Section 69A

Section 69A — the law in short

What the courts have decided on section 69A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Chuharmal v CIT Supreme CourtHelps department
  Valuables were found at my premises and I say they are not mine. Who has to prove ownership?
  You do. Title normally follows possession, and the principle in s.110 of the Evidence Act can be applied by taxing authorities even though the Act does not strictly govern them. Unexplained articles found in the assessee's possession were treated as his income under s.69A and the concealment penalty was confirmed.
• CIT v Daulat Ram Rawatmull Supreme CourtHelps taxpayer
  A fixed deposit stands in the name of a partner's son and my firm used it as security for its overdraft. The Assessing Officer says the money is really the firm's concealed income. Who has to prove what?
  The Department. The Supreme Court dismissed the Revenue's appeals and upheld the Calcutta High Court. The onus to prove that the apparent is not the real lies on the party who says so, and it was the Department that claimed the deposit standing in Biswanath's name belonged to the firm. Nothing showed the money came from the firm's coffers or went back into them; Biswanath himself drew the deposit. That his own explanation of where the money came from was false did not make it the firm's, and offering the receipt as security for the firm's overdraft did not make him anything but a surety.
• Saumya Chaurasia v Union of India High CourtHelps departmentNo later treatment found
  CBDT Circular 24/2019 says prosecution under s.276C(1) is to be launched only after the ITAT confirms the penalty. My appeal is still before the CIT(A). Can the sanction under s.279(1) be quashed on that ground?
  Not where the amount sought to be evaded exceeds Rs.25 lakh. On the Delhi High Court's reading of Circular No.24/2019 dated 09.09.2019 as clarified by Circular No.5/2020 dated 23.01.2020, the requirement of prior administrative approval of a collegium of two CCIT/DGIT rank officers, and the direction that prosecution be launched only after the ITAT confirms the penalty, are addressed to cases at or below the Rs.25 lakh threshold; above it the approval of the sanctioning authority, the Principal Commissioner, suffices and no pre-condition is attached. The challenge to Circular 5/2020 under Article 14 was rejected.
• CIT v Satya Narain Patni High CourtHelps taxpayer
  The search party left our jewellery alone but the AO has still added part of it. Can he do both?
  No, on these facts, and the reason is wider than the seizure decision. The Rajasthan High Court held that once the Board has expressed the opinion in Instruction No. 1916 that jewellery up to 500 grams for a married lady, 250 grams for an unmarried lady and 100 grams for a male member is not to be seized, it should normally follow that jewellery within those quantities will not be questioned as to its source and acquisition either. Here the family's entitlement was 2,700 grams against 2,202.464 grams found, the authorised officer had seized nothing, and the Assessing Officer's later addition on part of the same jewellery had no basis — he gave no reason for fixing 1,600 grams as the reasonable quantity. The Court preserved the department's power over the excess: jewellery beyond those weights can be questioned and, if not properly explained, treated as unexplained investment.
• Ashok Chaddha v Income Tax Officer High CourtHelps department
  My post-search assessment under section 153A was completed without any notice under section 143(2). Does Hotel Blue Moon make that fatal?
  No. The Delhi High Court held that there is no specific provision in the Act requiring an assessment under section 153A to be preceded by a notice under section 143(2). Hotel Blue Moon turned on clause (b) of section 158BC, which expressly applies sub-sections (2) and (3) of section 143 to a block assessment; section 153A contains no such provision. The words 'so far as may be' in clause (a) of section 153A(1) cannot be stretched to make a section 143(2) notice mandatory, because a specific notice is already required under that clause calling for the return. In any event the two detailed questionnaires issued here served the purpose. The appeal was dismissed.
• CIT v Ratanlal Vyaparilal Jain High CourtHelps taxpayer
  Does the jewellery instruction explain the source of the gold, or only stop the department seizing it?
  It explains the source, to the extent of the quantities in it. The Gujarat High Court held that the Board's circular proceeds on recognised customs prevailing in Hindu society, so possession of jewellery within those quantities is taken to be explained unless the Revenue shows otherwise.
• Fakir Mohmed Haji Hasan v CIT High CourtHelps department
  An unexplained investment has been added to my income under section 69A and the asset was then confiscated. Can I set the loss off against that addition?
  No. The Gujarat High Court held that income deemed under sections 69, 69A, 69B and 69C falls under none of the heads in section 14, not even income from other sources, because those sections apply precisely where the source is unknown or unexplained. Since the deemed income cannot be classified under a head, the deductions that go with a head are not available against it. Gold worth Rs 48,72,000 found concealed in the assessee's car and confiscated by customs was rightly added under section 69A, and its confiscation could not be claimed as a trading loss.
