The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has held that cash deposits arising from a property sale cannot be treated as unexplained income under Section 69A of the Income-tax Act, 1961, when such receipts are duly recorded in a registered sale deed and corroborated by bank statements.
In its order dated November 14, 2025, in ITA No. 4627/Mum/2024, the Tribunal observed that a registered sale deed constitutes a primary legal document and, when it clearly records the receipt of sale consideration including cash components, the source of such cash stands explained.
Background of the Case
The case pertained to an assessee who sold an immovable property during the relevant assessment year for a total consideration of ₹94.06 lakh, out of which ₹38.15 lakh was received in cash. A portion of this cash amounting to ₹13,00,500 was subsequently deposited in her ICICI Bank account.
Based on information generated through the Department’s internal AIMS module, the Assessing Officer reopened the assessment under Section 148 on the ground that the assessee had deposited unexplained cash and had not originally filed a return of income under Section 139. Despite the assessee later filing a return and submitting documentary evidence including the registered sale deed, bank statements, and computation of income, the Assessing Officer treated the entire sale consideration as unexplained income. The Commissioner of Income Tax (Appeals) partly allowed the appeal but sustained the addition relating to cash deposits under Section 69A.
Tribunal’s Observations
After examining the records, the ITAT noted that:
- The registered sale deed explicitly recorded the receipt of ₹38.15 lakh in cash.
- The cash deposits in the bank account directly corresponded to the cash receipts mentioned in the sale deed.
- The authenticity of the sale deed and bank statements was neither disputed nor disproved by the Revenue.
The Tribunal held that Section 69A permits addition only when the explanation offered by the assessee is unsatisfactory or unsupported by evidence. In the present case, the explanation was consistent and substantiated by contemporaneous primary documents.
The ITAT further observed that technical or system-generated issues, such as invalidation of a return of income, cannot override substantive evidence placed on record. Automated information systems may trigger inquiries but cannot supplant primary documentary evidence arising from a registered instrument of transfer.
Final Decision
Concluding that there was no material to suggest any source of income other than the disclosed sale consideration, the Tribunal held the addition of ₹13,00,500 under Section 69A to be unsustainable and directed its deletion. Accordingly, the appeal of the assessee was allowed.
Source from: https://economictimes.indiatimes.com/wealth/tax/lady-sells-property-for-rs-94-lakh-gets-rs-38-lakh-in-cash-files-no-itr-gets-tax-notice-for-unexplained-income-wins-case-in-itat-mumbai/articleshow/126215490.cms?from=mdr
