Addition Under Section 69A Unjustified When Bank Credit Source

Addition Under Section 69A Unjustified When Bank Credit Source Is Proven And Uncorroborated Cash Receipts Unproven

Issue

Whether an addition under Section 69A for unexplained money can be sustained for AY 2019-20 when a bank credit of Rs. 11 lakh is fully explained as an advance received through banking channels from a identified entity during property negotiations.
Whether an addition of Rs. 3.83 crore as unexplained cash under Section 69A for AY 2020-21 can be made based on an unsigned, disputed agreement to sell, third-party WhatsApp chats, and uncorroborated broker statements alleging cash payments.

Facts

AY 2019-20:
- Pursuant to a search in a connected case, a purported agreement to sell the assessee’s Noida property (recorded consideration of Rs. 4.50 crore with a recital of Rs. 1 crore by cheque) was recovered.
- The document was unsigned by the assessee and vendee, and the representative’s signature was disputed.
- Bank records reflected a Rs. 11 lakh credit in the assessee’s account from “Eight Petalled Lotus” (the vendee’s proprietary concern), which the vendee acknowledged paying as advance via cheque.
- The Assessing Officer treated the Rs. 11 lakh credited to the assessee’s account as unexplained money under Section 69A.
AY 2020-21:
- Relying on the same incomplete agreement, WhatsApp chats between the broker and the proposed purchaser’s husband, and a broker statement alleging cash transfers through angadias, the Assessing Officer alleged the actual transaction value was Rs. 7.50 crore.
- The Assessing Officer treated Rs. 3.83 crore as undisclosed cash consideration received during the year and added it under Section 69A.
- The vendee and her husband denied making any cash payments, denied issuing a Rs. 1 crore cheque, and affirmed that the deal was never concluded.

Decision

Regarding AY 2019-20 (Rs. 11 Lakh Credit): Held, yes. Since the nature and source of the Rs. 11 lakh credit were clearly established as advance money received through banking channels from an identified concern, the addition under Section 69A was deleted.
Regarding AY 2020-21 (Rs. 3.83 Crore Alleged Cash): Held, yes. The unsigned agreement, third-party WhatsApp chats, and uncorroborated broker statements failed to establish with sufficient reliability that the assessee actually received or owned Rs. 3.83 crore in cash; thus, the addition under Section 69A was deleted.

Key Takeaways

Banking Channel Credits Are Not Unexplained: Where a sum credited to an assessee’s bank account is supported by verifiable banking entries and an identified source, Section 69A cannot be invoked.
Uncorroborated Loose Evidence Inadmissible for Heavy Additions: Unsigned draft agreements, third-party WhatsApp exchanges, and unverified broker statements do not constitute conclusive or reliable evidence to sustain additions for alleged cash payments without corroborative proof of actual receipt/possession by the assessee.

IN THE ITAT MUMBAI BENCH ‘F’

Smt. Jaya Amitabh Bachchan

Deputy Commissioner of Income-tax, Central

Amit Shukla, Judicial Member
and MAKARAND VASANT MAHADEOKAR, Accountant Member

IT Appeal No. 283 (Mum.) of 2026
IT(SS)A No. 284 (Mum.) of 2026
[Assessment years 2020-21]

SEPTEMBER 28, 2026

N.K. Lal for the Appellant. Nishant Samaiya, CIT DR for the Respondent.

ORDER

Amit Shukla, Judicial Member. – These two appeals, preferred by the assessee, Smt. Jaya Amitabh Bachchan, for Assessment Years 2019–20 and 2020– 21, arise from separate assessment orders but concern the same alleged transaction relating to Plot No. B-130, Sector 44, Noida. The additions made in both years rest substantially upon a document described as an agreement to sell, statements recorded during the investigation and WhatsApp communications recovered from the mobile phone of Shri Amit Chauhan, stated to be the broker. Since the material and the principal controversy are common, the appeals were heard together and are being disposed of by this common order. The appeal for A.Y. 2019–20 is ITA No. 283/Mum/2026 and the appeal for A.Y. 2020–21 is IT(SS)A No. 284/Mum/2026. The reference to Appeal Nos. 383 and 384 in the written submission appears to be a typographical error.

