Unexplained credits: dual-party explanation requirement leads to inclusion of unexplained book credits as taxable income.
Unexplained credits are chargeable to income when sums in an assessee's books lack satisfactory explanation, with the assessing officer determining adequacy. Loans and borrowings require satisfactory explanations from both the assessee and the creditor; share application money, share capital and share premium in closely held companies similarly demand corroboration from the company and the named contributor. Venture capital funds and companies receive a specific exemption, while the provision overall increases recordkeeping and evidentiary burdens and enhances tax authority scrutiny.