9911796707
TMI Blog2024 (12) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 4. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s. 234A/B/C/D of the Act. 5. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in initiating penalty proceedings u/s. 271AAC of the Act." 3. The brief facts of the case are that the assessee, a company, filed its return of income for the Assessment Year 2022-23, declaring a total income of "Nil". During the course of the assessment proceedings, the Assessing Officer 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 (C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,63,000. Shortly after, on April 27, 2022, the sum of Rs. 3,08,63,000 was transferred from the assessee 's account to a separate account named 'Unspent CSR Account of Madhu Silica Foundation.' The remaining amounts of Rs. 3,25,00,000 and Rs. 3,00,00,000 were subsequently invested in fixed deposits (FDs) on October 4, 2022. The assessee earned interest on these fixed deposits, with tax duly deducted at source. Throughout financial year 2022-23, the fixed deposits were redeemed and reinvested, and the same process continued into the financial year 2023-24 as well. Further, the amount of Rs. 3,08,63,000 was transferred from one account to another under the same name, 'Unspent CSR Account of Madhu Silica Foundation.' From this sum, the assessee debited a total of Rs. 1,72,66,000 in the financial year 2022-23 to various individuals. In totality, the assessee received Rs. 9,60,00,000 from MSPL under the pretext of CSR funds on the last day of FY 2021-22, relevant to AY 2022-23. However, instead of using the funds for CSR activities, the appellant invested the entire amount in fixed deposits. The interest earned on these deposits was subsequently taxed. The assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agency, the assessee was not required to registration under Section 80G or 12AA of the IT Act for the purpose of carrying out CSR activities. Instead, it only required CSR-1 registration, which the appellant had duly obtained as required under the Companies Act. The Counsel for the assessee submitted that documentary evidence supporting the assessee's position was filed before the Tax Department which included the bank statement of the assessee, MCA's certificate for CSR activities, the certificate of incorporation of the assessee, ledgers of MSPL and the assessee, the Annual Report, the Trust Deed of the assessee and approval under Section 12AB(1)(b) of the Act, which were all provided during the proceedings before the Assessing Officer /Ld. CIT(Appeals). The Counsel for the assessee submitted that according to Section 68 of the IT Act, the initial burden is on the assessee to establish the identity, genuineness, and creditworthiness of the lender, which in this case was MSPL. The assessee successfully discharged this burden by providing sufficient documentary evidence, thus satisfying the requirements under the law. Once this initial onus was discharged, the burden shifted to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its creditworthiness are not under dispute per se. This brings us to the next question, which is that in case the assessee has not obtained the necessary approvals for carrying out CSR activities at the time of receipt of funds, or that, the assessee is not able to establish that the funds so received had been duly utilised for carrying out CSR activities, does this call for addition under section 68 of the Act, in the hands of the assessee on the ground that the genuineness of transaction has not been established by the assessee. Before us, the counsel for the assessee drew our attention to Form number 10 Ab dated 16-01-2024 issued in favour of the assessee, granting approval under section 12AB(1)(b) for assessment years 22-23 to 2026-27. Accordingly, we observe that albeit subsequently, the requisite approvals for undertaking CSR activities had been duly obtained by the assessee, for the impugned assessment year. 8. The next question which needs to be addressed is that in case the assessee is not able to utilise the funds for carrying out the CSR activities, then whether this would have implications under section 68 of the Act. In our view, the contents of section 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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