Key facts
- A taxpayer received Rs 2.5 lakh cash from selling a residential property and Rs 8.09 lakh cash from selling household items.
- The Income Tax Department initially treated these cash deposits and the investment in a new property as unexplained.
- The Income Tax Appellate Tribunal (ITAT) Chennai ruled in favor of the taxpayer, deleting the additions.
- The ITAT accepted the taxpayer's explanation for the cash deposits, citing documentary evidence.
- Section 269ST of the Income-tax Act restricts cash receipts of Rs 2 lakh or more in a single transaction.
An Income Tax Appellate Tribunal (ITAT) Chennai ruling has provided clarity on cash transactions, allowing a taxpayer to explain cash deposits from the sale of a residential property and household items. The taxpayer had sold a flat for Rs 35.50 lakh, receiving Rs 2.5 lakh in cash, and also sold household goods for Rs 8.09 lakh in cash. Initially, the Income Tax Department treated these cash deposits and the investment in a new property as unexplained money, leading to additions under Section 69A of the Income-tax Act. The ITAT, however, deleted these additions, accepting the taxpayer's explanation supported by documentary evidence like the sale deed and bills. The tribunal noted that the individual transactions for household items were below the Rs 2 lakh threshold. This case highlights the importance of documentary evidence in explaining cash transactions. However, it also brings attention to Section 269ST, which generally restricts cash receipts of Rs 2 lakh or more in a single transaction, potentially attracting implications for the property sale consideration.