Advance Sale Consideration Cannot Be Treated as Unexplained Money Under Section 69A — ITAT Hyderabad

Case Overview: Tejal Kaushik Maisheri Vs ACIT (ITAT Hyderabad)

The Hyderabad Bench of the Income Tax Appellate Tribunal delivered a significant ruling in two connected appeals filed by the assessee against the orders of the Commissioner of Income Tax (Appeals)-12, Hyderabad dated 30.10.2025. Both appeals arose from assessment orders passed under Section 153C of the Income-tax Act, 1961 on 21.02.2025 for Assessment Year 2019-20. Given that identical legal questions were involved in both matters, the Tribunal disposed of them through a consolidated order.

Background and Facts of the Case

The assessee had filed her return of income for AY 2019-20 on 03.03.2020, disclosing total income of ₹6,01,230. A search and seizure operation under Section 132 of the Income-tax Act, 1961 was carried out on 23.03.2021 at the premises of the Spectra Group of Companies.

During the course of that search, certain loose sheets marked as Annexure A/SIEPL/OFF/24, Pages 56 to 62 were found and seized. Upon examination, the seized documents were found to contain:

  • An Agreement of Sale pertaining to open plots at Saidapur Village, Yadagirigutta Mandal, Yadadri Bhongir District, admeasuring 4,519 Sq. Yards (4,108.94 sq. meters)
  • The agreement was executed between the assessee and her husband Shri Kaushik Jaichand Maisheri as sellers, and Shri Kalluri Manohar Reddy as purchaser
  • A receipt acknowledging payment of ₹50 lakh received on 26.04.2018 as advance sale consideration

However, a critical factual aspect emerged — the property was not ultimately conveyed to Shri Kalluri Manohar Reddy. Instead, it was transferred through registered sale deeds dated 22.06.2019 to M/s Spectra India Eco Projects Pvt. Ltd.

Assessment Proceedings and Addition Under Section 69A

The Assessing Officer concluded that the assessee and her husband had failed to satisfactorily explain the nature and source of the ₹50 lakh found mentioned in the seized documents. Treating the amount as unexplained money, the AO invoked Section 69A of the Income-tax Act, 1961 and made an addition of ₹25 lakh each in the hands of both the assessee and her husband.

The CIT(A) sustained the addition, which prompted the assessee to approach the Tribunal.

Grounds of Appeal Raised Before the Tribunal

The assessee challenged the assessment on the following fronts:

Jurisdictional Challenges

  1. Consolidated Satisfaction Note: The AO of the searched person had recorded a single satisfaction note covering Assessment Years 2015-16 to 2021-22, which the assessee argued made the assumption of jurisdiction under Section 153C invalid
  2. Post-01.04.2021 Receipt of Seized Material: The seized material was received by the jurisdictional Assessing Officer only on 25.08.2023, i.e., after 01.04.2021 — the assessee contended this triggered the bar under Section 153C(3), rendering the proceedings invalid and requiring initiation under Section 148 instead
  3. Mechanical Approval Under Section 153D: It was argued that the Additional Commissioner of Income Tax, Central Range-2, Hyderabad, had granted approval under Section 153D in a mechanical manner, without genuine application of mind

Merits-Based Challenge