₹20.45 Lakh Cash Deposits and ₹12.64 Lakh Property Sale: Why ITAT Hyderabad Gave a Woman Tax Relief

ITAT Hyderabad Grants Relief in ₹20.45 Lakh Cash Deposit Case

The Income Tax Appellate Tribunal (ITAT), Hyderabad, has granted significant relief to a Telangana woman after the Income Tax Department treated cash deposits of ₹20.45 lakh in her bank account as unexplained income.

The case involved Bhagya Ammula of Warangal, whose financial transactions came under scrutiny for Assessment Year 2020-21. The tax department also treated ₹12.64 lakh received from a property transaction as long-term capital gains in her hands.

In its order dated September 9, 2026, the tribunal found that the property-sale proceeds did not belong to the woman and that documentary evidence supported most of her explanation for the cash deposits.

However, the tribunal did not accept every part of her explanation unconditionally. It directed the assessing officer to verify the source of a remaining ₹1.90 lakh deposit attributed to a chit-fund payout.

Why Did the Income Tax Department Question ₹20.45 Lakh in Cash Deposits?

The tax proceedings began after information about the woman’s financial transactions came to the attention of the assessing officer.

The department identified cash deposits totalling ₹20.45 lakh in bank accounts maintained with Andhra Pradesh Grameena Vikas Bank. The assessing officer sought an explanation for the source of the money.

According to the tribunal’s order, the assessing officer treated the ₹20.45 lakh as unexplained money under Section 69A of the Income-tax Act, 1961, because satisfactory supporting details had not been furnished during the assessment proceedings.

The department also questioned the property transaction and added ₹12.64 lakh as long-term capital gains to the woman’s income.

The woman challenged the assessment before the Commissioner of Income Tax (Appeals), but that appeal was dismissed. She then approached the ITAT Hyderabad.

Why Was ₹12.64 Lakh in Property Sale Proceeds Disputed?

The property-related dispute centred on who actually owned and sold the land.

The department had treated ₹12.64 lakh from the sale of a property in Waddepally village, Hanamkonda mandal, as long-term capital gains in Bhagya Ammula’s hands.

However, the documents examined by the tribunal showed that the land belonged to her daughters, Ammula Mammatha and Ammula Jayalaxmi. They had acquired their respective portions through registered gift deeds and subsequently sold the property through a registered sale deed dated July 10, 2019.

Other family members, including Bhagya Ammula, had joined in executing the sale deed to facilitate the transaction and avoid potential future disputes.

The tribunal found no evidence establishing that Bhagya Ammula had an ownership interest in the property. It held that merely participating in a sale deed as a confirming or facilitating party did not make her liable for the capital gains arising from the sale in the circumstances of this case.

ITAT Deletes the ₹12.64 Lakh Capital Gains Addition

The tribunal accepted the woman’s explanation after examining the registered sale deed and related documents.

It concluded that the property had been sold by her daughters and that the capital gains could not be assessed in her hands merely because she had joined in executing the sale deed.

The ITAT therefore directed the assessing officer to delete the entire ₹12.64 lakh long-term capital gains addition made against Bhagya Ammula.

This part of the ruling turned on the ownership documents and the specific facts of the transaction. It does not mean that property-sale proceeds are automatically exempt from tax or that capital gains can never be assessed when a family member receives the sale consideration.

How Did the Woman Explain the ₹20.45 Lakh Cash Deposits?

Bhagya Ammula gave several explanations for the money deposited in her bank account.

Her explanation covered property-sale proceeds, accumulated family savings and money received from a chit-fund arrangement.

The tribunal considered the available documents and assessed the different sources separately rather than treating the entire amount as unexplained.

The main components were:

Source of fundsAmountITAT’s decisionProperty-sale proceeds₹16.95 lakhExplanation accepted; addition deletedAccumulated savings₹1.40 lakh claimed₹1 lakh accepted; addition deleted to that extentChit-fund payout₹1.90 lakhSent back to the assessing officer for verificationTotal cash deposits₹20.45 lakhSubstantial relief granted, with ₹1.90 lakh requiring further examination

The distinction is important: the tribunal did not grant unconditional relief for the entire ₹20.45 lakh. It accepted the explanation for ₹17.95 lakh and ordered further verification of the remaining ₹1.90 lakh.

Why the ₹16.95 Lakh Property-Related Deposits Were Accepted

The woman explained that ₹16.95 lakh of the deposits came from property transactions involving family members.

The amount included ₹5.95 lakh deposited on July 6, 2019, and ₹11 lakh deposited on July 10, 2019.

To support her explanation, she produced documents relating to the property transactions, including an agreement to sell dated February 16, 2018, a receipt acknowledging an earlier cash payment and the registered sale deed dated July 10, 2019.

The tribunal noted that the ₹11 lakh deposit was made on the same day as the registered sale deed. The timing of the deposits, considered alongside the transaction documents, supported the explanation that the money came from identifiable property-sale proceeds.

The tribunal also accepted the explanation that the woman, as the senior member of the family, had deposited the money into her account to facilitate its subsequent distribution among the relevant family members.

