Jyoti Chaudhary Vs ITO (ITAT Amritsar)
Demonetisation Cash from Property Sale Explained; Addition Deleted Despite Time Gap
The ITAT, Amritsar Bench held that mere time gap between sale deed execution and cash deposits cannot justify an addition, when sale consideration in cash is evidenced in the registered sale deed and capital gains are duly offered.
In this case, the assessee deposited cash during demonetisation and explained it as arising from sale of property and rental income. The AO doubted the explanation due to an alleged earlier deposit before execution date and a perceived idle period, granting partial relief and adding the balance. The CIT(A) affirmed the view citing time gap.
The Tribunal rejected these presumptions, holding that sale consideration logically exchanges hands at the time of execution of registered documents, unless the Revenue proves otherwise. In absence of evidence showing prior receipt or alternative utilisation of cash, the assessee’s explanation must be accepted. Accordingly, the entire addition was deleted and income directed to be recomputed. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
1. Aforesaid appeal by assessee for Assessment Year (AY) 2017- 18 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC dated 21-02-2025 in the matter of an assessment framed by Ld. AO u/s 144 / 147 on 19-12-2019. Having heard rival submissions, the appeal is disposed-off as under.
2. In the assessment order, Ld. AO made addition of Rs.11,46,500/- which stem from the fact that the assessee was found deposited cash of Rs.13,46.550/- in her bank account during demonetization period. The deposits were stated to be sourced from sale of property as carried out by the assessee on 11-04-2016. In the sale deed, it was mentioned that the amount was already received by the assessee before the execution of the sale deed. The Ld. AO observed that the assessee had deposited cash of Rs.8.10 Lacs on 05-03-2016 and secondly, there was long time gap between date of execution of sale deed and impugned deposits. After granting benefit of Rs.2 Lacs, the remaining amount was added to the income of the assessee. The Ld. CIT(A) confirmed the same considering the large time gap between execution of sale deed and period of deposits and no reasons were adduced by the assessee for keeping the money idle. Aggrieved, the assessee is in further appeal before us.
3. From case records, it could be seen that the assessee is regularly earning rental income. This year, the gross rental income is Rs.4.80 Lacs. The impugned deposits for Rs.4,96,500/- are stated to be sourced out of earlier cash withdrawals and rental income. The deposits of Rs.8.50 Lacs are stated to be out of sale proceeds of property. The assessee has reflected capital gains on sale of property in this year. As per sale deed dated 11-04-2016, the assessee has received sale consideration in cash. There is no evidence that the said money was received before 05-03-2016 and it could not be presumed by Ld. AO that the earlier deposits were made out of advances unlessevidence to that effect was brought on record. It is quite logical that the sale consideration would exchange hands at the time of execution of registered documents only. Therefore, the presumption of Ld. AO could not be accepted. Simply because of time-gap, the fact could not be rebutted that the assessee received sale consideration in cash and unless any other utilization of cash was established, the explanation of the assessee is to be accepted. Accordingly, we delete the impugned addition and allow the appeal of the assessee. The Ld. AO is directed to re-compute the income of the assessee.
4. The appeal stands allowed.
Order pronounced on 03rd February, 2026.
