Quick Summary
Cash credits under section 68 of the Act 1. Section 68 of the Act provides that where any sum is found to be credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not,
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FAQ :
Section 68 of the Act states that any sum credited in an assessee's books for which no satisfactory explanation of its nature and source is provided, can be charged to income tax as the assessee's income.
Certain judicial pronouncements have led to doubts about the onus of proof, especially when credits are in the form of loans or borrowings, making it easier to convert unaccounted money.
It is proposed that for any sum credited in an assessee's books, including loans or borrowings, the assessee must explain the source of funds in the hands of the creditor or entry provider.
Yes, the additional onus of explaining the source of funds in the creditor's hands will not apply if the creditor is a Venture Capital Fund or Venture Capital Company registered with SEBI.
The amendments will take effect from 1st April 2023, applying to the assessment year 2023-24 and subsequent assessment years.
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