ITAT Hyderabad deletes ₹20-lakh addition on property purchase, rejects Section 69A invocation

The Hyderabad “SMC” Bench of the Income Tax Appellate Tribunal has allowed the appeal filed by G K Properties Private Limited, deleting an addition of ₹20 lakh made as unexplained money under Section 69A of the Income-tax Act, 1961, for the Assessment Year 2020–21.

Background

The assessee, engaged in real estate business, had purchased two properties under separate sale deeds dated 30 January 2020, each for a consideration of ₹1.79 crore. In its balance sheet as on 31 March 2020, the assessee reflected an outstanding amount of ₹20 lakh (₹10 lakh per property) payable towards the purchase consideration. During scrutiny assessment under Section 143(3), the Assessing Officer treated this outstanding amount as unexplained money, reasoning that the sale deeds recorded acknowledgment of receipt of the entire consideration by the seller. On this basis, an addition of ₹20 lakh was made under Section 69A, which was later upheld by the NFAC.

Tribunal’s ruling

Allowing the assessee’s appeal, the Tribunal observed that although the sale deeds mentioned receipt of full consideration, they did not specify the mode or particulars of payment. The assessee, however, produced bank statements evidencing subsequent payment of the outstanding amount as well as TDS challans, showing that tax was deducted and paid along with interest and late fee. The Tribunal held that once subsequent payment through banking channels and TDS compliance were established, the outstanding liability shown in the balance sheet could not be treated as fictitious or unexplained. It ruled that the addition was made purely on suspicion, without disproving the documentary evidence produced by the assessee.

Accordingly, the Bench concluded that Section 69A was wrongly invoked, deleted the addition of ₹20 lakh, and allowed the appeal in favour of the assessee.