Unexplained cash credits taxed at a high flat rate with no deductions and potential penalty exposure. Unexplained cash credits are taxable as the assessee's income when no satisfactory explanation is offered. Credits characterised as loans require lenders to provide a satisfactory source explanation; credits treated as share application money or capital in closely held companies require the resident credited person to explain the source. Venture capital entities are excepted. Income so treated is taxed under a special regime that applies a high flat tax rate to the specified income, disallows all deductions and set-offs, and attracts a surcharge and a separate penalty unless disclosed and taxed in the return.