Section 69C vs Section 105 of ITA 2025: A Fundamental Shift in Tax Law

Vivek Jalan | Last updated: 22 December 2025

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The Income Tax Act of 2025 introduces a significant change with Section 105, replacing Section 69C of the 1961 Act. Unlike the previous discretionary 'may be' wording, Section 105 uses 'shall be', removing judicial interpretation in favour of the taxpayer regarding unexplained expenditure. Furthermore, Section 105(2) broadens the scope of disallowance, preventing such deemed income from being claimed as a deduction anywhere within the Act, a considerable expansion from Section 69C's limitations.

Section 105 of ITA'25 has become more stringent so to say as against Sec 69C of ITA'61. Under Section 69C, the use of the words "may be" has been replaced with "shall be". This therefore leaves no option for Courts to interpret the same in the assesses favour incase of any ambiguity. The Hon'ble Supreme Court in case of CIT v. Smt. P.K. Noorjahan [1999] 237 ITR 570 (SC) in context of section 69 - Unexplained investments has held that, "3a discretion has been conferred on the ITO under section

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1999

(Excl. of GST ₹359)

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3499

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999

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About the Author

Vivek Jalan

DESIGNATED PARTNER

Mr. Vivek Jalan is a FCA, Qualified LL.M (Constitutional Law) and LL.B. He is the Chairman of The Fiscal Affairs and Taxation Committee of The Bengal Chamber of Commerce and Industry. He is the Convenor on Indirect Taxes of the CII- Economic Affairs and Taxation Committee (ER); He is also a visiting faculty for Indirec ... Read more

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