TaxTMI 
TaxTMI 
2026 (4) TMI 1310
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.... filed reply on e-filing portal of the Department. During assessment proceedings, it was noticed that in balance sheet of the company cash-in-hand was shown as Rs. 80,85,609/- while in the last year cash was shown as Rs. 7,25,160/-. The assessee was asked about sharp rise in cash in hand in comparison to previous order cash in hand vide notice u/s 142(1) dated 19.09.2018. Assessee filed reply vide letter dated 27.12.2018 along with documents. 2.1 On completion of proceedings, Ld. AO vide order dated 30.12.2018, made addition of Rs. 75,00,000/-. 3. Against order dated 30.12.2018 of Ld. AO, the assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 08.07.2025. 4. Being aggrieved, appellant-assessee preferred present appeal on following grounds:- 1. That the order of the Ld. Commissioner of Income Tax (Appeals) NFAC, is bad in law and on facts. 2. That on the facts and circumstances of the case and in law, the Ld. CIT(A), NFAC has erred in treating the cash receipt of 275,00,000/- from Versatile Commotrade Private Limited as unexplained despite him acknowledging the facts given below in the CIT(A) order issued by his office a) ....
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....Tax (Appeals) grossly erred, both in law and on facts, in treating the cash receipt of INR 75 lakhs from Versatile Commotrade Private Limited (hereinafter referred to as the "buyer") against the sale of agricultural land as unexplained cash credit. The AO and CIT (A) arbitrarily made an addition under Section 68 of the Income Tax Act, 1961, without properly appreciating the nature of the transaction, the documentary evidence submitted, and the fact that the receipt was fully explained and accounted for. The addition is, therefore, unjustified, arbitrary, and contrary to law, as more fully explained in the accompanying written submission forming part of this appeal. It is a settled principle that income-tax authorities cannot pre-empt or disregard the outcome of civil proceedings when the nature and character of a receipt is sub judice. Until the civil dispute is adjudicated, the amount retains the character of an advance against a property transaction and cannot be arbitrarily treated as unexplained income. 5.1. That on the facts and circumstances of the case and in law, the Ld. CIT(A), NFAC has erred in treating the cash receipt of INR 75,00,000/- from Versatile Commotrade Priv....
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....of the Buyer to prove their genuineness and credit worthiness are also enclosed as per Refer Page No. 136 to 158 of the Paper Book 5.3. As per the terms of the Agreement, an advance of INR 1.25 crores was received through banking channels and duly reflected in the books of account. The balance consideration was required to be paid within 80 days, failing which the agreement would become void ab initio and the earnest money would stand forfeited. 5.4. It is respectfully submitted that during the subsistence of the agreement, and at the specific request of the buyer to keep the transaction alive, the appellant received an additional amount of INR 75 lakhs in cash. This receipt was duly recorded in the regular books of account, reflected in the cash book for the relevant financial year, and accounted for by the Appellant Company in their books of accounts. The aggregate amount of Rs. 2 crores i.e. Rs. 1.25 crores through cheque and the further sum of Rs. 0.75 lakhs in cash is the sum now being demanded back by the Buyer from the Appellant Company through the Suit filed by them in the Delhi High Court against the Appellant. The Buyer has also paid Court Fee of Rs. 2,08,060 lakhs ....
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....ence has been brought on record. Mere non-compliance by the buyer to a notice issued under Section 133(6) cannot, by itself, invalidate otherwise credible and corroborated evidence. 5.8. The reliance placed by the Revenue on conjectures and suspicion, while disregarding documentary evidence and judicial acknowledgment, is contrary to settled law. Courts have consistently held that once the assessee provides a plausible and supported explanation, additions under Section 68 cannot be sustained merely on the basis of doubt or disbelief. The Ld. CIT(A) has effectively substituted legal proof with subjective satisfaction, which is not as per the tenets of law 5.9. It is also pertinent to note that the very same amount of INR 75 lakhs is the subject matter of recovery proceedings before the Hon'ble Delhi High Court, where the buyer viz. Versatile Commodities Private Limited has sought refund of the advance paid, including the impugned cash amount. This fact alone demonstrates that the receipt represents a commercial transaction arising out of a land deal and not any unexplained or unaccounted income of the appellant. 5.10. In view of the above facts and circumstances, it is ....
