Cash Withdrawn Prior to Property Purchase Validates Source: ITAT Panaji Deletes ₹6.80 Lakh Addition Under Section 69A
Case Overview: Prasanna Purushottam Majalikar Vs ITO (ITAT Panaji)
The Panaji bench of the Income Tax Appellate Tribunal delivered a significant ruling in the case of Prasanna Purushottam Majalikar Vs ITO (ITAT Panaji) for Assessment Year 2020-21, providing meaningful clarity on how prior bank withdrawals can legitimately establish the source of cash payments made during immovable property transactions. The Tribunal overturned the findings of both the Assessing Officer and the CIT(A), ultimately deleting the entire addition of ₹6.80 lakh that had been made under Section 69A of the Income Tax Act, 1961.
Background and Facts of the Case
The assessee in this matter is a non-resident individual who entered into a registered purchase deed for a flat identified as Flat S-3, MZ Colony, Margao, Goa, on 24 October 2019. The total registered consideration for the immovable property stood at ₹18.80 lakh.
Breakdown of Payment Made by the Assessee
The total purchase consideration was discharged through a combination of banking and cash modes:
- ₹12 lakh — paid via account-payee cheque (documented and traceable)
- ₹6.80 lakh — paid in cash at the time of registration
While the cheque component posed no difficulty in terms of source verification, the cash component of ₹6.80 lakh became the focal point of dispute, as the Assessing Officer was not convinced by the assessee's explanation regarding the origin of these funds.
Assessment and Addition Under Section 69A
The Assessing Officer, while framing the assessment order dated 29.05.2025 under Section 147 read with Section 144C(3) of the Income Tax Act, 1961, treated the unexplained cash payment of ₹6.80 lakh as unexplained money in the hands of the assessee. This addition was made invoking Section 69A of the Act, which deals with unexplained money found in the possession of an assessee.
Section 69A of the Income Tax Act, 1961 applies where an assessee is found to be the owner of money, bullion, jewellery, or other valuable articles, and no satisfactory explanation is offered about the nature and source thereof. Such amount is then treated as the income of the assessee for that financial year.
The Assessing Officer held that merely stating the cash was sourced from savings or prior withdrawals—without corroborating evidence—was not a sufficient explanation. The addition of ₹6.80 lakh was thus confirmed at the assessment stage.