The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that no addition under section 69A of the Income-tax Act, 1961 can be made in respect of cash deposits in a bank account when such deposits are duly explained and supported by a registered sale deed. The Tribunal observed that where the assessee had sold an immovable property, received part of the sale consideration in cash, and deposited the same in her bank account, and the registered sale deed along with annexed receipts clearly confirmed receipt of such cash contemporaneously reflected in the bank statement, the addition under section 69A was unjustified. Merely because the return of income filed in response to notice under section 148 was treated as invalid on technical grounds, substantive documentary evidence explaining the source of cash could not be disregarded.
Case Summary — ITAT Mumbai (ITA No. 4627/Mum/2024)
Facts:
The assessee (Ms. Shalaka Chandrahas Chavan) sold an immovable property during the relevant year (AY 2015-16).
Sale consideration was around ₹94.06 lakh, of which ₹38.15 lakh was received in cash.
The assessee deposited ₹13,00,500 of that cash into her bank account.
She did not file an ITR originally under section 139 for the year.
The Income Tax Department, relying on AIMS/System information, reopened the assessment under section 147/148 and treated the cash deposits as unexplained money under section 69A.
In response to the notice, the assessee filed a return of income, but the system flagged it as invalid on technical grounds.
Assessing Officer’s stance:
The AO rejected the assessee’s documentary evidence (registered sale deed, receipt annexures, bank statements) solely because the ITR was technically invalid.
He held the cash deposits as unexplained and made an addition under section 69A.
ITAT’s Findings:
Primary documentary evidence overrides system defects — The registered sale deed itself recorded the receipt of cash consideration, and the bank deposits exactly matched the cash component mentioned therein.
Credible explanation supplied — The Tribunal held that once there is clear documentary evidence demonstrating the source of cash deposits, an addition under section 69A cannot be sustained unless the explanation is disproved by the Revenue.
Technical invalidation of ITR is not a reason to ignore evidence — The fact that the return was considered invalid by the system doesn’t justify disregarding substantive, contemporaneous primary evidence.
Revenue failed to challenge authenticity — The department did not challenge the sale deed’s genuineness or provide any contradictory evidence regarding the source of cash.
Conclusion:
The ITAT deleted the addition of ₹13,00,500 under section 69A in its entirety and allowed the appeal.
The decision emphasises that cash deposits backed by registered sale deeds and matching bank entries, when not disproved by the Revenue, do not qualify as unexplained under section 69A.
Key Takeaways for Professionals:
Registered sale deeds and contemporaneous receipts form strong primary evidence to explain cash receipt and deposits.
Section 69A should not be invoked mechanically where a taxpayer supplies a clear explanation with credible documents.
Technical return defects (e.g., invalid ITR due to system error) do not justify ignoring substantive evidence.
The case is often cited to support positions in reassessment proceedings involving cash receipts from property transactions when genuine documentation is available.