ITAT Delhi: ₹75 Lakh Cash Advance from Land Deal Not Unexplained Credit Under Section 68

April 17, 2026 : The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that a cash receipt arising from a genuine and duly documented transaction of sale of agricultural land cannot be treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961, when the assessee satisfactorily establishes the identity of the payer, genuineness of the transaction, and supporting evidence.

The ruling came in Angad Developers Pvt. Ltd. v. CIT(A), Delhi (ITA No. 5506/Del/2025), where a Bench comprising Judicial Member Vimal Kumar and Accountant Member S. Rifaur Rahman allowed the appeal of the assessee and deleted an addition of ₹75 lakh made by the Assessing Officer and upheld by the CIT(A).

The assessee had filed its return declaring a loss of ₹1.05 lakh, and the case was selected for scrutiny. During assessment proceedings, the Assessing Officer noted a significant rise in cash-in-hand and questioned the source. In response, the assessee explained that it had entered into an agreement to sell agricultural land to Versatile Commotrade Pvt. Ltd. for over ₹10 crore and had received advances, including ₹75 lakh in cash, which were duly recorded in its books.

The assessee further clarified that an initial advance of ₹1.25 crore was received through banking channels, while the additional ₹75 lakh in cash was paid by the buyer to keep the transaction alive. The company furnished documentary evidence, including the agreement to sell, cash book entries, audited financial statements, and records of the transaction.

A key factor noted by the Tribunal was that the cash payment was also acknowledged in civil proceedings before the Delhi High Court, where the buyer had filed a suit seeking recovery of advances paid. This judicial acknowledgment lent significant credibility to the assessee’s claim and corroborated the genuineness of the transaction.

Despite these submissions, the Assessing Officer treated the amount as unexplained cash credit under Section 68, and the CIT(A) confirmed the addition. However, the Tribunal held that the assessee had discharged the initial burden by establishing the identity, genuineness, and creditworthiness of the payer.

Relying on the Supreme Court’s ruling in CIT v. Orissa Corporation (P) Ltd., the Tribunal reiterated that once the assessee provides primary evidence, the burden shifts to the Revenue to disprove the explanation. In the absence of any contrary material, an addition under Section 68 cannot be sustained merely on suspicion or due to non-response by the creditor to departmental notices.

The Tribunal emphasized that the receipt was fully explained, properly recorded in the books of account, and supported by documentary as well as judicial evidence. Accordingly, it held the addition of ₹75 lakh to be unsustainable in law and set aside the orders of the lower authorities.

The appeal of the assessee was thus allowed.