1. Key Features of Section 69B
- Objective: Targets underreported investmentswhere actual expenditure > recorded value in books.
- Deemed Income: Difference between actual costand recorded value is taxable.
- Burden of Proof: Assessee must justify the lower valuationor face additions.
- Tax Rate: Normal slab rates (not 115BBE) unless proven as unexplained income.
2. When Does Section 69B Apply?
- Investment Exists(property, gold, shares, etc.).
- Actual Cost > Book Value(e.g., property bought for ₹1Cr but recorded as ₹70L).
- No Satisfactory Explanationfor the undervaluation.
3. Common Scenarios & Tax Impact
| SITUATION | EXAMPLE | TAXABLE AMOUNT |
| Underreported Property Purchase | Bought for ₹1Cr, books show ₹70L | ₹30L added to income |
| Unaccounted Gold Acquisition | Paid ₹20L cash + ₹10L cheque (books show only ₹10L) | ₹20L taxed |
| Undisclosed Share Premium | Shares allotted at ₹500 vs. FMV ₹1000 (per share) | Difference per share x quantity |
4. How to Defend Against Section 69B Additions?
✔ Prove Fair Valuation:
- Submit registered sale deed, valuation reports.
- Show bank trailsfor full payment.
✔ Explain Cash Transactions:
- Cash < ₹10,000/day (to avoid Section 40A(3) disallowance).
- Prove source (past savings, loans).
✔ Claim Exemptions:
- If difference due to market fluctuations(e.g., shares).
5. Penalty Risks
- Tax: Normal slab rates (unless linked to unexplained income).
- Penalty: 50-200% of tax if concealment proven.
- Prosecution: Possible for willful evasion.