2. The relevant background is that a search under section 132 of the Income-tax Act, 1961 (“the Act”) was conducted on 15 January 2021 in the case of Bloomstrende Buildwell Pvt. Ltd. and others. The premises of Shri Amit Chauhan, a property broker, were also covered. Among the documents stated to have been found there was an “Agreement to Sell” concerning the assessee’s property at B-130, Sector 44, Noida. The document is dated 25 November 2019 and purports to record a sale by the assessee to Smt. Mamta Wadhwa for a total consideration of ₹4.50 crore. It recites that ₹1 crore had been received by cheque No. 044495 dated 12 August 2019 and that the balance of ₹3.50 crore was payable by 30 November 2019. The document bears a signature in the vendor’s execution space attributed to Shri Rajesh Yadav, stated to have acted for the assessee; it does not bear the assessee’s personal signature, and the vendee’s execution space is blank. The assessee disputes the signature attributed to Shri Yadav and his authority to execute the document. Smt. Wadhwa, when shown the document, also disputed its contents, including the description of her husband, her address and company name, and the recital that ₹1 crore had been paid. The document’s recital of a ₹1 crore cheque is at variance with the bank material obtained by the Assessing Officer, which identifies a credit of ₹11 lakh in the assessee’s account.

3. The statements of Smt. Mamta Wadhwa and her husband, Shri Manish Wadhwa, were recorded on 9 March 2021 by the Investigation Wing. Smt. Wadhwa stated that Shri Amit Chauhan had introduced the property to her husband and that she, her husband and Shri Chauhan had met Shri Amitabh Bachchan and Shri Rajesh Yadav at the latter’s office in Mumbai. She stated that she had handed over a cheque of ₹11 lakh to Shri Amitabh Bachchan towards the proposed purchase. She further stated that the deal did not work out, that the money had not been returned to her, and that she and her husband had not received any agreement to sell. When asked to describe how the transaction had been brokered, she stated that she did not know the total consideration, that no agreement to sell had been made, and that the proposed deal had been delayed and never happened. When confronted with Shri Chauhan’s statement referring to a consideration of ₹7.50 crore and cash payment, she denied any cash payment and maintained that the only amount paid was ₹11 lakh by cheque. She also stated that she had not issued any cheque beyond ₹11 lakh for this particular transaction. Thus, her statement accepts the cheque payment and the existence of negotiations, but disputes the execution of the agreement, the completion of the transaction and the alleged cash component.

4. Shri Manish Wadhwa’s statement contains both an acknowledgment of the proposed transaction and responses concerning the electronic communications relied upon by the Assessing Officer. He stated that the deal concerning the Noida property had been brokered by Shri Chauhan and confirmed that ₹11 lakh had been paid by cheque from his wife’s account. When confronted with the WhatsApp communications, he acknowledged that the chats were between him and Shri Chauhan, but gave different explanations for different messages. In relation to the communication dated 10 December 2019 referring to “3.5” being given or transferred to Mumbai, he described the figure as an estimate or calculation. When confronted with another communication dated 2 December 2020, which the Assessing Officer read as referring to a figure of approximately ₹3.73 crore or ₹3.80 crore for the Noida property, he again described the figure as a future estimate. He also stated during the questioning that he had not paid any cash. However, when shown the separate WhatsApp communication dated 28 October 2020, which the Assessing Officer construed as giving a bifurcation of ₹3.83 crore in cash and ₹11 lakh by cheque for the Noida property, Shri Wadhwa acknowledged that the message was his but stated that he had no explanation for it at that time. His responses, therefore, are not uniform: he expressly denied cash payment and described some figures as estimates, but acknowledged authorship of the message upon which the Assessing Officer principally relied for the figure of ₹3.83 crore.

