Section 104 - Unexplained asset
Section 104 focuses on ownership or belonging of an unexplained asset. It covers a wholly unrecorded asset and an asset whose acquisition cost exceeds the amount recorded. The express list includes money, bullion, jewellery and virtual digital assets, while “other valuable article” keeps the provision wider.
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 104 focuses on ownership or belonging of an unexplained asset. It covers a wholly unrecorded asset and an asset whose acquisition cost exceeds the amount recorded. The express list includes money, bullion, jewellery and virtual digital assets, while “other valuable article” keeps the provision wider.
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 104.
Old-law bridge
1961 Act Sections 69A 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 Section 103 attaches to the tax year of investment. Section 104 attaches to the tax year in which the asset is found to be owned by or belonging to the assessee. The distinction can change timing materially.
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 digital-asset wallet controlled by an individual contains tokens worth ₹18 lakh and no acquisition trail appears in the books or disclosed records. The individual must establish ownership, acquisition dates, exchange statements, wallet transfers and the source of funds. Failure can trigger section 104 in the year the asset is found to belong to the assessee.
Evidence / compliance checklist
- For section 104, 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 104: Unexplained asset).
- 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 104: Unexplained asset).
- Reconcile the explanation to return data, audited accounts and information-reporting statements so that dates and amounts do not conflict (section 104: Unexplained asset).
Common mistake
Treating section 104 as a documentation formality. For section 104, the statutory trigger, tax year, ownership/book entry and adequacy of the source explanation must be established separately.
Recommended approach
For section 104, fix the governing tax year, identify the operative sub-section for “Unexplained asset”, 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
- 104. (1) Where in any tax year, any asset has been found to be owned by or belonging to 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 expended in acquiring such asset exceeds the amount recorded in such books of account and—
- 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.
Judicial / interpretive bridge
No section-specific Supreme Court bridge is included for section 104 unless text-equivalence with the 2025 Act has been checked. Legacy cases should not be transplanted into section 104 merely because the subject is similar.
Related provisions
Current statutory text
Primary-source trail
FAQs
What does section 104 of the Income-tax Act, 2025 cover?
Section 104 covers unexplained asset. 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 104?
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 104.
Are there specific Rules or Forms for section 104?
No provision-specific Rule/Form independently mapped in this tranche.