ITAT Deletes Addition Under Section 69A After Accepting Cash Received on Relinquishment of Property Rights

ITAT Allahabad held that the addition made under Section 69A was unsustainable and accordingly allowed the appeal of the assessee.

The assessee filed his return of income, declaring a total income of Rs 5.47 lakh. The case was selected for limited scrutiny and notices were issued seeking explanation regarding cash deposits made but during the assessment proceedings, the AO noticed cash deposits aggregating to Rs 29.69 lakh. Finding the explanation furnished by the assessee unsatisfactory, the AO treated the entire amount as unexplained money under Section 69A of the Income Tax Act, 1961.

The CIT(A) partly allowed the appeal but sustained the addition to the extent of Rs 7.50 lakh.

The assessee before Tribunal argued that the amount represented cash consideration received from his real brother towards relinquishment of his share in an inherited residential property. In support of the claim, the assessee produced an unregistered deed dated 17 December 2016 and furnished particulars of the cash receipts.

It was observed that the assessee had furnished details regarding the cash component received from his brother and that these particulars sufficiently established the source of the cash deposits. It held that neither the AO nor the CIT(A) had properly appreciated these material aspects.

Allowing the appeal, the ITAT Ahmedabad held that where an assessee demonstrates that cash deposits originated from consideration received for relinquishing rights in inherited property, such deposits cannot be treated as unexplained money merely because the underlying document is unregistered. Consequently, the addition of Rs 7.50 lakh made under Section 69A of the Income Tax Act, 1961 was deleted.