1. Key Features of Section 69
- Objective: Targets unexplained investments(e.g., property, gold, shares) not recorded in books.
- Deemed Income: Treated as taxable incomein the year of investment.
- Burden of Proof: Assessee must explain the sourceand nature of investment.
- Tax Rate: 60% + 25% surcharge + 4% cess = 25%(under Section 115BBE).
2. Conditions for Invoking Section 69
- Investment Exists(e.g., property, jewelry, shares).
- Not Recorded in Books(if books are maintained).
- No Satisfactory Explanation:
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- Assessee provides no explanation, OR
- AO rejectsthe explanation as false/inadequate.
3. Common Scenarios & Examples
| INVESTMENT TYPE | EXAMPLE | TAX IMPLICATION |
| Real Estate | Purchase of flat with unaccounted cash | Market value added to income |
| Gold/Jewelry | Unexplained gold found during survey | Value taxed at 77.25% |
| Shares/Stocks | Off-market purchases without trail | Investment treated as income |
| Bank Deposits | Cash deposits without source proof | Added to taxable income |
4. How to Avoid Section 69 Additions?
✔ Maintain Books: Record all investments (if books are maintained).
✔ Provide Evidence:
- Source of funds(e.g., past savings, loans, gifts with gift deeds).
- Purchase documents(agreements, bank statements).
✔ Prefer Banking Channels: Avoid cash transactions > ₹10,000.
5. Penalty & Consequences
- Tax: 77.25% on unexplained investments.
- Penalty: 10% of tax (if not disclosed in ITR).
- No Set-Off: Losses/deductions cannotreduce this income.
