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Facts
The assessee, Shri Pradip Kumar Roy, sold a residential property for Rs. 61,00,000 on 07.07.2010 and deposited Rs. 29,15,000 of the sale proceeds into his bank account on the same day. The Assessing Officer (AO) made an addition of Rs. 31,17,500 as unexplained cash credit under section 68 of the Income Tax Act, 1961, while accepting the capital gains computation. The assessee had not filed a return of income for the Assessment Year 2011-12.
Held
The Tribunal held that since the sale consideration of Rs. 61,00,000 was accepted and the cash received of Rs. 31,00,000 was not disputed, the deposit of Rs. 29,15,000 on the same date could not be disputed as unexplained. However, the Tribunal also noted that the sale consideration mentioned in the notice under section 148 was Rs. 30,45,000, which differed from the assessee's figure. Therefore, the addition of Rs. 29,15,000 was directed to be deleted.
Key Issues
Whether the addition of Rs. 31,17,500 as unexplained cash credit under section 68/69A is justified when it represents part of the sale consideration of a property, and the capital gains were accepted. Whether the notice u/s 148 was issued beyond the limitation period.
Sections Cited
143(3), 147, 68, 69A, 148, 54
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI, VICE –
ORDER PER PRASHANT MAHARISHI, VICE – PRESIDENT 1.
Shri Pradip Kumar Roy (the Assessee/Appellant) for Assessment Year 2011-12 against the Appellate Order passed by the Joint Commissioner of Income Tax, Appeals-4, Mumbai on 31.07.2025 wherein Appeal filed by the Assessee against the re- assessment order passed u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 passed by the ITO, Ward-5(3)(7), Bengaluru was dismissed.
The Assessee has raised following grounds:-
The Learned CIT(A) has erred in law and on facts in confirming the addition of ₹ 31,17,500/-as unexplained money u/s 69A of the Income Tax Act, 1961, despite the same representing part of the sale consideration of the residential house property sold for ₹61,00,000/-on 07.07.2010, Reliance is placed on CIT v. Kulwant Rai [291 ITR 36 (Delhi)).
Page 2 of 5 2. The authorities below failed to appreciate that ₹ 29,15,000/- was deposited in the bank on the very date of execution of the sale deed (07.07.2010), clearly establishing a nexus between the sale consideration and the cash deposits. Reliance: CIT v. P.K. Noorjahan [237 ITR 570 (SC)).
The addition results in double taxation, as the AO has already accepted the computation of long-term capital gain on the full sale price of ₹ 61,00,000/-(net of cost & investment u/s 54), and simultaneously treated part of the same receipt as unexplained money, which is contradictory and impermissible in law. Reliance: ITO v. Raj Kumar Agarwal [108 taxmann.com 339 (ITAT Kolkata)]
The addition under section 68/69A is bad in law and deserves to be deleted, as the appellant has discharged the initial burden of proof by explaining the nature and source of cash deposits. Reliance: CIT v. Orissa Corporation (P) Ltd. [159 ITR 78 (SC)] 5. Without prejudice, once the entire transaction is disclosed, documented, and taxed under ‘Capital Gains', invoking section 68/69A amounts to double addition on the same sum. Reliance: ACIT v. Kulwant Singh [85 taxmann.com 112 (ITAT Amritsar)]. 6. The CIT(A) also failed to consider that if the appellant had been permitted to file a return of income, the full sale consideration of ₹61,00,000/- would have been duly disclosed in the ITR, and after claiming exemption u/s 54, no capital gains tax liability would have arisen. Since there is no loss of revenue to the Department, the technical lapse of non- filing of return should not result in an unjust demand. Reliance: CIT v. Vegetable Products Ltd. [88 ITR 192 (SC)]. 7. The order of the CIT(A) is against the facts and circumstances of the case, arbitrary, and contrary to settled judicial precedents. Reliance: CIT v. Reliance Petroproducts Pvt. Ltd. [322 ITR 158 (SC)). 3. The brief fact of the case shows that the Assessee is an employee of Wipro Limited and has not filed any return of income. Information was received that Assessee has not filed any return of income and therefore the notice u/s. 148 of the Act was issued on 30.03.2018. In response to such notice, Assessee intimated the Ld. Assessing Officer through email that he is presently residing at United Kingdom and does not have documents with him except form no. 16 for the impugned Assessment Year.
Page 3 of 5 4. The Ld. Assessing Officer found that according to the Annual Information Return, Assessee has deposited in cash Rs. 31,71,500/- with State Bank of India, Kumaraswamy Layout, Bangalore and has sold an immovable property for Rs. 30,45,000/- on 07.07.2010. The Ld. Assessing Officer sent an email on 04.12.2018 asking Assessee to furnish the return of income as well as furnish the sources of the funds for cash deposit as well as chargeability of capital gain and sale of immovable property.
