Top Stories Cash Deposits in Bank Account from Sale Proceeds received in Cash on due explanation, is not Unexplained Credit: ITAT [Read Order] Cash deposits in bank account from sale proceeds received in cash on due explanation, is not unexplained credit, rules ITAT By Kalyani B. Nair – On March 5, 2024 1:16 pm – 2 mins read The New Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that cash deposits in bank account from sale proceeds received in cash on due explanation, is not unexplained credit.
The sale deed was registered however only for Rs. 49 lakhs. The assessee could not produce the confirmation from the buyer of the property that he had paid Rs. 29 lakhs in cash for the property. Accordingly, lower authorities concluded that there was no nexus between alleged receipt of sale consideration in cash of Rs. 29 lakhs and the cash deposit made in the bank account by the assessee and hence the source for cash deposit remains unexplained. With these observations the lower authorities had made an addition towards cash deposit of Rs. 29 lakhs in the hands of the assessee. The date of sale was 10.06.2010. The date of cash deposit in bank account was 04.07.2010. Hence, the explanation given by the assessee that he had received cash of Rs. 29 lakhs on sale of property which has been used by him for making cash deposit within a short span of time thereon proving the nexus between two. A Single Member Bench of M Balaganesh observed that
“The assessee in the return filed on 22.05.2018 in response to notice under Section 148 of the Income Tax Act had declared income of Rs. 5,27,050/- which is nothing but the salary income. Hence, it is proved beyond doubt that the assessee did not have any other source of income except salary which is only Rs. 5.27 lakhs. While this is so how the assessee could have made reinvestment in new property for Rs. 52,63,500/- would become point to ponder. Considering this fact itself, I hold that the explanation given by the assessee that he had received Rs. 29 lakhs in cash on sale of property is to be believed and assessee faithfully had deposited the said sum in his bank account within short span of time.”
“The salary income placed the sale consideration received of Rs. 43 lakhs ( both cash and cheque portion ) coupled with savings of the past of any enable the assessee to make investment of Rs. 52,63,500/- in the new property. Hence, the explanation given by the assessee that source for cash deposit for Rs. 29 lakhs in the bank account was made out of sale proceeds received in cash is to be believe as there is no other source of income available to the assessee. Accordingly, I hold that there is no cash for making any addition on account of unexplained credits in bank account in respect of cash deposit of Rs. 29 lakhs in the instant case” the Tribunal noted.