Property dealer deposits ₹54 lakh cash, faces tax demand: Why Delhi ITAT ruled the money was not his taxable income

A property dealer who deposited ₹ 54 lakh in cash into his bank account and did not file an income tax return for the relevant year has won a tax dispute after the Delhi bench of the Income Tax Appellate Tribunal (ITAT) found that the money was not his income.

In its order dated 30 July 2026 in Anil Rathee vs ITO (ITA No. 3847/Del/2026) for assessment year 2012-13, the Delhi bench of the ITAT set aside the tax department’s addition of ₹ 54,00,500. The tribunal found that Rathee was acting as an intermediary in property transactions and that the evidence supported his explanation of the cash deposits.

The case relates to financial year 2011-12. According to the ITAT order, information received through AIR/CBI showed that Rathee had deposited ₹ 54,00,500 in cash in his bank account during the year. He had not filed a return of income under section 139(1) of the Income Tax Act.

The tax department issued a verification letter asking him to explain the source of the cash. After the response was not filed, reassessment proceedings were initiated under section 147 and a notice under section 148 was issued on 28 March 2019.

Several subsequent notices were also issued under sections 142(1) and 143(2). The order records that Rathee did not file a reply or information during the proceedings. The assessing officer subsequently made an addition of ₹ 54,00,500 in the assessment order dated 16 December 2019.

Before the tribunal, Rathee explained that he was a property dealer and had acted as an intermediary for Zile Singh and his family members. He said he collected cash from prospective property buyers, deposited it into his personal bank account and subsequently transferred the money to the sellers to facilitate registration of various sale deeds.

The tribunal recorded that Rathee had submitted a detailed reply dated 29 November 2019 along with bank statements, three affidavits from the sellers and eight sale deeds executed by the Zile Singh family. He also submitted seven affidavits from property buyers confirming that they had handed over cash to him for the specific purpose of transferring it to the sellers.

The ITAT examined the material and said it was “crystal clear” that Rathee, acting as an intermediary, had received cash from property buyers, deposited it in his bank account and subsequently transferred the amounts to the seller to facilitate registration of sale deeds.

The tribunal also identified the documents in its record, including the bank statement, sellers’ affidavits, reconciliation statement, sale deed and buyer affidavits, as well as the replies submitted before the assessing officer and the CIT(A).

Based on these documents, the ITAT held that the receipt of money from purchasers, its deposit into Rathee’s bank account and its subsequent transfer to the property seller were supported by the affidavits of the buyers and sellers.

It therefore held that the impugned orders were not fair and reasonable, set aside the assessing officer’s order and the CIT(A)’s order, and allowed Rathee’s appeal.

The ruling does not mean that depositing ₹ 54 lakh in cash into a personal bank account is automatically tax-free.