Be Document-Smart — Mention the Cash Part in Your Sale Deed.
This is not just advice — it’s law, as recently reaffirmed by the Income Tax Appellate Tribunal. (ITAT, Case ITA No.4627/Mum/2024)
Here’s the story that shows why every property seller should take this to heart.
The Case That Changed the Narrative
A woman in Mumbai sold her property for around ₹94 lakh. As often happens in real estate transactions, the buyer paid part of the sale consideration in cash — ₹38.15 lakh — and part via bank transfer. The entire transaction, including the cash portion, was properly recorded in the registered sale deed.
She then deposited this cash into her bank account to ensure transparency and compliance. But later, the Income Tax Department issued her a notice under Section 148/69A, alleging that the cash deposit was “unexplained income” — simply because she had not filed an ITR earlier and some of the cash had been deposited in her bank.
The ITAT Mumbai Ruling — A Victory for the Taxpayer
The woman didn’t back down. She filed her ITR, submitted the registered sale deed, bank statements, and a full explanation of the sale and cash deposit. When the matter reached the ITAT Mumbai, the tribunal examined the evidence and reached a clear, sensible conclusion:
📌 Primary legal document trumps suspicion: The ITAT noted that the registered sale deed explicitly recorded the receipt of the ₹38.15 lakh in cash.
📌 Bank records matched the sale deed: The cash deposits in her bank account exactly corresponded with the cash amount recorded in the sale deed.
📌 No contradictory evidence from the Revenue: The Income Tax Department failed to provide any evidence to say the cash was from an unaccounted source.
Because of this, the ITAT ruled that:
“Once the registered sale deed confirms the receipt of cash and the bank entries support the same, there remains no basis in law or on fact to treat the deposit as unexplained income.”
In other words: the cash deposit was fully explained by the sale documents and bank records — so it cannot be treated as unexplained income under Section 69A.
The tribunal accordingly deleted the addition of unexplained income that the Assessing Officer had made.
What This Means for Property Sellers
This judgment is practical tax wisdom for anyone selling property:
✔️ 1. Document the Cash Part Clearly
If you receive any portion of the sale consideration in cash, make sure it is explicitly recorded in the registered sale deed.
✔️ 2. Deposit Cash into Your Bank Account
Instead of holding cash at home (which raises red flags), deposit the amount into your bank account. This creates a direct, traceable link between:
- the sale deed, and
- the bank deposit.
✔️ 3. Keep the Paper Trail
Sale deed + Bank statement + ITR (if required) = perfectly explained source of funds.
When both the documented sale deed and the bank records align, the Income Tax Department cannot treat the cash as unexplained. In fact, the ITAT explicitly held so and quashed the addition.
Be Fearless, Be Smart
Here’s the essence:
📌 If you deposit the cash received from the sale of property in your bank account and it is supported by the sale deed, the income tax department cannot label that deposit as unexplained income.
So going forward:
- Mention the cash component clearly in the sale deed
- Deposit it into your bank account
- Preserve a complete paper trail
… and you can stand firm against any claim of “unexplained income.”
This ruling from ITAT Mumbai gives you the confidence to transact cleanly and transparently — without fear.
