CBDT to tighten monitoring of donations to trusts

Source:The Hindu Business line

Move comes after a case of bogus donations is detected

Tax authorities will be closely monitoring donations made to trusts, after it recently found a bogus donation racket of a research institute with offices in Mumbai and Puducherry.

The Central Board of Direct Taxes has asked its officials to closely review pending scrutiny assessment cases of such donors and also examine the specific transactions related to the sum donated and cash trail in similar other cases.

The move comes after the CBDT smelled a rat after receiving several representations from field offices about Shri Arvindo Institute of Applied Scientific Research Trust.

On checking the records, tax authorities found that the trust was earlier registered under section 35(1}(ii} of the Income Tax Act as a ‘research association having as its sole object the undertaking of scientific research or to a ‘university, college or other institution’ for carrying out scientific research’.

However, its registration had expired on March 31, 2006 and it was no longer eligible to receive donations. But using a fake certificate, it had continued to raise significant donations. Moreover, the donors were also irregularly claiming weighted deduction on donations made to the trust.

Donors can take weighted deduction of up to 175 per cent on donations to such trusts until March 31, 2018 and now up to 150 per cent.

Concerned by this development, the CBDT has asked its officials to check the pending scrutiny assessment cases donors who have claimed irregular weighted deduction.

“In case of donors whose cases are presently not under scrutiny, the Board desires that a list of donors who had provided funds to the Trust should be drawn by CIT (Exemption), Mumbai for the period from assessment year 2012-13 to 2018-19 and circulated to the concerned field authorities expeditiously,” it has said.

In other such cases too, it has asked the assessing officer to examine the specific transactions related to the sum donated and cash trail should be clearly identified.

“Also, various provisions pertaining to enquiry and investigation under the Act should be effectively used and assessment orders should be passed under the monitoring of supervisory authorities,” the CBDT has further said.

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