ITAT Deletes Rs. 54.36 Lakh Cash Deposit Addition and Rs. 2.14 Crore Unexplained Investment:

The assessee had filed his return of income declaring a total income of Rs. 74,38,145. His case was selected for scrutiny on account of substantial cash deposits in bank accounts and transactions involving the purchase and sale of immovable property. During the assessment proceedings, the AO noticed cash deposits of Rs. 54,36,000 in the assessee's current account maintained with Central Bank of India. The assessee explained that the deposits represented cash received from purchasers against the sale of plots developed from a parcel of land purchased earlier.

Before the Tribunal, it was explained that the transactions were carried out through mediators under a Memorandum of Understanding (MOU) dated 06/01/2021, which provided that the mediators would identify purchasers, collect the sale consideration and deposit the amounts into the assessee's and his wife's bank accounts. The property was to be registered in favour of the ultimate purchasers after receipt of the agreed consideration.

The Tribunal observed that the total sale consideration realised from the four purchasers amounted to approximately Rs. 3.72 crore and that the receipts, including cash and cheque transactions, had been disclosed in the return of income, with tax paid accordingly. It further noted that the assessee had been suffering from serious health complications during the assessment proceedings and had undergone coronary angiography and pacemaker implantation, which also affected his ability to respond to certain statutory notices.

Considering the documentary evidence, registered sale deeds, bank statements and the overall circumstances of the transactions, the Tribunal held that the cash deposits could not be treated as unexplained money under Section 69A of the Act. Accordingly, it set aside the CIT(A)'s order and directed the AO to delete the entire addition of Rs. 54.36 lakh.

After examining the bank statements and payment details, the Tribunal observed that the purchase consideration, registration fees and stamp duty had been paid through banking channels. Therefore, the investment was duly supported by documentary evidence and could not be regarded as unexplained. Consequently, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition.