On-Money From Property Sale Taxable as Capital Gains, Not Section 69A: ITAT Delhi

Sandeep Kapoor Vs DCIT (ITAT Delhi)

Summary: ITAT Delhi partly allowed four connected appeals concerning Sandeep Kapoor and Shri Amarjeet Singh Kapoor for Assessment Years 2021-22 and 2023-24 and held that cash received as “on money” over and above the consideration recorded in registered sale deeds could not be assessed as unexplained money under section 69A where the source and character of the receipt were established as consideration received from the identified purchaser of the property. The Tribunal, however, held that such on-money could not escape taxation and was required to be included in the sale consideration while computing income under the head “Income from Capital Gains”.

For AY 2021-22, Sandeep Kapoor had originally filed his return declaring total income of INR 2,18,58,700/-. A search and seizure action under section 132 was carried out on 31.10.2022 on Johnson Watch & Kapoor Watch Group of cases and the assessee’s residential premises were also covered. On the basis of loose papers and material found during the search, the case was reopened by notice under section 148 dated 16.05.2023. The assessment ultimately determined total income at INR 2,68,16,550/- after various additions. The CIT(A) granted substantial relief but sustained an addition of INR 16,75,000/- under section 69A.