Section 69 of ITA, 1961 : Section 69: Unexplained Investments

Explanation using Example

Imagine a scenario where an individual, Mr. Sharma, purchases a new luxury car in the financial year 2022-2023 for ₹50 lakhs. However, this purchase is not recorded in his business books or any other financial records. During the assessment year 2023-2024, the Income Tax Department conducts an assessment and notices the car. They ask Mr. Sharma to explain the source of funds for the purchase. Mr. Sharma fails to provide a satisfactory explanation or evidence that the investment was made from his accounted income. Under Section 69 of the Income-tax Act, 1961, the Assessing Officer may consider the ₹50 lakhs spent on the car as undeclared income for the financial year 2022-2023 and tax it accordingly.