CBDT Clarifies Crypto Tax, Cash Credit, Perquisites, and Reassessment Provisions
This is an important amendment, but we want to be very clear about what we intend to do with this one.
Under section 68, if there is a credit, that is, if there is a loan or a borrowing or a receipt, or an amount, in the name of someone else in your books, it means that you received the amount from him, either as a loan or a loan or a normal receipt. The taxpayer must explain where the money comes from. He must identify it.
Now, in the case of private companies, checking the person in whose name the credit is, the inquiries were mounting. We were looking at share capital or demand money for shares.
On a source check source, you can only go one step forward because it’s only limited to that. Now, we have extended the source of source verification investigation to loans and borrowings. The fact is that it is not said in so many words, but in whispers, it has been said and it has been confirmed in many of our investigations. Life is difficult for an investigator in the income tax department or any other agency precisely because a whole host of entry providers operate in gray and dark areas of the economy.
They introduce illicit cash and make investments by overlaying various accounts. Cash entry by one end and by overlapping 14, 15 or 17 bank accounts appearing as a cash credit in the 18th account. It is a very onerous task to go to the real source of deposits or the real source of that deposit in someone’s account.
If the loan or borrowing is untainted, it comes from the right source with credibility and creditworthiness, is identifiable — there is no problem or concern for this kind of investment.
But if the goal is to spin unaccounted money through stratification, Article 68 with the new provisions should be tougher in this regard.