NICOSIA, Cyprus (AP) _ A malfunctioning altimeter caused an Iranian military transport plane to crash into a mountain near the Afghan border, killing all 103 people aboard, Iran's official news agency reported Monday.

The American-built C-130 plane was transporting soldiers from the western Bakhtaran war front on Sunday to Zahedan, in southeastern Sistan-Baluchi stan province, Iranian military authorities were quoted as saying.

Iran and Iraq have been at war since September 1980.

Iran's Islamic Republic News Agency, monitored in Nicosia, quoted an unidentified source in the provincial governor-general's office as saying: ''The control tower of Zahedan airport had warned the pilot not to fly lower than 6,500 feet altitude, but due to a technical defect in the altimeter, the pilot failed to heed the warning.''

The crash occurred six miles east of Zahedan, a desert city ringed with mountains.

IRNA noted that previous reports put the death toll at 98. Without explanation, it said the count had risen to 103 passengers and crew. The soldiers were from the 88th Armored Division of Zahedan, it said.

Bodies were pulled from the wreckage by Monday morning and recovery operations continued. Authorities described the dead as martyrs.

In Sistan-Baluchistan, authorities declared a day of public mourning for the province.

Earlier Monday, an official at the military headquarters in Tehran told The Associated Press by telephone that an army investigation would determine the cause of the crash.

The official, who would not give his name, refused to provide further details of the incident, the worst in that country since an Iran Air passenger plane crashed six years ago near Tehran, killing all 128 people on board.

Four top Iranian military commanders were killed in September 1981 when their plane, also a C-130, plunged into the public square of Tehran's Kahrizak suburb. They were flying from a battlefront on a plane that also was carrying war dead and wounded.

In a crash last Feb. 20, a special envoy of Ayatollah Ruhollah Khomeini and six Iranian parliamentary deputies were among 46 people killed. Tehran claimed Iraqis shot down the Fokker Friendship plane, a charge Baghdad denied.

IRNA said Monday that Iranian forces destroyed the communications center of the Iraqi army's 7th Division in an area 12 miles east of Abu-Khasib, near Basra port in southern Iraq.

The agency said the attack cut links between the division and Iraq's command headquarters.