• Manoj Kumar Jagetia v ITO ITATHelps taxpayerNo later treatment found
  My s.80GGC donation has been disallowed and the same money added back under s.69A, purely because the Investigation Wing says the party ran a cash-back racket. Nothing in the order names me. Can that stand?
  No. A general modus operandi found in a search of the recipient political party may justify opening an enquiry, but it cannot by itself prove that this donor got his money back; the Revenue must produce assessee-specific material and must confront the donor with it. The Tribunal restored the full Rs.3,00,000 deduction under s.80GGC and deleted the consequential Rs.2,85,000 addition under s.69A.
• Pavai Varam Educational Trust v PCIT (Central), Chennai ITATHelps taxpayerNo later treatment found
  The PCIT cancelled my registration under s.12AB(4) for a specified violation resting entirely on an addition made in assessment. The Tribunal has since deleted that addition. Does the cancellation survive?
  No. Where the order under s.12AB(4) is founded entirely on the outcome of another proceeding, its fate depends on the sustainability of that foundational finding; once the Tribunal reversed the quantum findings on which the alleged specified violation rested, the cancellation could not survive independently. The Tribunal set aside the cancellation and directed restoration of the registration.
• Hirabhai Karshanbhai Solanki v ITO, Rajkot ITATHelps taxpayerNo later treatment found
  In a s.147 reassessment the Assessing Officer has thrown out my s.80U disability deduction along with 80C and 80TTA because I produced nothing during the assessment. Can I still prove it in appeal?
  Yes, on this order. The Rajkot Tribunal deleted the whole Chapter VI-A disallowance where the assessee produced LIC premium receipts and notified mutual fund receipts for s.80C, and for s.80U produced a disability certificate issued by the competent medical authority — the assessee also appearing personally before the Tribunal — holding that "such evidence cannot be ignored".
• Anilkumar Narayanrao Mudradattu v ITO ITATCuts both waysNo later treatment found
  Interest-free loans from family, and savings built up over decades. Does the department have to accept that?
  Largely, yes, on evidence. Genuineness cannot be doubted merely because the lenders are relatives, particularly where their own returns are produced. Of the Rs 9 lakh still in dispute before the Tribunal, Rs 8 lakh was deleted and Rs 1 lakh sustained.
• Mohamed Asmi v ITO ITATHelps departmentNo later treatment found
  I filed under s.44AD and the officer has still added my whole bank credit under s.69A. Doesn't the presumptive return protect me?
  Not by itself. The Tribunal held that s.44AD and s.69A operate in distinct fields, and that a presumptive return cannot regularise deposits whose source and genuineness the assessee cannot establish; the entire addition of Rs 7,10,37,643 was sustained.
• Dipyaman Dutt v ITO ITATHelps taxpayerNo later treatment found
  I declared income under 44AD. Can the AO still add my cash deposits as unexplained income?
  No. Where income has been offered on a presumptive basis under s.44AD on declared turnover, cash deposits representing that turnover cannot be added again as unexplained income — that taxes the same receipts twice, once as deemed profit and once as unexplained credits.
• Krishnakumar Manda v DCIT, Circle-12(1), Hyderabad ITATHelps departmentNo later treatment found
  The addition under the s.68 group has been confirmed and I never showed the income in my return. Is there any discretion left to the AO not to levy the s.271AAC penalty?
  On this decision, none. The Hyderabad Bench held that once income of the s.68 to s.69D kind is brought to tax and sustained, and the conditions of the proviso are not satisfied, the levy of the s.271AAC penalty is automatic and mandatory, and the language of the section leaves the AO no discretion.
• Mrs. Sisily Jose v. ITO, NCW-19(4), Chennai (ITAT Chennai) — converting field latex into ribbed smoked sheets is not "manufacture or processing" within Rule 7A, so the whole income remains agricultural ITATHelps taxpayerNo later treatment found
  My client taps rubber and makes ribbed smoked sheets to keep the latex from spoiling before sale. The Commissioner (Appeals) has applied Rule 7A and taxed thirty-five per cent as business income. Is that right?
  No. The Tribunal held that ribbed smoked sheets are merely dried and smoked latex, intended to prevent deterioration and make the product marketable, and that the process involves no chemical or mechanical treatment or transformation resulting in a new product — so it is not "manufacture" or "processing" in the sense contemplated by Rule 7A. Rule 7A applies to income from the manufacture or processing of centrifuged latex and the other products it names, not to the simple smoking or drying of latex sheets. The Tribunal set aside the Commissioner (Appeals)'s order to the extent it treated thirty-five per cent of the income as business income and directed the Assessing Officer to treat the entire income from the sale of ribbed smoked rubber sheets as agricultural income.