5. Shri Amit Chauhan’s statement also refers to the transaction, but the figures and manner of payment attributed to him differ from those appearing in the purported agreement and from the account given by the proposed purchasers. When confronted with the agreement, he stated that the actual sale consideration was ₹7.50 crore and not ₹4.50 crore, and that ₹3.50 crore had been paid in cash; he further stated that the ₹1 crore shown in the agreement as paid by cheque had, in fact, been paid in cash. In response to another question concerning the transaction, he referred to payment of ₹11 lakh by cheque to Shri Amitabh Bachchan in Mumbai, in the presence of Shri Rajesh Yadav, and stated that cash of approximately ₹3 crore to ₹3.50 crore had been sent from Delhi to Mumbai through angadias. His account thus attributes a substantial cash component to the proposed deal, but the total consideration and payment particulars do not correspond consistently with the agreement, the bank evidence or the statements of Smt. Wadhwa and Shri Manish Wadhwa. The assessment order records that Smt. Wadhwa and Shri Manish Wadhwa had sought to cross-examine Shri Chauhan; summons dated 28 June 2021 were issued fixing 2 July 2021 for that purpose, but neither attended. The assessment order further records that an opportunity to cross-examine Shri Chauhan was also afforded to Shri Rajesh Yadav, who did not avail himself of it. These circumstances form part of the evidentiary record and are noticed here without expressing any conclusion on their effect.

6. The Assessing Officer also relied upon the WhatsApp communications between Shri Manish Wadhwa and Shri Chauhan. The communications referred to in the assessment order include the message of 10 December 2019 concerning an amount of ₹3.50 crore to be transferred to Mumbai; the message dated 2 December 2020 containing figures which the Assessing Officer read as approximately ₹3.73 crore or ₹3.80 crore for the property; and the message dated 28 October 2020, which the Assessing Officer read as setting out ₹3.83 crore in cash and ₹11 lakh by cheque. The communication of 10 December 2019 post-dates the 30 November 2019 deadline mentioned in the purported agreement for payment of the balance consideration. Shri Wadhwa described the figures in the first two communications as estimates or future calculations. In relation to the 28 October 2020 communication, he acknowledged that the message was his but did not then explain it. The Assessing Officer treated that message as corroborating the alleged cash payment and relied upon it, together with Shri Chauhan’s statement, to compute the alleged cash consideration at ₹3.83 crore. The material thus includes both the Assessing Officer’s inference of actual payment and the explanations or denials given by the persons whose statements and messages were relied upon.

7. For A.Y. 2019–20, the Assessing Officer obtained information from Bank of India and found a credit of ₹11 lakh in the assessee’s account on 27 February 2019. The bank identified the cheque as cheque No. 0267 drawn by Eight Petalled Lotus, the proprietary concern of Smt. Mamta Wadhwa. This credit preceded the purported agreement dated 25 November 2019 by about nine months; the agreement, in turn, refers to a different payment of ₹1 crore by cheque dated 12 August 2019. The Assessing Officer treated the ₹11 lakh credit as unexplained money under section 69A and added it to the assessee’s returned income. The assessee’s case in appeal is that the cheque was the advance paid during negotiations for the proposed transfer, that its source was identified, and that it was disclosed in her records and return. For A.Y. 2020–21, the Assessing Officer treated ₹3.83 crore as cash consideration allegedly received during the relevant previous year and added it under section 69A. The assessment order records that the ₹11 lakh cheque had already been considered in A.Y. 2019–20 and that the addition for the succeeding year was confined to the alleged cash component. The amounts brought to tax—₹11 lakh and ₹3.83 crore, aggregating to ₹3.94 crore—do not correspond to the agreement’s stated consideration of ₹4.50 crore or to the total consideration of ₹7.50 crore stated by Shri Chauhan.

8. The assessee’s appeals before the learned Commissioner of Income-tax (Appeals) were dismissed by orders dated 12 December 2025. For A.Y. 2019–20, the learned CIT(A) treated the cheque as part of the alleged larger transaction and sustained the addition of ₹11 lakh under section 69A. The appellate order records the assessee’s explanation that the amount was an advance in the course of negotiations and refers to its having been returned in April 2023. The assessee’s present submission, however, states that the amount was retained as an advance pending adjustment against the cost of acquisition when the property was ultimately sold; Smt. Wadhwa’s statement is that the amount had not been returned to her. For A.Y. 2020–21, the learned CIT(A) held that the purported agreement, the statements and the WhatsApp material established the alleged cash receipt, and considered the later registered sale to Smt. Varsha Singh irrelevant to the transaction alleged to have taken place with Smt. Wadhwa. The assessee has challenged both appellate orders, maintaining that the property was never sold to Smt. Wadhwa and relying on the subsequent registered sale to Smt. Varsha Singh in April 2023.

