The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has clarified that cash received from property sales cannot be treated as unexplained income under Section 69A of the Income-tax Act, 1961, when properly recorded in a registered sale deed and corroborated by bank statements. The ruling reinforces the legal recognition of primary documents in property transactions and may influence future assessments in real estate dealings.
The case involved a taxpayer who sold an immovable property for Rs 94.06 lakh during the relevant assessment year, receiving Rs 38.15 lakh in cash. A portion of this cash, Rs 13,00,500, was subsequently deposited in her ICICI Bank account. The Assessing Officer, relying on data generated through the Department’s internal AIMS module, reopened the assessment under Section 148, alleging that the cash deposits were unexplained, despite the taxpayer filing her return and submitting supporting documents. The Commissioner of Income Tax (Appeals) partially upheld the assessment, applying Section 69A to the cash component. The taxpayer appealed, providing the registered sale deed, bank statements, and income computations as evidence. Upon review, the ITAT observed that the sale deed explicitly documented the receipt of Rs 38.15 lakh in cash, and the bank deposits directly corresponded to this amount. The Tribunal noted that the authenticity of both the sale deed and bank statements was not contested by the Revenue. It highlighted that Section 69A additions are justified only when explanations are unsatisfactory or unsupported. In this case, the explanation was substantiated by primary contemporaneous documents.
“The Tribunal recognised that system-generated or procedural anomalies, such as invalid return filings, cannot override verifiable evidence of transactions,” an industry expert noted. “This decision underscores the importance of properly documented property transactions in supporting taxpayers’ claims.” The Tribunal concluded that there was no evidence suggesting any additional source of income beyond the disclosed property sale. Accordingly, it ordered the deletion of Rs 13,00,500 from the taxable income, effectively allowing the appeal. Legal analysts suggest that this ruling provides clarity for property sellers who receive cash payments, emphasising the significance of maintaining accurate records in registered sale deeds and bank statements. Experts also indicate that it could guide future ITAT and high court decisions, offering taxpayers stronger safeguards when cash transactions are properly documented.
The ruling aligns with a broader trend of recognising digital and primary documentation in urban real estate markets, supporting transparency and reducing disputes between taxpayers and authorities. It also indirectly encourages urban property owners to maintain thorough records, contributing to a more accountable and traceable property market.
Also Read: Noida NBCC Sells 417 Amrapali Flats Raising One Thousand Crore Revenue
