Cash credits
Section 68 of the Income-tax Act, 1961 deals with cash credits. 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 The Act came into force on 01 Apr 1962. Repealed by the Income-tax Act, 2025 with effect from 1 April 2026, but conduct before that date is still charged, tried and appealed under it.
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 the assessee of that previous year :
Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless,—
(a) the person in whose name such credit is recorded in the books of such assessee 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 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 also that nothing contained in the first proviso or second 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.
Unexplained investments.
Section 68, The Income-tax Act, 1961 (Act 43 of 1961).
Now in the Income-tax Act
INCOME-TAX-ACT-2025 102 Unexplained credits Official correspondence
Measured by comparing the text of the two provisions, not taken from an official correspondence table — there is no machine-readable one. See both texts side by side before relying on it.
Both regimes are live. The repealed enactment still governs what happened while it was in force. We never redirect one to the other.
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 7
- Finance Act s. 22 Amendment of section 68
- Finance Act s. 17 Amendment of section 68
- s. 115BBD Tax on certain dividends received from foreign companies
- s. 115BBDA Tax on certain dividends received from domestic companies
- s. 115BBE Tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D
- s. 158BB total undisclosed income] of block period
- s. 271AAC Penalty in respect of certain income
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Principal Commissioner of Income Tax(central) 1 vs Nra Iron and Steel Pvt. Ltd. through Director
Court's Decision & Legal Precedent
In a case where Share Capital/Premium is credited in the books of account of an Assessee company, the onus of proof is on the assessee to establish by cogent and reliable evidence: (1) the identity of the investor companies; (2) the credit-worthiness of the investors; and (3) the genuineness of the transaction, to the satisfaction of the Assessing Officer. The Assessing Officer is duty bound to conduct independent enquiry to verify these elements. If enquiries and investigations reveal that the identity of the creditors is dubious or doubtful, or they lack credit-worthiness, then the genuineness of the transaction would not be established, and the assessee would not have discharged the primary onus under Section 68 of the Income Tax Act. In such cases, the Assessing Officer is justified in adding the amount back to the assessee's income. Merely proving that money was received through banking channels or producing income tax return acknowledgments is not sufficient to discharge this onus if the substance of the transaction is contradicted by independent investigation revealing non-existent entities or lack of financial capacity.
On this section: Section 68 deals with cash credits and unexplained sums found credited in the books of an assessee. The Court held that this section is widely worded and includes investments made by introduction of share capital or share premium. The section places the initial burden on the assessee to explain the nature and source of such credits. If the explanation is not satisfactory to the Assessing Officer, the sum may be charged as income of the assessee.
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Sheela Overseas Pvt. Ltd. v. Pr. Commissioner of Income Tax, Delhi-08
Court's Decision & Legal Precedent
The pre-Finance Act 2022 proviso to s.68 requiring explanation of source-of-source applies only to share application/capital/premium (noscitur a sociis), not to unsecured loans. For AY 2015-16, once the assessee proves identity of the director-lender, banking-channel receipt, and capacity via an FD-backed overdraft, cash deposits in the lender’s own account cannot justify a s.68 addition in the company’s hands.
On this section: s.68 cash credits — scope of source-of-source proviso for unsecured loans versus share capital; discharge of identity/capacity/genuineness.
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Pr. Commissioner of Income Tax (Central)-1 v. Jaguar Buildcon Pvt. Ltd.
Court's Decision & Legal Precedent
Under s.68 the assessee must prove identity, creditworthiness and genuineness of share-capital/premium credits; mere identity or bank-channel documentation is not enough where the AO has traced multi-layer fund trails and paper entities. An ITAT order that deletes a s.68 addition without engaging the AO’s fund-trail and creditworthiness findings is perverse and is set aside, restoring the assessment (applying CIT v. NRA Iron & Steel).
On this section: s.68 cash-credit addition on share application money/premium — primary onus and twin/triple test of identity, creditworthiness and genuineness.
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Principal Commissioner of Income Tax, Delhi-10 v. Radius Industries
Court's Decision & Legal Precedent
Where the Tribunal as final fact-finder has held that the assessee discharged the twin test of creditworthiness and genuineness of unsecured-loan creditors under s.68, and the Revenue shows no perversity in those findings, no substantial question of law arises; the Revenue appeal is dismissed.
On this section: s.68 unexplained cash credit on unsecured loans — discharge of onus and limits of HC interference with concurrent/Tribunal findings of fact.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 68
What have the courts held on Section 68 of the Income-tax Act?
Principal Commissioner of Income Tax(central) 1 vs Nra Iron and Steel Pvt. Ltd. through Director (05 Mar 2019) is the leading judgment on this section among those set out below: Section 68 deals with cash credits and unexplained sums found credited in the books of an assessee. The Court held that this section is widely worded and includes investments made by introduction of share capital or share premium. The section places the initial burden on the assessee to explain the nature and source of such credits. If the explanation is not satisfactory to the Assessing Officer, the sum may be charged as income of the assessee. Another 3 judgments on this section are set out below, 1 of them from the Supreme Court. They run from 2019 to 2025.
How do I find court cases under Section 68 of the Income-tax Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Income Tax Act 68, section 68 Income Tax Act, section 68 of the Income-tax Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 4 reported judgments on this section are set out on this page, beginning with Principal Commissioner of Income Tax(central) 1 vs Nra Iron and Steel Pvt. Ltd. through Director (05 Mar 2019).
What should I read with Section 68 of the Income-tax Act, and has it changed?
Its own text turns on section 10 (Incomes not included in total income), so none of them can safely be read on its own. 7 other provisions in this corpus refer back to it. For anything done on or after 1 April 2026 the provision to read is Income-tax Act, 2025, section 102 (Unexplained credits), which replaced it; conduct before that date is still charged, tried and appealed under this section.
When did Section 68 of the Income-tax Act come into force?
Section 68 of the Income-tax Act, cited as Income Tax Act 68, came into force on 01 Apr 1962, having been enacted on 13 Sep 1961. It is no longer in force.
Other sections of this Act
- 10. Incomes not included in total income30885 words
- 2. Definitions11419 words
- 80HHF. Deduction in respect of profits and gains from export or transfer of film software, etc7148 words
- 80-IB. Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings5474 words
- 155. Other amendments5451 words
- 139. Return of income5400 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Recovered from the consolidated text published by the Income Tax Department, as amended by the Finance Act, 2026. India Code holds no record of this Act in any form. This page is not a substitute for legal advice.