It therefore directed the assessing officer to delete the ₹16.95 lakh addition relating to these deposits.

Why Was ₹1.40 Lakh in Family Savings Partly Accepted?

The woman also said that ₹1.40 lakh of the cash deposits came from accumulated savings.

Her explanation referred to the financial circumstances of the family, including her husband’s government pension of approximately ₹37,000 per month and his retirement benefits.

After considering the explanation and the overall circumstances, the tribunal accepted the source of ₹1 lakh from accumulated savings.

It directed the assessing officer to delete the addition to that extent. The remaining ₹40,000 was not covered by the tribunal’s specific direction accepting ₹1 lakh and should not be described as having received the same relief.

Why the ₹1.90 Lakh Chit-Fund Claim Needs Further Verification

The remaining ₹1.90 lakh was explained as money received through a chit-fund arrangement.

The woman submitted a photocopy of a chit or money-lending book as supporting evidence. However, the tribunal found that complete details were not available to establish the claim conclusively.

At the same time, it held that the explanation should not simply be rejected without further examination.

The ITAT therefore sent this issue back to the assessing officer, directing the officer to verify the claim and give the woman a reasonable opportunity to provide additional documents.

The ₹1.90 lakh claim has not yet been finally accepted or rejected by the tribunal. Its tax treatment depends on the outcome of the further verification.

What Does Section 69A Mean for Cash Deposits?

Section 69A of the Income-tax Act, 1961, allows the tax authorities to treat money as unexplained where a taxpayer is found to own money or other specified assets and does not satisfactorily explain their nature and source.

In this case, the assessing officer invoked the provision because the source of the cash deposits had not been satisfactorily established during the assessment proceedings.

The ITAT subsequently examined the evidence presented during the appeal, including property documents, transaction receipts and explanations concerning family savings.

The ruling demonstrates the importance of assessing the source of individual transactions on the evidence available. A cash deposit may attract scrutiny, but its tax treatment depends on the facts, the applicable law and whether the taxpayer can substantiate the explanation.

What Taxpayers Can Learn From the ITAT Ruling

The case offers several practical lessons for people who deposit cash received from property transactions or family-related arrangements.

1. Keep Property Ownership Documents

Registered gift deeds, sale deeds and other ownership records can help establish who owned and sold a property.

In this case, the ownership documents were central to the tribunal’s decision not to tax the ₹12.64 lakh capital gain in the woman’s hands.

2. Maintain Evidence of the Source of Cash

Where cash deposits arise from a property transaction, taxpayers should preserve agreements to sell, receipts, sale deeds, bank statements and other records showing when the money was received and deposited.

The tribunal relied on the transaction documents and the timing of the deposits when accepting the explanation for ₹16.95 lakh.

3. Explain Family Transactions Clearly

If one family member receives or deposits money on behalf of others, the ownership of the underlying funds and the reason for the arrangement should be documented as clearly as possible.

The tribunal accepted the woman’s explanation that she deposited property-sale proceeds to facilitate distribution among family members, based on the evidence and circumstances of the case.

4. Keep Records of Savings and Chit-Fund Transactions

Explanations based on accumulated savings or chit-fund payouts should be supported by evidence wherever possible.

The tribunal accepted ₹1 lakh of the accumulated-savings explanation but required further verification of the ₹1.90 lakh chit-fund claim because the documents submitted were incomplete.

5. Respond to Tax Notices With Supporting Documents

Taxpayers should respond to notices within the prescribed timelines and provide relevant records. If an assessment is made without the evidence being properly considered, the available appeal mechanisms may provide an opportunity to challenge the decision.

However, the outcome of any appeal depends on its facts and applicable law.

Key Takeaways

• The ITAT Hyderabad ruled in Bhagya Ammula’s case on September 9, 2026.

• The Income Tax Department had treated ₹20.45 lakh in cash deposits as unexplained.

• The department also added ₹12.64 lakh as long-term capital gains.

• The tribunal deleted the ₹12.64 lakh capital gains addition after finding that the property belonged to the woman’s daughters.

• It accepted the explanation for ₹16.95 lakh in property-related cash deposits based on supporting documents.

• It also accepted ₹1 lakh out of the ₹1.40 lakh claimed as accumulated savings.

• The remaining ₹1.90 lakh chit-fund claim was sent back to the assessing officer for verification.

• The ruling highlights the importance of maintaining property deeds, transaction receipts, bank statements and evidence of other cash sources.

Bottom Line

The ITAT Hyderabad granted substantial relief to Bhagya Ammula after finding that the Income Tax Department had wrongly assessed property-sale gains belonging to her daughters in her hands. It also accepted documentary evidence explaining ₹16.95 lakh in cash deposits and allowed relief for ₹1 lakh claimed as accumulated savings.

However, the case is not a blanket exemption for cash deposits. The tribunal directed further verification of the ₹1.90 lakh chit-fund claim, making clear that supporting evidence remains essential when taxpayers explain the source of money deposited in their accounts.

Disclaimer: This article is for informational purposes and does not constitute tax or legal advice. The outcome of an individual tax dispute depends on its facts, documentation and the applicable law.