Section 68 - Cash Credits
Provisions of section 68 of the Act reads as under:
"Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offer sno explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.
Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless—
- the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and
- such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory."
Section 68 : Key Points
- Sum must be credited in the "books of account"
- In case of a private limited company, if the sum is received from resident in India, source of investment by such resident also needs to be established
- Amendment relating to source of source was inserted by Finance Act, 2012 w.e.f. 01.04.2013.
- Bank account is not books of account [CIT v. Bhaichand H .Gandhi: 141 ITR 67 (Bom.); Sheraton Apparels vs. ACIT: 256 ITR 20 (Bom); Sampat Automobiles vs. ITO: 96 TTJ 368 (Jodh ITAT)].
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