Meaning of “Assessee offers no explanation”

The meaning of assessee offers no explanation under section 68 & 69A of the Income Tax Act is not defined in the act itself. But we can take guidance from decisions by various high courts. Here are excerpts of courts orders in which the Hon’ble High Court tried to explain the meaning of assessee offers no explanation.

Meaning of assessee offers no explanation defined by court

The phrase ‘assessee offers no explanation‘ used in section 68 & 69A of the Income Tax Act came up before Hon’ble Indore High Court in Mudra Om Securities (P.) Ltd. vs. Asstt. CIT [2011] 47 sot 58 (uro)/12 taxmann.com 459 (Indore) and it explained.

Meaning : The expression ‘the assessee offers no explanation’ means where the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee.

Section 68 & 69A of the Income Tax Act

Cash credits.

68. 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 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 81[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.

In this article, you can get guidance from high courts on the meaning of assessee offers no explanation under section 68 & 69A of the Income Tax Act.

Updated up to Finance Act 2021