Section 105
Section 105: unexplained expenditure
Section 105 taxes expenditure incurred by an assessee that cannot be satisfactorily explained. Unlike unexplained credits, investments or assets (which relate to money coming in or being held), this section targets money going out - spending whose source cannot be accounted for.
What Section 105 says
Where an assessee has incurred any expenditure in a tax year, and either offers no explanation about the source of that expenditure (or part of it), or the explanation offered is not found satisfactory by the Assessing Officer, the amount covered by that expenditure (or the unexplained part) is deemed to be the assessee's income for that tax year.
No deduction for the deemed income
Irrespective of any other provision of the Act, the amount deemed to be income under this section cannot be claimed as a deduction under the Act.
Frequently asked questions
What is taxed under Section 105?
Expenditure incurred by the assessee whose source cannot be satisfactorily explained - the amount of that expenditure is deemed to be income for that tax year.
Can I claim the deemed expenditure amount as a deduction elsewhere?
No - Section 105(2) specifically bars claiming the amount deemed as income under this section as a deduction under the Act.
Related sections
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Get help responding to an unexplained expenditure queryLast updated 9 September 2026