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CA Final · Direct Tax Laws & International Taxation · Taxation of Digital Transactions

Case: During a search, an officer finds that Meera Traders held a virtual digital asset wallet whose holdings were not recorded in books and represent income that would not have been disclosed. Under the Income-tax Act, 2025, how is this wallet treated for block assessment?

The wallet is undisclosed income. The definition of undisclosed income expressly includes virtual digital assets that represent, wholly or partly, income or property which has not been or would not have been disclosed. No conversion to rupees or minimum holding period is required.

  1. AIt is outside undisclosed income because only money and bullion are covered
  2. BIt is covered only if converted into rupees before the search
  3. CIt is undisclosed income because the definition expressly includes virtual digital assets representing income or property not disclosedCorrect
  4. DIt is covered only if held for more than 36 months

Explanation

Section 301 defines undisclosed income to include any money, bullion, jewellery, virtual digital asset or other valuable article representing wholly or partly income or property that has not been or would not have been disclosed. No conversion or holding period condition exists, so the other options are wrong.

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