ITAT Relief on Rs. 38 Lakh Cash Receipt Not Licence for Cash Property Deals: Ruling Limited to Pre-June 2015 Period

A news report widely circulated over the past two days claimed that a lady taxpayer had “won” her case before the Income Tax Appellate Tribunal (ITAT) after receiving ₹38 lakh in cash on sale of immovable property, with the Tribunal holding that such cash was not unaccounted since it was disclosed in the registered sale deed and deposited in the bank. While this reporting is factually correct, it is incomplete and potentially misleading without crucial legal context. What the ITAT Actually Held? The ITAT deleted an addition made under Section 69A relating to cash deposits of ₹13 lakh (out of ₹38.15 lakh cash received), after accepting the assessee’s explanation that the cash originated from sale consideration of immovable property. The Tribunal relied on the registered sale deed and annexed receipt, which clearly recorded receipt of cash consideration, and noted that the Revenue had not disputed the authenticity of these documents. On this factual footing, the Tribunal held that once the source of cash was satisfactorily explained and supported by documentary evidence, it could not be treated as unexplained money merely because of procedural or technical lapses in filing of return. The Missing but Crucial Context? What has largely been omitted in popular reporting is that the transaction in question relates to Financial Year 2014–15 (Assessment Year 2015–16). This timeline is critical. At the relevant time, Section 269SS did not cover cash receipts in respect of sale of immovable property. The law was amended with effect from 1 June 2015, expanding the scope of Section 269SS to expressly prohibit acceptance of cash of ₹20,000 or more for transfer of immovable property, whether or not the transaction is completed. Post 1 June 2015, any such cash receipt—even if fully disclosed, reflected in the sale deed, and deposited in bank—can attract penalty under Section 271D, equal to the amount of cash received. Why the Distinction Matters? The ITAT ruling does not legitimise or approve large cash receipts in property transactions under the current law. It merely holds that for pre-amendment years, where cash receipts were not prohibited by Section 269SS, and where the source of cash is clearly explained and evidenced, an addition under Section 69A cannot be sustained. Presenting the decision without highlighting this statutory change risks creating the impression that cash receipts in property sales are permissible even today, which is legally incorrect. The dispute arose for Assessment Year 2015–16, where information reflected in the AIMS module of the ITBA system indicated that the assessee had sold an immovable property for a consideration of ₹94.06 lakh and had deposited ₹13,00,500 in cash in her ICICI Bank account. Since no return had originally been filed under Section 139, the Assessing Officer (AO) initiated reassessment proceedings by issuing notice under Section 148 after following the procedure prescribed under Section 148A. In response, the assessee filed a return of income declaring ₹6.95 lakh. However, the return was flagged as invalid by the system. Treating the assessee as a non-filer, the AO proceeded with assessment under Sections 147 read with 144 and made additions, including treating the cash deposit of ₹13,00,500 as unexplained money under Section 69A. During the assessment proceedings, the assessee furnished a computation of income, purchase and sale deeds, bank statements, and detailed written submissions explaining that the cash deposits originated from sale proceeds of the immovable property. Despite these documents being reproduced in the assessment order, the AO refused to consider them solely on the ground that the return filed under Section 148 was invalid. On appeal, the Commissioner (Appeals) granted partial relief on capital gains computation but sustained the addition of ₹13,00,500, without engaging with the evidentiary value of the registered sale deed and the corresponding receipt acknowledging cash consideration. The ITAT observed that the registered sale deed itself contained a clear recital acknowledging receipt of sale consideration, including cash, from the purchaser. The receipt annexed to the sale deed specifically recorded that out of ₹61 lakh received during the year, ₹38.15 lakh was paid in cash, which directly corresponded with the cash deposits made into the ICICI Bank account. The Tribunal noted that the authenticity of the sale deed, the annexed receipt, and the bank statement had never been disputed by the Revenue. It emphasised that Section 69A requires an addition only when the explanation offered by the assessee is either absent or found to be unsatisfactory. Where the explanation is supported by primary documentary evidence and is not shown to be false, no addition can be sustained. Critically, the ITAT held that non-acceptance of the return on account of a system-generated technical defect cannot absolve the Assessing Officer of the duty to examine the source of funds when credible evidence is placed on record. The Tribunal cautioned that information from automated systems such as AIMS may trigger inquiry but cannot override or supplant primary documentary evidence emanating from a registered instrument of transfer. Concluding that there was no material to suggest that the cash deposit represented any income other than sale consideration of the property, the Tribunal directed deletion of the addition of ₹13,00,500 made under Section 69A. The appeal was accordingly allowed in favour of the assessee. Case Details Case Title: Shalaka Chandrahas Chavan Versus ITO Case No.: ITA No.4627/Mum/2024 Date: 14/11/2025 Counsel For Appellant: Sameer G Dalal Counsel For Respondent: Swapnil Choudhary, Sr. DR Click Here To Read Order Read More: MCA21 Portal Glitch Continues: Professionals Spend Sleepless Nights

ITAT Relief on Rs. 38 Lakh Cash Receipt Not Licence for Cash Property Deals: Ruling Limited to Pre-June 2015 Period

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