CONDITIONS OF UNEXPLAINED CASH CREDITS
- Where any sum is found credited in the books of accounts of an assessee maintained for any previous year, and
- Assessee could not explain about the nature and source of the same, or
- The explanations given by the assessee is not satisfactory in the opinion of the Assessing Officer
Than the sum so credited is treated the unexplained cash credits and may be charged to income tax as the income of the assessee of that previous year.
IN THE CASE OF CORPORATE ASSESSEE
Where 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
- Any sum by whatever name called
Any explanations offered by such company shall be deemed to be not satisfactory, unless
- The person, being a resident in whose name such credits is recorded in the books of such company, also explain about the nature and source of such amount so credited,
- Such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory.
Above such provision is not applicable on venture capital fund or venture capital company under section 10(23FB).
- That Assessee should file a valid confirmation which consist of name ,complete address , PAN of lender and also file the details of transactions with copy of bank pass book, income tax return of lender.
- There must be exist of the Books of Accounts before making the addition and also such books of accounts should belongs to the assessee. As per Section 2(12A) of I.T.Act,1961 books includes ledgers, day books, cash book, whether maintained in the written form or as print out of data stored in floppy, disc, tape or any other electro magnetic data storage device.
- Loose Sheets or scraps of paper can not be termed as books of accounts.
- Bank pass book is not books of accounts for the purpose of Section 68.
- Where the Partnership Firm satisfactorily explained that the credit is standing in the name of its partners, the responsibility of the Firm has discharged.
- Without making the Proper enquiry the A.O. can not make addition u/s 68.
- The assessee has right to cross examine any person whose statement has been recorded by the A.O.
- Burden of Proof is on the assessee and assessee should establish
- Identity of the creditors.
- Capacity or creditworthiness of creditor
- Genuineness of transactions.