9. Before us, the learned counsel submitted that the agreement does not establish a concluded sale or the receipt of the consideration recited in it: the assessee did not sign it; the vendee did not sign it; the signature attributed to the assessee’s representative is disputed; and the agreement’s ₹1 crore cheque recital is inconsistent with the only bank credit identified, namely ₹11 lakh. It was submitted that Smt. Wadhwa accepted only the ₹11 lakh cheque and denied any cash payment, while Shri Manish Wadhwa also stated that no cash had been paid and described certain amounts in the chats as estimates. The learned counsel further submitted that the ₹11 lakh was an advance received in negotiations and its treatment was governed by section 51 when the property was later transferred; he also relied on the property’s subsequent sale to Smt. Varsha Singh. The learned counsel contended that the learned CIT(A) had not properly dealt with the statements, the discrepancies in the agreement and payment figures, the subsequent sale or the assessee’s plea under section 51. The learned Departmental Representative supported the orders below, relying on Shri Chauhan’s statement, the WhatsApp message dated 28 October 2020 and the fact that the buyer and her husband did not attend the offered cross-examination. The assessee has also raised objections concerning the notices under sections 143(2) and 153C, the opportunity and material furnished during assessment, and the invocation of section 69A. The merits issue is whether the evidence establishes, separately for each assessment year, that the assessee received or owned the amount brought to tax; the statements, agreement and electronic material must accordingly be considered together, including the portions that support and those that contradict the respective accounts.

10. We have considered the material on record and the rival submissions. Both additions have been made under section 69A of the Act. The question is whether the assessee was found to be the owner of the respective sums in the relevant previous years and whether their nature and source remained unexplained. The fact that negotiations for the Noida property took place is not in dispute. What remains to be determined is whether those negotiations resulted in an agreement with Smt. Mamta Wadhwa and, in particular, whether the assessee received ₹3.83 crore in cash during the previous year relevant to A.Y. 2020–21.

11. The purported agreement does not, by itself, establish a concluded transaction or the payments attributed to it. The assessee did not sign it personally; the vendee’s signature space is blank; and the signature appearing in the vendor’s space, attributed to Shri Rajesh Yadav, is disputed. The record does not establish that the agreement was mutually executed or otherwise reliably accepted by the Wadhwas. Its payment recital is also inconsistent with the bank material: the agreement refers to ₹1 crore paid by cheque, whereas the bank records identify a credit of ₹11 lakh from Eight Petalled Lotus. The agreement records total consideration of ₹4.50 crore, while Shri Chauhan referred to ₹7.50 crore and gave varying accounts of the cash component. The Assessing Officer, in turn, assessed ₹11 lakh in A.Y. 2019–20 and ₹3.83 crore in A.Y. 2020–21, aggregating to ₹3.94 crore. These discrepancies concern the consideration and the manner of payment themselves. The agreement is relevant material, but it does not, without reliable corroboration, establish the precise amounts assessed.

12. The addition of ₹11 lakh for A.Y. 2019–20 cannot be sustained under section 69A. The Assessing Officer’s own inquiry established that the amount was received by cheque No. 0267 from Eight Petalled Lotus, the proprietary concern of Smt. Wadhwa. She accepted payment of ₹11 lakh as an advance towards the proposed purchase, and Shri Manish Wadhwa confirmed that the cheque was paid from his wife’s account. The payer, banking source and nature of the credit as an advance are thus established. The assessee’s case is that the advance was disclosed and retained for adjustment against the cost of acquisition when the property was later transferred. Section 51 provides for the treatment, in computing the cost of acquisition, of advance money received and retained during negotiations for transfer of a capital asset. The appellate order and the statements contain differing accounts as to whether the amount was later returned or retained; that question need not be determined in deciding whether the original cheque credit was unexplained. Its source and nature are established, and its appropriate subsequent treatment, if any, falls to be considered under the applicable provisions in the relevant year. The addition under section 69A is therefore deleted.

