CBDT, through its communication dated 29 May 2026, has directed all field formations to ensure uniform and correct application of Sections 68, 69A, 69B, 69C and 69D of the Income-tax Act, 1961, along with Section 115BBE, following observations made by the Comptroller and Auditor General (C&AG) in its Compliance Audit. The audit highlighted inconsistencies among Assessing Officers in invoking these provisions, making additions, and applying the prescribed tax rates, resulting in potential revenue loss. CBDT has instructed Assessing Officers to properly ascertain the true nature and source of unexplained amounts through necessary inquiries and investigations, including use of Section 133(6). The relevant statutory provisions should be invoked based on facts and findings of each case. The Board has further emphasized mandatory application of Section 115BBE for taxation of additions under these provisions and stressed accurate completion of ITBA computation fields to prevent errors in income computation, tax calculation, and loss carry-forward.
F.No.225/26/2026-ITA.II
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
******
Room No. 10018, Kartavya Bhavan-1
New Delhi, the 29th May, 2026
To,
All The Pr. Chief Commissioners/Director Generals of Income Tax
Madam/Sir,
Subject: – The C&AG’s “Draft Report on Compliance Audit on Application of Provisions under Section 68, 69A, 69B, 69C and 69D read with Section 115BBE”-reg.
Reference may be made to audit objections brought out by Comptroller and Audit General of India (C & AG) while carrying out Compliance Audit on Application of Provisions under Section 68, 69A, 69B, 69C and 69D read with Section 115BBE of I.T. Act, 1961. It has been pointed out therein that there was variation in invoking the provisions of relevant Sections and additions made by the AOs and also that incorrect application of rate of tax etc. led to loss to the exchequer.
2. In view of the above, the field offices are hereby directed to take into account the following while invoking provisions of section 68, 69A, 69B, 69C and 69D (corresponding section 102, 103, 104, 105 and 106 of I.T. Act, 2025) read with Section 115BBE of I.T. Act, 1961 (corresponding section 195 of I.T. Act, 2025):
(i) The Assessing officer has to satisfy himself as to the true nature and source of the amounts for which such sections are invoked. For the same, necessary investigation or enquiry may be carried out, including, inter-alia, using provisions of section 133(6) of I.T. Act, 1961 (corresponding section 252 of I.T. Act, 2025).
(ii) Based upon inquiry and facts of the case, relevant provisions of the Act may be invoked.
(iii) While making additions under section 68, 69A, 69B, 69C and 69D of I.T. Act, 1961 (corresponding section 102, 103, 104, 105 and 106 of I.T. Act, 2025), provisions of Section 115BBE of I.T. Act, 1961 (corresponding section 195 of I.T. Act, 2025) should be considered which mandates tax at special rates for such additions and does not allow expenditure or set-off of losses under any other provisions of the Act in computing income under these sections of the Act.
(iv) Further, relevant columns of computation sheet (regarding these sections viz. 68, 69C etc.) should be filled up correctly on ITBA so as to avoid the recurrence of errors in computation of income and tax/carry forward of losses.
3. This issues with approval of Member (IT), CBDT.
Frequently Asked Questions (FAQs)
Q1. Why did CBDT issue the communication on Sections 68, 69A, 69B, 69C, 69D and Section 115BBE?
Ans. CBDT issued the communication following observations made by the Comptroller and Auditor General (C&AG) during its Compliance Audit, which found inconsistencies in the application of these provisions by Assessing Officers, including incorrect additions and application of tax rates that could result in revenue loss.
Q2. What has CBDT instructed Assessing Officers before invoking Sections 68, 69A, 69B, 69C or 69D?
Ans. CBDT has directed Assessing Officers to ascertain the true nature and source of unexplained amounts by carrying out necessary inquiries or investigations, including the use of Section 133(6), and invoke the appropriate provision based on the facts and findings of each case.
Q3. What is the significance of Section 115BBE in the CBDT’s instructions?
Ans. CBDT has emphasized that additions made under Sections 68, 69A, 69B, 69C and 69D should be taxed in accordance with Section 115BBE, which prescribes a special tax rate and does not permit deduction of expenditure or set-off of losses while computing income under these provisions.
Q4. What instructions has CBDT given regarding the ITBA computation sheet?
Ans. CBDT has instructed field formations to correctly fill the relevant computation fields in the Income Tax Business Application (ITBA) relating to Sections 68, 69A, 69B, 69C and 69D to avoid errors in income computation, tax calculation and carry-forward of losses.
Q5. Does the CBDT communication refer to the corresponding provisions under the Income-tax Act, 2025?
Ans. Yes. The communication refers to Sections 102, 103, 104, 105 and 106 of the Income-tax Act, 2025 as the corresponding provisions to Sections 68, 69A, 69B, 69C and 69D of the Income-tax Act, 1961, and Section 195 as the corresponding provision to Section 115BBE.
Yo rs faithfully
(Dr. Indu Bala)
Deputy Secretary (ITA-II), CBDT
Ph. 011-24012362
E-mail ID: directorita-2@gov.in
Copy to: 1. PS to Chairman, CBDT & all Members, CBDT
2. All Pr.DGsIT/DGsIT
3. DGIT(Systems), Delhi and Bengaluru
4. All Joint Secretaries/CsIT, CBDT
5. Web Manager with request to upload on the departmental website:www.incometaxindia.gov.in
6. JDIT, Data-Base Cell for uploading on irsofficersonline website
(Dr. Indu Bala) Deputy Secretary (ITA-II), CBDT
Asseessing officers are treating all cash or credit by cheques etc,as income us 69A ignoring the basic point of withdrawals, transfer of fund even to different government accounts,How it is ignored that every
business houses had to make payment for purchase and other expenses and sales proceeds are credited to bank accounts
The real challenge is not the absence of legal principles but the fear of audit objections. When an addition is not made, the officer faces questions from audit; when an unsustainable addition is made and later deleted in appeal, there is usually little personal consequence. This naturally encourages assessments to err on the side of revenue. Hopefully, the CBDT’s latest instruction will be used to promote correct application of sections 68–69D rather than indiscriminate invocation of those provisions
CBDT’s objective of uniform application is welcome. Equally important is ensuring that sections 68 to 69D are invoked only where there is genuinely unexplained income and not merely because a third party fails to issue Form 16, confirm rent or respond to departmental notices. An amount cannot become unexplained merely because someone else remains unresponsive