The section operates where, in any tax year, an investment has been made by the assessee which is not recorded in the books of account, if any, maintained by him for any source of income, or where the Assessing Officer finds that the amount of the investment exceeds the amount recorded in those books. If in either case the assessee offers no explanation about the nature and source of the investment or of the excess, or the explanation he offers is not satisfactory in the opinion of the Assessing Officer, the value of the investment, or the excess amount as the case may be, is deemed to be the income of the assessee of that tax year.
Why it is there
An investment the books do not account for is direct evidence of resources that have not been brought to tax. Rather than requiring the Department to trace those resources to a source, the section puts the burden on the person who made the investment to explain its nature and source, and treats the value itself as income of the year of the investment where he cannot.
Who it applies to
Any assessee who has made an investment in a tax year, whether or not he maintains books of account
An assessee whose books record an investment at less than its actual amount
The Assessing Officer, who finds the excess and forms the opinion on the explanation
What this means in practice
There are two limbs and they produce different additions: where the investment is wholly unrecorded the value of the investment is deemed income, and where it is recorded at less than it cost only the excess is. The deeming attaches to the tax year in which the investment was made, not the year in which the Department discovers it. The explanation demanded covers both the nature and the source of the investment, and clause (b) makes the sufficiency of it a matter of the Assessing Officer's opinion. This section only deems the income; what it costs is set elsewhere — section 195 charges income referred to in sections 102 to 106 at 30%, and section 195(2) allows no deduction for any expenditure or allowance and no set off of any loss against it.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
An assessee buys property in a tax year for 90 lakh rupees while his books record 60 lakh, and he cannot explain where the balance came from. Only the excess of 30 lakh is deemed to be his income of that tax year, and section 195 charges it at 30% with no expenditure and no set off allowed against it. Had the books recorded nothing at all about the purchase, the whole 90 lakh would have been deemed his income of that year.
Where you meet this section
In the show-cause that asks you to explain the nature and source of an investment, and in the assessment or reassessment order that makes the addition — most often following a search, a survey, or third-party information about a purchase.
The words themselves
the assessee offers no explanation about the nature and source of such investment, or such excess amount, as the case may be
Section 103(a), Income-tax Act, 2025.
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
Section 103, Income-tax Act, 2025.
What people get wrong
Explaining the source but not the nature. Clauses (a) and (b) call for an explanation about "the nature and source" of the investment.
Adding the whole investment where the books record part of it. Where the amount exceeds what is recorded, only "such excess amount" is deemed income.
Assuming the section needs books of account. It applies to books maintained "if any", so an assessee who keeps none is squarely within it.
Setting a loss or expenditure off against the addition. Section 195(2) bars any deduction for expenditure or allowance and any set off of loss against income referred to in this section.
Taxing it in the year of detection. The deeming is of income "of that tax year" — the year in which the investment was made.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
69 - Unexplained investments
69B - Amount of investments, etc., not fully disclosed in books of account
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 103. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
Alishan Complex P Ltd v Initiating OfficerHigh CourtHelps taxpayertagged s.69 The benami attachment rests on a retracted statement and they refused cross-examination. Is that evidence?
CIT v Satya Narain PatniHigh CourtHelps taxpayertagged s.69 The search party left our jewellery alone but the AO has still added part of it. Can he do both?
PCIT v DSG Papers (P) LtdHigh CourtHelps taxpayertagged s.69 The addition rests on statements of ex-employees and third parties I was never allowed to question. Is the assessment good?
Jafferali K. Rattonsey v DCITITATHelps taxpayertagged s.69 I held shares in physical form for years and dematerialised them just before selling. The AO says my holding period runs from the demat date. Is he…
Jagdish Kumar Arora v DCITITATHelps taxpayertagged s.69 You surrendered income in a survey. Is it taxed at 60% under s.115BBE, or at your normal rate?
Net Agri Co P Ltd v ITOITATHelps taxpayertagged s.69 The CIT(A) accepted my explanation for the property investment but taxed the cash deposits behind the loan repayments instead. Can he do that without…
Seo Lehenga House v DCITITATHelps taxpayertagged s.69 I have already offered the profit on the disputed transactions. Can the officer add the broker's commission on top under s.69C?
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.