Case Law Details
Aasra Fincorp Private Limited Vs ITO (ITAT Allahabad)
Facts- The assessee is engaged in the business of Micro Finance. The assessee e-filed its ROI on 29th September, 2016, in form ITR-6 declaring taxable income of Rs. 74,380/-. The case of the assessee was selected for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act, under CASS. The AO made additions to the returned income in the hands of the assessee, under Section 68 of the 1961 Act, to the tune of Rs. 75,00,000/- towards the share capital introduced during the year under consideration , as the assessee company failed to prove the creditworthiness of the persons who have contributed the fresh share capital allotted by the company during the year under consideration, vide assessment order dated 23.12.2018 passed by the AO u/s 143(3) of the 1961 Act .
Aggrieved by assessment order dated 23.12.2018 passed by AO u/s 143(3) of the 1961 Act , the assessee filed first appeal before the ld. CIT(A), who was pleased to uphold the additions to the tune of Rs. 20,00,000/- being share capital received from Shri Sanjeev Kumar of Rs. 10,00,000/- and also with respect to share capital received from Shri Vinod Kumar Sharma of Rs. 10,00,000/-.
Still aggrieved by the appellate order dated 02.12.2019 passed by ld. CIT(A), the assessee has filed an second appeal before the tribunal.
Conclusion- We are of the considered view that Section 68 of the Act creates a legal fiction which cast obligation on the assessee to explain to the satisfaction of the AO about nature and source of credit in case any amount is found credited in the books of the assessee maintained for any previous year. This creates a legal fiction and in case the assessee did not offer explanation to the satisfaction of the AO as to the nature and source of credit of any amount found credited in the books of the assessee for any previous year by cumulatively satisfying the AO about the identity and creditworthiness of the creditor and about the genuineness of the transaction, the amount found credited in the books of the assessee shall be treated to be the income of the assessee as unexplained income under legal fiction created by Section 68 of the Act.
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