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TMI BlogUnderstanding the Legal Framework for Unexplained Investments in Clause 103 of the Income Tax Bill, 2025 Vs. Section 69B of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed or inadequately explained investments are taxed as income. This commentary will provide a detailed analysis of Clause 103 and Section 69B, comparing their provisions, objectives, and implications. Objective and Purpose The primary objective of Clause 103 and Section 69B is to curb tax evasion by ensuring that any unexplained investments are treated as income. This is achieved by deeming such investments as income if the assessee fails to provide a satisfactory explanation for the source of funds used for the investment. The legislative intent behind these provisions is to close loopholes that allow individuals and entities to conceal income through undisclosed investments. Historically, tax authorities have faced challenges in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 1965, with amendments over time to refine its application. It addresses situations where investments, bullion, jewellery, or other valuable articles are not fully disclosed in the books of account. The main elements of Section 69B are: 1. **Undisclosed Investments and Assets**:- Applies to investments, bullion, jewellery, or other valuable articles where the recorded amount is less than the actual expenditure. 2. **Explanation Requirement**:- Similar to Clause 103, the assessee must offer an explanation for the excess amount. If the explanation is unsatisfactory to the Assessing Officer, the excess amount is deemed income. 3. **Deeming Provision**:- The excess amount is deemed to be the income of the assessee for the financial yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses and individuals must ensure that all investments and valuable assets are accurately recorded in their books of account. * Taxpayer Rights and Responsibilities - Taxpayers have the right to provide explanations and evidence to support the legitimacy of their investments. However, they also have the responsibility to maintain transparency and honesty in their financial disclosures. * Impact on Tax Administration - The provisions empower tax authorities to address tax evasion effectively. However, they also require tax officials to exercise their discretion judiciously to avoid arbitrary assessments. Conclusion Clause 103 of the Income Tax Bill, 2025, and Section 69B of the Income-tax Act, 1961, are critical provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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