VoxJuris
Home › Acts › Income-tax Act, 1961 › Chapter VI › Section 68

Income-tax Act, 1961 · Chapter VI: Aggregation of Income and Set Off or Carry Forward of Loss · Aggregation of income

Section 68: Cash credits

The Income-tax Act, 1961 was repealed by the Income-tax Act, 2025 from 1 April 2026. The text is kept here because the judgments below apply it.

In plain words

If a sum is found credited in the assessee's books and the assessee gives no explanation of its nature and source, or the explanation is not satisfactory, the sum may be taxed as the assessee's income of that year.

  • The assessee usually has to prove the identity of the creditor, their capacity to pay and the genuineness of the transaction.
  • For a closely held company, share application money, share capital or share premium is treated as unexplained unless the resident in whose name it is recorded also explains its source satisfactorily.
  • That rule does not apply where the investor is a venture capital fund or venture capital company.
  • The section applies only to credits in the books of the assessee.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Official text

Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing Officer], satisfactory, the sum so credited may be charged to income-tax as the income of theassessee of that previous year: [Provided that where the assessee is 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 or any such amount by whatever name called, any explanation offered by such assessee-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 in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:

Provided further that nothing contained in the first proviso shall 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 clause (23FB)of section 10.]

Source: India Code (Legislative Department), the text of the Act as it stood before its repeal. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Supreme Court judgments citing the section 68