1. Key Features of Section 69A
- Objective: Targets unexplained money, jewellery, or assetsfound in possession but not recorded in books.
- Deemed Income: Treated as taxable incomein the financial year of discovery.
- Burden of Proof: Assessee must explain the sourceof the money/assets.
- Tax Rate: 60% + 25% surcharge + 4% cess = 25%(under Section 115BBE).
2. Conditions for Invoking Section 69A
- Possession of Unexplained Assets:
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- Cash, jewellery, bullion, or any valuable asset.
- 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
| ASSET TYPE | EXAMPLE | TAX IMPLICATION |
| Cash | ₹10 lakh found during raid with no source proof | Entire ₹10 lakh added to income |
| Gold/Jewellery | 500g gold bars not declared in wealth statement | Market value taxed at 77.25% |
| Foreign Currency | USD 50,000 without travel records | Converted to INR and taxed |
| Other Valuables | Luxury watches, art, or antiques without bills | FMV added to income |
4. How to Avoid Section 69A Additions?
✔ Maintain Records: Declare high-value assets in ITR/wealth statements.
✔ Explain Sources:
- Gifts: Provide gift deeds, donor’s PAN, and source proof.
- Inheritance: Submit will, probate, or legal heir certificate.
- Savings: Show bank statements or past income proofs.
✔ Avoid Cash Hoarding: Use banking channels for large transactions.
5. Penalty & Consequences
- Tax: 77.25% on unexplained money/assets.
- Penalty: 10% of tax (if not disclosed in ITR).
- No Set-Off: Losses/deductions cannotreduce this income.
