ITAT Delhi Deletes ₹75 Lakh Addition, Holds Cash Advance for Land Deal Cannot Be Treated as Unexplained Credit

April 17, 2026 : The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that a cash receipt arising from a duly substantiated transaction for the sale of agricultural land cannot be taxed as unexplained cash credit under Section 68 of the Income Tax Act, 1961, where the assessee establishes the identity, genuineness, and creditworthiness of the payer.

In Angad Developers Pvt. Ltd. v. CIT(A), Delhi (ITA No. 5506/Del/2025; AY 2016–17), the Bench comprising Judicial Member Vimal Kumar and Accountant Member S. Rifaur Rahman allowed the assessee’s appeal and deleted the addition of ₹75 lakh made by the Assessing Officer and sustained by the Commissioner of Income Tax (Appeals).

Background

The assessee, Angad Developers Pvt. Ltd., had filed its return declaring a loss. During scrutiny assessment, the Assessing Officer noticed a significant increase in cash-in-hand and sought an explanation. The assessee clarified that it had entered into an agreement to sell agricultural land to Versatile Commotrade Private Limited for a total consideration exceeding ₹10 crore.

It was explained that:

• An initial advance was received through banking channels; and
• An additional ₹75 lakh was received in cash at the request of the buyer to keep the transaction alive.

The assessee supported its explanation with documentary evidence including:

• Agreement to sell
• Cash book and accounting records
• Audited financial statements of both parties
• Judicial records from civil proceedings before the Delhi High Court

Notably, the buyer itself had filed a civil suit seeking recovery of advances paid, explicitly acknowledging the payment of ₹75 lakh in cash.

Revenue’s Stand

Despite the documentation, the Assessing Officer treated the ₹75 lakh as unexplained cash credit under Section 68. The CIT(A) upheld the addition, primarily citing lack of independent confirmation from the buyer.

Tribunal’s Findings

The Tribunal found that the assessee had discharged its initial burden under Section 68 by establishing:

• Identity of the payer
• Genuineness of the transaction
• Creditworthiness of the payer

It emphasized that:

• The transaction was supported by contemporaneous documentation and recorded in books of account.
• The cash receipt was corroborated by judicial proceedings before the Delhi High Court, where the buyer admitted the payment.
• The existence of such third-party judicial acknowledgment significantly strengthened the assessee’s case.

The Tribunal reiterated the settled legal position that once the assessee furnishes primary evidence, the burden shifts to the Revenue to disprove it with cogent material. In this case, no contrary evidence was brought on record.

Legal Principle Applied

Relying on the Supreme Court’s ruling in CIT v. Orissa Corporation (P) Ltd., the Tribunal held that:

• Additions under Section 68 cannot be sustained merely on suspicion or due to non-response from the creditor;
• Where the assessee’s explanation is supported by credible evidence, it must be accepted unless disproved by the Revenue.

Conclusion

The Tribunal concluded that the ₹75 lakh receipt was a genuine advance arising out of a property transaction and could not be treated as unexplained income. Accordingly, the addition was deleted and the appeal was allowed.