (para 9).
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