Lady Wins Unexplained Income Case After Selling Property for Rs 94 Lakh

On November 14, 2025, the Income Tax Appellate Tribunal (ITAT) in Mumbai ruled that if a registered sale deed, which serves as a primary legal document, shows cash receipts from a property sale and bank statements confirm the deposit of that cash, then the source of the cash is fully accounted for, and it cannot be classified as unexplained cash credit.

This ruling was made in light of a case where the income tax department had received tips that a lady had sold a property during that year for Rs 94.06 lakh and deposited Rs 13 lakh out of Rs 38 lakh cash in her ICICI Bank account. Since she hadn’t filed an income tax return (ITR) under Section 139, the income tax Assessing Officer decided to reopen the assessment by issuing a notice under Section 148 on April 28, 2022, after following the necessary procedures outlined in Section 148A.

Chartered Accountant Suresh Surana said to ET Wealth Online, “In the given case (no: ITA No.4627/Mum/2024), the assessee had sold an immovable property during the relevant assessment year and deposited a portion of the sale consideration in cash into her ICICI Bank account.” Surana explained that based on information generated through the AIMS module, the Assessing Officer (AO) reopened the assessment under Section 148, alleging that the assessee had deposited unexplained cash of Rs 13,00,500.

According to Surana, the assessee in response, filed an ITR and furnished supporting documentary evidence, including the registered sale deed, annexed receipts, bank statements, and a computation explaining that Rs 38,15,000 out of the total sale consideration was received in cash. Despite this, the AO treated the ITR as invalid due to a system-generated technical issue and disregarded the evidence furnished, ultimately treating the entire sale consideration of Rs 94,06,000 as unexplained income. The CIT(A) partly accepted the capital gains computation but upheld the addition under Section 69A relating to the cash deposits.

The ITAT Mumbai examined the matter and noted that the registered sale deed clearly recorded the receipt of sale consideration, including the cash component of Rs 38,15,000. Surana said, “Further, the cash deposits shown in the bank account directly corresponded to the cash receipts recorded in the sale deed, and no contrary evidence was brought on record by the Revenue.”

Surana added, “The ITAT Mumbai held that once the primary legal document, i.e., the registered sale deed, confirmed the cash receipt and the bank entries supported the same, the source of the deposits stood explained.” The Tribunal emphasized that Section 69A permits addition only where the explanation for cash deposits is unsatisfactory or unsubstantiated. In this case, the explanation was consistent, supported by contemporary primary documents, and remained unrebutted by the Income Tax Department.

According to Surana, the ITAT Mumbai further observed that mere technical defects, such as a system-generated invalidation of the return, cannot override substantive evidence placed on record. Automated information systems like AIMS may trigger reassessment but cannot supersede primary documentary evidence. Since the Revenue neither challenged the authenticity of the documents nor demonstrated any alternative source of unaccounted income, the Tribunal concluded that the addition under Section 69A was unsustainable. Accordingly, the ITAT Mumbai deleted the addition of Rs 13,00,500 and allowed the assessee’s appeal.

ITAT Mumbai in its judgement (ITA No.4627/Mum/2024) said that the registered sale deed records that the assessee (Smt. Chavan) received Rs 61 lakh from the purchaser (of property) during the year, out of which Rs 38.15 lakh was received in cash. ITAT Mumbai stated, “This receipt corresponds exactly with the cash deposits made into the ICICI Bank account. The correctness of these documents has neither been challenged nor disproved by the revenue.”

ITAT Mumbai said that once the registered sale deed itself confirms the receipt of cash and the bank statement reflects the deposit of the same cash, there remains no basis in law or on fact to treat the sum of Rs 13,00,500 as unexplained. ITAT Mumbai added, “The statutory mandate under Section 69A requires that where the explanation furnished by the assessee is supported by credible evidence and is not shown to be false, no addition is warranted. The explanation in the present case is not only consistent but stands fortified by primary documents which the revenue has not sought to impeach.”

ITAT Mumbai also stated that the non-acceptance of the assessee’s ITR 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. Information obtained through automated modules such as AIMS (tax department’s internal system) may trigger an enquiry but cannot override or supplant primary documentary evidence emanating from the registered instrument of transfer itself. The authorities below have thus erred in proceeding on peripheral considerations rather than adjudicating the factual merits.

In these circumstances, the addition of Rs 13,00,500 under Section 69A is wholly unsustainable. There is no material on record to suggest that the assessee possessed any source of income other than the sale consideration in question. The factual matrix overwhelmingly supports the assessee’s explanation, and therefore, the impugned addition is directed to be deleted. Order pronounced on 14th November, 2025.