Section 103 — Unexplained investment
Old Act equivalent: Section 69 of IT Act 1961 Sub-part: Chapter VI — Aggregation of Income
Statutory Text
Where in any tax year, any investment has been made by the assessee which is not recorded in the books of account, if any, maintained by such assessee for any source of income, or, the Assessing Officer finds that the amount of such investment exceeds the amount recorded in such books of account and—
(a) the assessee offers no explanation about the nature and source of such investment, or such excess amount, as the case may be; or
(b) the explanation offered about the nature and source of such investment by the assessee, is not satisfactory in the opinion of the Assessing Officer,
then, the value of such investment, or such excess amount, as the case may be, shall be deemed to be the income of the assessee of that tax year.
Key Structure
- Applies to: Any assessee making investments not recorded (or under-recorded) in books
- Trigger: Investment not in books, or investment exceeds recorded amount
- Burden: Assessee must explain nature and source satisfactorily
- Deemed income: Full value of unrecorded investment, or excess over recorded value
- Tax rate: Per section 107 → section 195
Cross-References
- s102-unexplained-credits — Section 102: unexplained credits (parallel provision)
- s107-charge-of-tax — Section 107: charge at special rates
Practical Notes
- Covers off-the-books investments: property purchases, share acquisitions, jewellery, etc.
- “Books of account, if any” — applies even where the assessee is not required to maintain books but voluntarily does so.
- The excess amount provision catches under-invoicing: if the AO finds the real investment exceeds the recorded amount, the difference is deemed income.