• Jagdish Kumar Arora v DCIT ITATHelps taxpayerJudgment not reachable
  You surrendered income in a survey. Is it taxed at 60% under s.115BBE, or at your normal rate?
  Where the source is your own business, at your normal rate. The deeming provisions only bite where the source is unexplained; unrecorded debtors from the business are explained, so s.115BBE was held not to apply.
• Abdulrahiman Abdulkadar v ITO ITATHelps taxpayerNo later treatment found
  The CIT(A) refused your additional evidence, saying no Rule 46A application was filed — but you filed one.
  Then the refusal cannot stand. Where the application was in fact on record, additional evidence could not be shut out on the ground that none was filed. The order was set aside and the matter remanded.
• Masudan Tanti v ITO — s.44AD is unavailable once the claimed turnover crosses the ceiling, but the deposits still cannot be added whole ITATCuts both waysNo later treatment found
  My client asked the officer to tax his bank deposits at eight per cent under s.44AD. The deposits are more than the s.44AD limit and the whole amount has been added. What now?
  Where the deposits said to be the turnover themselves exceed the s.44AD ceiling, s.44AD does not apply — the ceiling is part of the definition of 'eligible business' in the Explanation, not a rate condition. But that does not entitle the Assessing Officer to add the entire deposits: even in a best judgment assessment he must estimate the income, and the Tribunal set aside the CIT(A)'s order for a fresh estimate after the assessee produced the evidence he had withheld below.
• Bichitrananda Rout v ITO — specified bank notes added under s.69A although the rest of the turnover was taxed at eight per cent under s.44AD ITATHelps departmentNo later treatment found
  My client returned his business income at eight per cent under s.44AD and says his old-note deposits came out of his opening cash. The officer has added the specified bank notes anyway. Can that stand?
  It can, and here it did. The Assessing Officer accepted the balance of the turnover and estimated income on it at eight per cent, but treated the specified bank notes of Rs 8,35,500 as unexplained under s.69A, and the Cuttack Bench confirmed the addition and dismissed the appeal because the assessee produced a cash sales statement rather than a cash book, could not establish the actual cash in hand as on 1 November 2016, and could not explain from whom he had received demonetised notes after the appointed date.
• Shri Samadhan Rambhau Patil v ITO, Ward-1, Malegaon ITATHelps departmentNo later treatment found
  I explained my cash deposits as loans taken in cash from local farmers and filed their Aadhaar cards and 7/12 extracts. The Assessing Officer added the amount under s.69A because the farmers did not turn up. What happens on appeal?
  Identity documents and land records of the lenders are not enough by themselves. The Pune Tribunal held that Aadhaar cards and 7/12 extracts failed to serve any purpose once the lenders, when summoned, did not confirm the loans, and that the absence of the one-time settlement papers the loans were said to have funded left the explanation unverified at every stage. But because the assessee had in fact produced the farmer-lenders before the Assessing Officer on 20 October 2019 and they could not be examined owing to the officer's own unavailability, and because the Departmental Representative did not controvert that, the Tribunal remanded the issue for de novo verification and allowed the appeal for statistical purposes.
• Shri Madhusudan Dhakad v ITO-1, Harda ITATHelps taxpayer
  I am a farmer. Cash deposits in my bank account during demonetisation have been added under s.69A because I could produce bills and vouchers for only part of my crop sales. How much proof of cultivation is enough?
  Enough to show that you had sufficient sources for the deposits, not vouchers for every rupee. The Indore Tribunal deleted an addition of Rs 9,42,063 where the assessee produced vouchers covering about 72 per cent of the year's total deposits, held 99.195 acres in the family with 40.90 acres in his own name, was a full-time agriculturist with government awards for yield, had made cash withdrawals of Rs 33,86,980 from the same accounts during the year, and had no other source of income. The Tribunal held the explanation that part of the crop was sold direct to consumers without bills deserved credence.
• Kokkarne Prabhakar v ITO ITATHelps taxpayer
  My return was under s.44AD. The officer has added the whole gap between my Form 26AS turnover and my declared turnover, and has also added my bank deposits under s.68. Can he do either?