The Assessee replied on mail that he has bought a house in Kumaraswamy Layout, Bangalore in the year 2004 for Rs. 29,00,000/- which was sold in 2010-11 for Rs. 61,00,000/-. Out of the above consideration, Assessee has purchased an apartment at Kanakapura Road on 15.10.2010 for Rs. 23,00,000/-. Assessee further submitted the computation of Long Term Capital Gain as well as exemption claim u/s.
The Ld. Assessing Officer found that the computation of capital gain is correct and accepted.
Regarding cash deposit of Rs. 31,75,000/-, as Assessee did not submit any information.
Thus, above sum was added to the total income of the Assessee u/s. 68 of the Act and ld. AO passed a Re-assessment Order on 27.12.2018.
The Assessee aggrieved with the order preferred an Appeal. Before the Ld. CIT(A), the Assessee submitted the details vide written submission dated 13.06.2025. Assessee submitted that out of the total sale consideration of Rs. 61,00,000/- on 07.07.2010 he received cash of Rs. 31,00,000/- out of which on the same date Rs. 29,15,000/- was deposited in his bank account. He therefore submitted that there is no unaccounted income. The Assessee further stated that no notice u/s. 143(2) of the Act was issued to the Assessee and therefore the Assessment Order is not correct. The Ld. CIT(A) was also confronted with the fact that notice issued u/s. 148 of the Act on Assessee on 10.04.2018 is also beyond limitation and therefore Assessment deserves to be quashed.
The Ld. CIT(A) rejected the contention of the Assessee that notice u/s. 148 of the Act is barred by limitation, stated that for Assessment Year 2011-12, the notice issued and served on 10.04.2018 could be issued up to sixyears from the end of the relevant Assessment Year. On the issue of notice u/s. 143(2) of the Act, he held that as Assessee did not have any return of Page 4 of 5 income in response to notice u/s. 148 of the Act, no such notice should have been issued. With respect to the addition of Rs. 31,17,500/- he held that Assessee has failed to conclusively substantiate the direct nexus between the cash deposit and the sale consideration received. He held that merely because the Long Term Capital Gains is accepted by the Ld. Assessing Officer, it cannot be said that Assessee has substantiated the cash deposits. Accordingly, he dismissed the Appeal of the Assessee.
The Assessee aggrieved with the Appellate Order has filed this Appeal. I have heard Shri Praveen Kumar, CA, Authorized Representative and Shri Ganesh R Ghale, Standing Counsel for Revenue. The only issue involved in this Appeal is that the Ld. Assessing Officer has made an addition of Rs. 31,17,500/- under the head income from other sources as unexplained cash credit u/s. 68 of the Income Tax Act. As per the information given by the Assessee and gathered by the Ld. Assessing Officer, facts show that Assessee has made a cash deposit of Rs. 31,17,500/- with State Bank of India, Kumaraswamy Layout, Bangalore. This was deposited on 07.07.2010. The Assessee has stated that he has sold a house property for Rs. 61,00,000/- and out of which a sum of Rs. 31,00,000/- was received by the Assessee in cash on 07.07.2010 and on the same date out of the same Rs. 29,15,000/- was deposited in his bank account. Therefore, with respect to the sum of Rs. 29,15,000/- could not have been disputed because when the Assessee has paid the capital gain showing the sale consideration of Rs. 61,00,000/-, it was accepted. Therefore, when the sale consideration of Rs. 61,00,000/- is accepted, out of which Rs. 31,00,000/- received in cash, which has not been disputed and out of the same the deposit of Rs. 29,15,000/- on 07.07.2010 could not have been disputed.
However, we find that ld. AO has issued notice u/s 148 of the act where in the sale consideration of house property is mentioned at Rs. 3045000/- whereas the assessee has shown sales consideration of Rs 61,00,000/-. Despite this the ld. AO has accepted the computation of capital gain showing sales consideration of Rs 61 lakhs. Therefore, we direct the Ld. Assessing Officer to delete the addition of Rs. 29,15,000/- out of the sum of Rs. 31,17,500/-. As there is no explanation before us, the balance addition of Rs. 2,02,500/- deserves to be confirmed.
Before us, the grounds of issue of notice u/s. 148 beyond the time limit as well as non-issue of notice u/s. 143(2) of the Act which are dismissed by the Ld. CIT(A) are not raised.
Accordingly, ground no. 2 of the Appeal is allowed and addition is restricted to the extent of Rs. 2,02,500/-. All other grounds are supportive.
Accordingly, Appeal of the Assessee is allowed.
Order pronounced in the open court on 06th February, 2026.