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....velopers Pvt. Ltd., has fully disclosed the receipt of INR 75 lakhs/- from Versatile Commotrade Pvt. Ltd., which was deposited in the bank, recorded in the cash book, reflected in the audited financial statements, and supported by the sale agreement and the civil suit filed by the buyer before the Hon'ble Delhi High Court. The Revenue has not brought any material to rebut the explanation, nor disputed the identity of the creditor or the genuineness of the transaction. In view of CIT v. Satranchand Baisoya & Bros. (1979) 117 ITR 159 (SC), wherein it was held that mere disbelief or lack of independent verification cannot justify an addition under Section 68, the impugned addition of INR 75 lakhs/- is wholly unsustainable in law and deserves to be deleted. Further reliance can be placed upon the judgment of the Hon'ble Supreme Court in CIT v. Lovely Exports (P) Ltd., 216 CTR 195 (SC), wherein the Hon'ble Court held that when the assessee provides a credible and verifiable explanation for any receipts, the Revenue cannot sustain an addition merely on the basis of suspicion or disbelief. The Court further observed that the burden lies on the Revenue to bring positiv....
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....leted. 5.17. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in failing to consider the High Court suit and the audit report along with the financial statements of the appellant, which were duly submitted, substantiating the fact of receipt of cash money towards advance. 5.18. Without prejudice to the above, it is respectfully submitted that the Ld. CIT(A) erred in not appreciating the audit report and duly audited filed financial statements of the buyer, which were placed on record to conclusively establish the identity and creditworthiness of the purchaser. The appellant is a regularly assessed corporate entity, incorporated under the Companies Act, having audited accounts, PAN, and statutory compliances duly in place. The financial statements of the purchaser are a part of this paper book attached to this submission from page 136 to 158. 5.19. Further, as submitted above, at the specific request of the purchaser to keep the transaction alive, the Appellant Company received an amount of INR 75 lakhs in cash as earnest money. The said receipt was duly disclosed and is also reflected in the civil suit filed by the purchaser against the Appe....
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....ng judicial precedents which are forming part of the paper book from page no. 159 to 186. Hon'ble Supreme Court in Commissioner of Income Tax v. Balbir Singh Maini, (2017) 398 ITR 531 (SC), wherein the Hon'ble Court held that tax cannot be imposed on receipts that do not constitute realizable or legally enforceable income, and that contingent or hypothetical amounts cannot be treated as taxable merely because they appear in books or records. The Court emphasized that the Revenue must examine the substance of the transaction rather than rely on form or assumptions. 5.23. In the present case, the appellant, Angad Developers Pvt. Ltd., received INR 75 lakhs from Versatile Commotrade Pvt. Ltd. pursuant to a valid commercial arrangement for the sale of agricultural land, with the receipt duly recorded in the audited financial statements, and cash book and acknowledged in the civil suit filed by the buyer with the Hon'ble high court. The Revenue has neither questioned the legal enforceability of the transaction nor established that the receipt was contingent or hypothetical. In light of the principles in Balbir Singh Maini, it is evident that the cash receipt repr....
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....t is crystal clear that, Ld. CIT(A) vide order dated 08.07.2025 upheld order dated 30.12.2018 of Ld. AO treating cash receipt of Rs. 75,00,000/- from Versatile Commotrade Private Limited (hereinafter referred to as the "buyer") against the sale of agricultural land as unexplained cash credit. 7.1. Appellant company had disclosed the fact of receipt of Rs. 75,00,000/- in cash was reflected in Civil Suit filed by the buyer against the appellant. A sum of Rs. 2 crores was received by the appellant company from the buyer. These include the cash receipts issued by the appellant company on receipt of the amount in cash from the buyer. A copy of Agreement to Sale has been included by the Buyer in their Suit filed before the Delhi High Court vide page no. 103 to 109 of the paper book. The audited accounts of the Buyer to prove their genuineness and credit worthiness are also enclosed as per Refer Page No. 136 to 158 of the Paper Book. The advance of Rs. 1.25 crores was received through banking channels and duly reflected in the books of account. The receipt of cash of Rs. 75,00,000/- was duly recorded in the regular books of account, reflected in the cash book for the relevant financial....