Cash Deposits from Property Sale Cannot Be Taxed as Unexplained: ITAT
The Income Tax Appellate Tribunal (ITAT), Mumbai, recently deleted an addition of Rs. 13,00,500 under section 69A, as the assessee’s cash deposits were explained with proofs.
The assessee, Shalaka Chandrahas Chavan, sold an immovable property of Rs 94,06,000. She deposited Rs 38,15,000 into her bank. Due to non-filing of the return, the assessee’s case was reopened under section 148. Therefore, the assessee filed her ITR declaring an income of Rs 6,95,000. However, the return filed by the assessee was declared invalid by the AO on the technical grounds.
Even though the assessee had submitted bank statements, a sale deed, and receipts acknowledging cash receipt during the assessment proceedings, the AO did not consider them and treated the entire amount as unexplained income under section 69A. This was challenged before the CIT(A), which provided partial relief on the capital gain. Therefore, the assessee filed an appeal before the ITAT, Mumbai.
The assessee explained that the cash of Rs. 38,15,000 out of the total consideration of Rs 61,00,000 was received from the buyer, which was deposited into her ICICI bank account. This was proved by the sale deed, which acknowledged the cash receipts.
The ITAT reviewed the scanned copy of the cash receipt forming part of the registered sale deed, which showed clear proof of the cash receipts and the bank statement also shows the deposit of the same cash. Therefore, the sum of Rs 13,00,500 cannot be treated as unexplained.
The Tribunal highlighted the statutory requirement under section 69A which says that if an explanation is supported by credible evidence and is not proved false, no addition should be made.
“The non acceptance of the assessee’s return on account of a system generated technicality cannot eclipse the fundamental obligation of the Assessing Officer to examine the source of funds when tangible evidence is placed before him“, the Tribunal held.
The Tribunal concluded that the addition of Rs. 13,00,500 under section 69A is unjustified and the same was directed to be deleted.
Case Citation: Shalaka Chandrahas Chavan Vs Income Tax Officer (ITAT Mumbai); ITA No.4627/Mum/2024; 14/11/2025; 2015-16
