Addressing the issue of undisclosed income through unexplained assets In Clause 104 of the Income Tax Bill, 2025 Vs. Section 69B of the Income Tax Act, 1961

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..... x evasion and ensure that all income is appropriately taxed, thereby enhancing the integrity of the tax system. Clause 104 introduces a contemporary framework for addressing unexplained assets, reflecting changes in the economic landscape, such as the inclusion of virtual digital assets. Section 69B, on the other hand, has been part of the Indian tax law since 1965, providing a mechanism to tax investments or assets not fully disclosed in the books of account. This commentary will analyze each provision in detail, comparing their objectives, interpretations, practical implications, and potential issues, while also suggesting areas for reform or clarification. Objective and Purpose Clause 104 of the Income Tax Bill, 2025, aims to address t .....

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..... value, and the assessee fails to provide a satisfactory explanation, the asset's value is deemed as income. This dual condition ensures that both unrecorded and undervalued assets are captured. 3. Assessing Officer's Role: The Assessing Officer plays a pivotal role in determining whether the explanation provided by the assessee is satisfactory. This discretionary power, while necessary, may lead to subjective interpretations and potential disputes. 4. Inclusion of Digital Assets: The explicit mention of virtual digital assets is a significant development, recognizing the need to regulate and tax digital wealth. However, this inclusion may also pose challenges in terms of valuation and verification. Section 69B of the Income Tax A .....

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..... id arbitrary decisions. - Challenges with Digital Assets: The inclusion of virtual digital assets in Clause 104 introduces complexities in terms of valuation and verification. Assessees dealing with cryptocurrencies and similar assets must navigate these challenges to ensure compliance. Comparative Analysis - Scope and Coverage: Clause 104 expands the scope of unexplained assets to include virtual digital assets, reflecting contemporary economic realities. Section 69B, while comprehensive for its time, lacks this modern perspective. - Discretionary Power: Both provisions grant significant discretion to the Assessing Officer, highlighting the importance of objective and fair assessments. However, this discretion also introduces potential .....

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