Section 104 — Unexplained asset
Old Act equivalent: Section 69A of IT Act 1961 Sub-part: Chapter VI — Aggregation of Income
Statutory Text
(1) Where in any tax year, any asset has been found to be owned by or belonging to 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 expended in acquiring such asset exceeds the amount recorded in such books of account and—
(a) the assessee offers no explanation about the nature and source of acquisition of such asset, or such excess amount, as the case may be; or
(b) the explanation offered about the nature and source of acquisition of such asset by the assessee, is not satisfactory in the opinion of the Assessing Officer,
then, the value of such asset, or such excess amount, as the case may be, shall be deemed to be the income of the assessee of the tax year in which such asset has been found to be owned by, or belonging to, the assessee.
(2) For the purposes of this section, “asset” includes money, bullion, jewellery, virtual digital asset or other valuable article.
Key Structure
- Applies to: Assets found owned/belonging to assessee but not recorded in books
- Asset definition (sub-section 2): Money, bullion, jewellery, virtual digital asset, or other valuable article
- Trigger: Asset not in books, or acquisition cost exceeds recorded amount
- Deemed income: Value of asset or excess — in the year the asset is found
- VDA inclusion: Virtual digital assets (crypto) explicitly covered
Cross-References
- s102-unexplained-credits — Section 102: unexplained credits
- s103-unexplained-investment — Section 103: unexplained investments
- s107-charge-of-tax — Section 107: charge at special rates
Practical Notes
- Particularly relevant in search and seizure cases: unrecorded cash, gold, jewellery, and now crypto assets found during a search are deemed income under this section.
- Virtual digital asset is a new explicit inclusion in sub-section (2) — aligning with the broader VDA taxation framework.
- The deemed income arises in the year the asset is “found” — not necessarily the year of acquisition.