Advance sale consideration cannot be taxed as unexplained money when seized records connect it to the property transfer.

Advance sale consideration evidenced by a seized agreement, receipt and subsequent registered conveyance cannot be assessed as unexplained money where the material establishes its connection with the property transaction. The receipt may instead be relevant, if taxable, to capital gains computation as suppressed sale consideration in the year of transfer. The notes further state that section 153C applicability depends on the date of search initiation, while the date seized material reaches the other person's Assessing Officer only determines abatement of assessment years. A section 153D approval challenge requires cogent material showing mechanical approval or lack of application of mind.

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Issues: (i) Whether the advance sale consideration received pursuant to an agreement for sale could be assessed as unexplained money; (ii) Whether proceedings under section 153C were invalid because seized material was received by the Assessing Officer of the other person after 01.04.2021; (iii) Whether the assessment was invalid for alleged mechanical approval under section 153D.

Issue (i): Whether the advance sale consideration received pursuant to an agreement for sale could be assessed as unexplained money.

Analysis: The seized agreement and receipt, read with the subsequent registered conveyance of the property to the group entity from whose premises the documents were seized, established that the payment was advance sale consideration received on behalf of the eventual purchaser. Applying preponderance of human probabilities, the payment was intrinsically connected with the property transaction. The assessing authority had itself identified the nature and source of the receipt as advance consideration; it could not simultaneously treat the same receipt as unexplained money. The amount, if taxable, was relevant to computation of capital gains as suppressed sale consideration in the year of transfer.

Conclusion: The addition as unexplained money was unsustainable and was deleted, in favour of the assessees.

Issue (ii): Whether proceedings under section 153C were invalid because seized material was received by the Assessing Officer of the other person after 01.04.2021.

Analysis: The statutory exclusion of section 153C turns on the date of initiation of the search or requisition. The deeming of the date on which seized material is received by the Assessing Officer of the other person is confined to determining the assessment years that abate and cannot be extended to determine whether section 153C applies. The underlying search was initiated before 01.04.2021.

Conclusion: The proceedings under section 153C were valid, against the assessees.

Issue (iii): Whether the assessment was invalid for alleged mechanical approval under section 153D.

Analysis: Prior approval by the competent authority was recorded in the assessment order. No cogent material was produced to substantiate that the approval was mechanical or granted without application of mind.

Conclusion: The challenge to the approval under section 153D failed, against the assessees.

Final Conclusion: The disputed receipt is to be treated, if at all taxable, as consideration connected with transfer of the property and not as unexplained money, while the jurisdictional challenges based on the timing of receipt of seized material and the approval were rejected.

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