  Not in that form, but read the second half of this order narrowly. On the turnover gap the Tribunal held, in its own words at para 7, that the difference between the declared turnover and the Form 26AS turnover 'is to be part of the business turnover of the assessee', that it 'should be included in the total turnover of the assessee and income of 8% is to be estimated on it', and that 'the entire undisclosed turnover of Rs.5,05,050/- cannot be considered as income of the assessee'; the Assessing Officer was directed to consider 8 per cent of that sum. On the deposits the Tribunal deleted the addition of Rs 3,00,000, saying that once the assessment of the assessee was completed under s.44AD there cannot be any application of s.68 or s.69A. The appeal was partly allowed. What the order decides on that second ground is narrower than the sentence in which it is expressed: a deposit addition of Rs 3,00,000 could not stand alongside a completed s.44AD assessment on a declared turnover of Rs 41,41,302. The sentence itself is wider than the High Court authority under it, because CIT v. Surinder Pal Anand relieves the assessee of explaining individual cash deposits only where the deposit has a nexus with the gross receipts already declared, and it is the order of a single Accountant Member. Do not take it as a general immunity from s.68 and s.69A on a presumptive return.
• CBDT letter of 29 May 2026 on invoking ss.68 to 69D with s.115BBE CBDT Circulars & InstructionsHelps taxpayer
  Is there anything from the Board telling the officer he has to establish the section before he makes a deeming addition?
  Yes. Following a C&AG compliance audit that found officers were invoking the wrong section and applying the wrong rate, the Board directed field offices that the Assessing Officer "has to satisfy himself as to the true nature and source of the amounts for which such sections are invoked", that the necessary enquiry — including under s.133(6) — may be carried out, and that "Based upon inquiry and facts of the case, relevant provisions of the Act may be invoked." The same letter gives the Income-tax Act 2025 counterparts: s.195 for s.115BBE and s.252 for s.133(6), each one for one, and “section 102, 103, 104, 105 and 106” against the whole set “section 68, 69A, 69B, 69C and 69D”, which is a correspondence between two lists and not between their members in order.
• Statutory position — section 158BB: how the block figure is built, what is kept out of it, and why Abhisar Buildwell does not simply carry across CBDT Circulars & InstructionsCuts both ways
  The block assessment adds amounts for which nothing was found in the search. Can I take the Abhisar Buildwell point that there must be incriminating material?
  Not in the form in which that case decides it, because Abhisar Buildwell construes section 153A and section 158BB is worded differently. Section 158BB(1) makes the total undisclosed income of the block period the aggregate of only two things — what the assessee declares as undisclosed income in his section 158BC return, and what the Assessing Officer determines under section 158BB(2); and section 158BB(2) requires that determination to be made 'on the basis of evidence found as a result of search or survey or requisition of books of account or other documents and any other material or information as are either available with the Assessing Officer or come to his notice during the course of proceedings under this Chapter'.
• Statutory position — section 79A: no set-off against undisclosed income found in a search, requisition or survey, from AY 2022-23 CBDT Circulars & InstructionsCuts both ways
  A search threw up unaccounted stock and cash and the Assessing Officer has added it. I have a large brought-forward loss and unabsorbed depreciation sitting there. Can I set them off against the addition?
  For AY 2022-23 and every later year, no. Section 79A, inserted by the Finance Act 2022 (Act No. 6 of 2022) with effect from 1 April 2022, says that where, consequent to a search under s.132, a requisition under s.132A or a survey under s.133A other than s.133A(2A), the total income of any previous year includes undisclosed income, no set-off of any loss — brought forward or of the current year — and no set-off of unabsorbed depreciation under s.32(2) shall be allowed against that undisclosed income under any provision of the Act.
• CBDT Circular No. 11/2019 — set-off of loss against s.115BBE income CBDT Circulars & InstructionsHelps taxpayer
  Is there anything from the Board itself I can put in front of the officer on setting off losses against s.68 or s.69 additions in an old year?
  Yes. Circular No. 11 of 2019 records the Board's view that an assessee is entitled to claim set-off of loss against income determined under s.115BBE up to assessment year 2016-17. It is the department's own instruction, so an Assessing Officer cannot take a contrary view for those years — and by the same document, the position from assessment year 2017-18 is that the set-off is denied.
• CBDT Instruction No. 1916 of 11 May 1994 — jewellery that is not to be seized CBDT Circulars & InstructionsHelps taxpayer
  The search party found my family's gold. Is there a quantity the department is not supposed to touch?
  Yes, for seizure. The Board's instruction tells the authorised officer not to seize gold jewellery and ornaments up to 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family where the person is not assessed to wealth-tax, and to leave more than that where the status of the family and the customs of the community justify it. It is written as a seizure instruction, and whether it also bars an addition is a separate fight.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.