Unexplained book credits can be taxed as income under Section 68; loans need corroboration from credited person
If any amount is credited in a taxpayer's books for a previous year and the taxpayer fails to satisfactorily explain its nature and source to the assessing officer, that amount may be treated as the taxpayer's income. Where the credit is a loan/borrowing, the explanation is treated as unsatisfactory unless the credited person also explains and the assessing officer accepts it. For closely held companies, the same requirement applies to share application money, share capital, share premium or similar amounts. These provisos do not apply when the credited person is a specified venture capital fund or company.
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