ITAT allows appeal on Rs. 20 lakh cash deposits explained as property advance refund with proper documentation

ITAT Delhi allowed assessee's appeal regarding cash deposits of Rs. 20 lakhs in bank account. The deposits were explained as amounts received from Madhur Infra Developers P. Ltd. against advance payment for plot purchase, supported by receipts and proximity of transactions. On Long Term Capital Gains, ITAT noted AO computed LTCG on entire consideration despite partial receipt. CIT(A) directed recalculation based on actual consideration received (Rs. 20,33,320). ITAT restored matter to AO to verify if assessee already offered LTCG in AY 2019-20 when entire consideration was received, directing no addition if tax liability already discharged.

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Issues:
1. Addition of Rs. 20 lakhs for cash deposits in the bank.
2. Addition of Rs. 45,79,404/- for alleged Long Term capital Gain (LTCG).

Analysis:

Issue 1: Addition of Rs. 20 lakhs for cash deposits in the bank:
The appellant contested the addition of Rs. 20 lakhs in cash deposits in the bank, arguing that the amount was received as a refund of advance payment for a plot purchase. The appellant provided evidence of receiving Rs. 20 lakhs in cash from a developer and subsequently depositing the same amount in the bank. The Tribunal found the proximity of events and documents submitted by the appellant to be convincing, thus allowing the appeal and deleting the addition.

Issue 2: Addition of Rs. 45,79,404/- for alleged Long Term capital Gain (LTCG):
Regarding the addition of LTCG, the appellant sold land for Rs. 55,33,320/- but received only Rs. 20,33,320/- due to dishonored cheques. The remaining amount of Rs. 35 lakhs was disputed and later paid by the purchaser. The CIT(A) directed the AO to recalculate LTCG based on the consideration actually received. The Tribunal agreed that the computation of LTCG in the impugned assessment year was incorrect. The issue was remanded to the AO to verify if the appellant had declared LTCG in the year of receiving the entire consideration, suggesting no addition in the current assessment year if the tax liability was discharged in the relevant year.

In conclusion, the appeal was partly allowed, with specific grounds upheld for statistical purposes, and the matter of LTCG recalculated based on actual consideration received was remanded for further verification by the AO.

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