Madhu Silica Foundation Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that provisions of section 68 of the Income Tax Act doesn’t apply in the matter of non-utilisation of amounts received towards Corporate Social Responsibility (CSR) activities. Thus, appeal allowed.
Facts- During the course of the assessment proceedings, AO noted that the assessee received a sum of Rs. 6,51,37,000 on March 29, 2022, and another sum of Rs. 3,08,63,000 on March 30, 2022, from Madhu Silica Pvt. Ltd. These amounts were supposedly received for the purpose of assessee’s Corporate Social Responsibility (CSR) activities. The AO noticed that the assessee did not have its books of account audited and failed to furnish the required Audit Report and Form No. 10B for the Assessment Years 202021 and 2021-22. Further, the assessee did not provide detailed information about the donations received and the expenditures incurred over the past three years. Moreover, the assessee did not have registration u/s. 12AA of the Income Tax Act, nor did it provide any supporting documents concerning the utilization of the CSR funds. Given the assessee’s failure to substantiate the genuineness of the transactions with documentary evidence, the AO treated the total amount of Rs. 9,60,00,000 received from Madhu Silica Pvt. Ltd. as unexplained cash credits u/s. 68 of the Income Tax Act. The AO imposed tax on this amount at the rate of 60% as per Section 115BBE of the Income Tax Act.
