Section 103 - Unexplained investment
Section 103 combines two situations: an investment missing entirely from the books, and an investment recorded below the amount actually spent. The unexplained value or unexplained excess is deemed income of the tax year in which the investment was made.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current-law control
This page uses the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026. Earlier years and saved proceedings remain subject to the repeal-and-savings framework.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
Section 103 combines two situations: an investment missing entirely from the books, and an investment recorded below the amount actually spent. The unexplained value or unexplained excess is deemed income of the tax year in which the investment was made.
Who should use this section
Any assessee whose books, investments, assets, expenditure or specified negotiable-instrument transaction can trigger the unexplained-income code in sections 102-107 This applicability note is specific to section 103.
Old-law bridge
1961 Act Sections 69 and 69B
The bridge is navigational only. A 1961 Act case or rule is carried forward only after checking wording, transition provisions and the current 2025 Act text.
Professional alert
Professional alert The new provision uses “shall be deemed”, whereas old sections 69 and 69B used “may be deemed”. Legacy cases based on discretionary wording must therefore be applied cautiously.
Connected Income-tax Rules, 2026 and Forms
No provision-specific Rule/Form is independently mapped in this tranche. General return, procedure and evidence rules can still apply.
Worked application
A property is acquired for ₹1.50 crore but the books and funding file support only ₹1.05 crore. If the assessee cannot satisfactorily explain the remaining ₹45 lakh, that excess can fall within section 103. The valuation evidence, payment trail and year of investment must all be established.
Evidence / compliance checklist
- For section 103, preserve the books/ledger entry or asset/expenditure record that establishes the exact trigger and tax year.
- Keep bank statements, confirmations, contracts, invoices and source documents that explain both the nature and the source of the amount under examination (section 103: Unexplained investment).
- Where the statute imposes a source-of-source test, retain the counterparty financial capacity and transaction trail rather than relying only on PAN/identity (section 103: Unexplained investment).
- Reconcile the explanation to return data, audited accounts and information-reporting statements so that dates and amounts do not conflict (section 103: Unexplained investment).
Common mistake
Treating section 103 as a documentation formality. For section 103, the statutory trigger, tax year, ownership/book entry and adequacy of the source explanation must be established separately.
Recommended approach
For section 103, fix the governing tax year, identify the operative sub-section for “Unexplained investment”, trace every amount to evidence, apply only verified Rule/Form links, and retain a computation that another reviewer can reproduce from the primary source.
Thresholds, periods and timing checkpoints
- 103. Where in any tax year, any investment has been made by the assessee which is not recorded in the books of account, if any, maintained by such assessee for any source of income, or, the Assessing Officer finds that the amount of such investment exceeds the amount recorded in such books of account and—
- then, the value of such investment, or such excess amount, as the case may be, shall be deemed to be the income of the assessee of that tax year.
Judicial / interpretive bridge
No section-specific Supreme Court bridge is included for section 103 unless text-equivalence with the 2025 Act has been checked. Legacy cases should not be transplanted into section 103 merely because the subject is similar.
Related provisions
Current statutory text
Primary-source trail
FAQs
What does section 103 of the Income-tax Act, 2025 cover?
Section 103 covers unexplained investment. The operative result depends on the exact statutory conditions shown on this page and applies from 1 April 2026, subject to transition/savings provisions.
Who should check section 103?
Any assessee whose books, investments, assets, expenditure or specified negotiable-instrument transaction can trigger the unexplained-income code in sections 102-107 This applicability note is specific to section 103.
Are there specific Rules or Forms for section 103?
No provision-specific Rule/Form independently mapped in this tranche.