13. The addition of ₹3.83 crore for A.Y. 2020–21 rests principally on Shri Chauhan’s statement and the WhatsApp communications between him and Shri Manish Wadhwa. We have not overlooked the communication dated 28 October 2020. Shri Wadhwa acknowledged that it was his message but, when confronted with the Assessing Officer’s reading of it as showing ₹3.83 crore in cash and ₹11 lakh by cheque, stated that he had no explanation for the message at that time. This is an adverse circumstance and has been weighed. His acknowledgment establishes authorship of the message and his failure then to explain it; it does not, by itself, establish that the cash recorded in it was actually paid to the assessee, or that it was paid during the previous year relevant to A.Y. 2020–21. Shri Wadhwa also expressly stated that he had not paid cash and described other figures in the communications as estimates or future calculations. Smt. Wadhwa consistently stated that only ₹11 lakh was paid and denied any cash payment.

14. The timing of the electronic material is material. The previous year relevant to A.Y. 2020–21 ended on 31 March 2020. The communications dated 28 October 2020 and 2 December 2020 fall in the following previous year. Though they may bear upon the parties’ later discussions or understanding of the proposed transaction, they do not, without evidence establishing when the cash was actually paid, fix receipt of ₹3.83 crore in the previous year under appeal. The communication dated 10 December 2019 falls within the relevant previous year, but it post-dates the 30 November 2019 deadline stated in the purported agreement for payment of the balance consideration and refers to ₹3.50 crore being given or transferred to Mumbai. Shri Wadhwa described the figure as an estimate or calculation. The assessment order does not identify the date or dates of actual cash delivery during FY 2019–20.

15. Shri Chauhan’s statement also attributes a substantial cash component to the proposed transaction, and we have considered it with the electronic material. When confronted with the agreement, he referred to a total consideration of ₹7.50 crore, ₹3.50 crore in cash, and stated that the ₹1 crore shown in the agreement as paid by cheque had instead been paid in cash. In another answer, he referred to an ₹11 lakh cheque and cash of approximately ₹3 crore to ₹3.50 crore, allegedly sent from Delhi to Mumbai through angadias. These accounts do not correspond consistently with the agreement, the bank evidence or the precise ₹3.83 crore assessed by the Assessing Officer. The assessment order does not identify the angadias, the dates or instalments of the alleged cash delivery, or other material tracing the cash to the assessee. The order also treats the non-attendance of Smt. Wadhwa and Shri Manish Wadhwa at the offered cross-examination as establishing the correctness of Shri Chauhan’s account. Their failure to attend is a relevant circumstance and weighs against their denials. The assessment order also records that the assessee’s representative did not avail himself of the opportunity to cross-examine Shri Chauhan. These circumstances have been taken into account; nevertheless, non-attendance does not, by itself, establish the amount, recipient or year of the alleged payment. The statement must still be assessed with the other material, and the inconsistencies and absence of particulars do not establish that ₹3.83 crore was delivered to the assessee during FY 2019–20.

16. The registered sale of the property to Smt. Varsha Singh in April 2023 also forms part of the record. We do not treat that subsequent sale, standing alone, as proof that no money could have been paid during earlier negotiations; a proposed transaction may fail even after a payment or advance. It does, however, support the assessee’s case that the property was not conveyed to Smt. Wadhwa and remained available for transfer to another purchaser. Considered with the absence of a mutually executed or otherwise reliably established agreement with the Wadhwas, the discrepancy between the agreement’s ₹1 crore cheque recital and the established ₹11 lakh credit, the statements of the proposed purchasers, and the inconsistent figures and timing in Shri Chauhan’s account and the electronic material, the later sale reinforces the conclusion that the alleged receipt of ₹3.83 crore in FY 2019–20 has not been established.

17. On an overall appraisal, the source and nature of the ₹11 lakh cheque credit are established, and the amount cannot be treated as unexplained money under section 69A. As regards A.Y. 2020–21, the material does not establish with sufficient reliability that the assessee received or owned ₹3.83 crore in cash during the relevant previous year. The WhatsApp message and Shri Chauhan’s statement are relevant and have been weighed, but they do not establish the date of actual payment or reliably connect the precise amount assessed to receipt by the assessee in FY 2019–20. The additions of ₹11 lakh for A.Y. 2019–20 and ₹3.83 crore for A.Y. 2020–21 are accordingly deleted.

18. In view of our decision on the merits, it is unnecessary to adjudicate the objections concerning notices under sections 143(2) and 153C or the other procedural grounds. Those grounds are left open and treated as academic; no finding on their merits is expressed. The appeals are allowed.

19. In the result, both the appeals of the assessee are allowed.