What are Cash Credit and Unexplained money under income tax?
Cash Credit and Unexplained money under income tax Explained below:
Section 68 of the Income-tax Act, 1961 deals with Cash Credit
Any sum credited in the books can be considered as cash credit if:
- The assessee offers no explanation about nature and source or,
- The explanation offered is not satisfactory to the Assessing Officer
the sum so credited may be charged to income-tax as the income of the assessee of that previous year.
Provided that where the assessee is a company (other than public company), and the sum so credited consists of:
Share application money,
Share capital,
Share premium or
Any such amount by whatever name called,
any explanation offered by such company shall be deemed to be not satisfactory, unless—
(a) the person*, being a resident in whose name such credit is recorded in the books of such company, also offers an explanation about the nature and source of such sum so credited; and
(b) such explanation is satisfactory to the Assessing Officer.
*The above proviso shall not apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in section 10(23FB).
Section 69A of the Income-tax Act, 1961 deals with Unexplained money, etc.
Whenever, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and:
- Such item is not recorded in the books of account, if any, maintained by him, and
- The assessee offers no explanation about the nature and source of acquisition of such item, or
the explanation offered by him is not satisfactory to Assessing Officer
the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.
Taxability:
As per section 115BBE, an assessee is liable to pay tax at the rate of 60% on Income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D.
Point to remember: No deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed to the assessee while computing such income.
Penalty under section 271AAC:
In addition to tax payable, an assessing officer may impose the penalty at the rate of 10% of the tax payable under section 115BBE.
Point to remember: No penalty shall be levied in respect of such income if it has been included by the assessee in the return of income furnished under section 139.
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