Section 104 — Unexplained Asset | ITA 2025

Section 104 — UNEXPLAINED ASSETS (1961 ss. 69A & 69B SUCCESSOR)

Section 104 is the substantive equivalent of 1961 ss. 69A and 69B. Where any ASSET is found OWNED BY or BELONGING TO the assessee but not recorded in books (or recorded below actual cost), AND no/unsatisfactory explanation about source of acquisition is offered, the asset's value (or excess) is deemed INCOME. Asset includes: money, bullion, jewellery, valuable articles, virtual digital assets (crypto / NFTs), works of art, etc. Charged at 60% punitive rate u/s 195.

Statutory text — Income-tax Act, 2025

Marginal note — Unexplained asset

(1) Where in any tax year, any asset has been found to be owned by or belong- ing to the assessee which is not recorded in the books of account, if any, main- tained by such assessee for any source of income, or the Assessing Officer finds that the amount expended in acquiring such asset exceeds the amount recorded in such books of account and—

(a) the assessee offers no explanation about the nature and source of acqui- sition of such asset, or such excess amount, as the case may be; or

(b) the explanation offered about the nature and source of acquisition of such asset by the assessee, is not satisfactory in the opinion of the Assessing Officer, then, the value of such asset, or such excess amount, as the case may be, shall be deemed to be the income of the assessee of the tax year in which such asset has been found to be owned by, or belonging to, the assessee.

(2) For the purposes of this section, “asset” includes money, bullion, jewellery, virtual digital asset or other valuable article.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 — s. 104	INCOME-TAX ACT, 1961 — ss. 69A / 69B
Asset owned but not in books — taxed	1961 s. 69A
Asset recorded below actual — excess taxed	1961 s. 69B
60% punitive rate u/s 195	1961 s. 115BBE — same

STATUTORY ARCHITECTURE

Section 104 is the search-and-survey workhorse — typically applied where: (a) cash / jewellery / bullion / artworks discovered during search are unrecorded; (b) under-valued assets in books (purchased at ₹ X but recorded at ₹ Y < X); (c) virtual-digital-assets (post-FA 2022 explicit inclusion) — crypto / NFT holdings undisclosed; (d) foreign-asset disclosures via Form 67 / Schedule FA in ITR — under-disclosure invokes s. 104.

CASE LAW

CBDT Instruction No. 1916 (1994) — search-discovered jewellery within prescribed limits (married woman 500g, unmarried 250g, male member 100g) presumed acquired from inheritance / gifts / family customs — NOT s. 69A unless excess. CIT v. Manoj Kumar Beriwal (Cal HC) — onus is on AO to establish ownership BEFORE invoking s. 69A; mere discovery in premises insufficient if explainable belonging-to-others. PCIT v. Sahara India (Mum HC) — diary entries showing assets — admissible evidence under s. 69A even without physical-asset recovery.

PLANNING NOTES

(i) Maintain asset register annually — jewellery / valuables valuation reports; CBDT-1916 limits as benchmark for family jewellery. (ii) For VDA (crypto / NFT) holdings, Schedule VDA in ITR + transaction-wise documentation; survey-discovery without disclosure invokes s. 104. (iii) For foreign assets, full Schedule FA disclosure mandatory; Black Money Act overlap with s. 104 — penalty AND prosecution risk. (iv) For valuables found at residence belonging to family members, document ownership chain (purchase invoice / gift letter / inheritance evidence).

CROSS-REFERENCES

Section 102 / 103 / 105 — Sister anti-evasion provisions.
Section 195 — Punitive 60% rate.
Black Money (Undisclosed Foreign Income and Assets) Act, 2015 — overlap.
Schedule VDA / Schedule FA — ITR disclosures.

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