Property dealer deposits Rs 54 lakh cash in bank, files no ITR, gets tax notice, does not respond, wins case in ITAT Delhi; Know why

Mr Rathee, a property dealer from Rohtak, Haryana, found himself in hot water with the income tax department after he deposited Rs 54 lakh in cash in his bank account because he hadn’t filed his income tax return (ITR) and ignored the tax notice sent to him. Consequently, the Income Tax Assessing Officer (AO) deemed this cash as unexplained and initiated legal proceedings against him.

The income tax department flagged Rathee’s cash deposit after receiving information from AIR/CBI during the Financial Year 2011-12 (Assessment Year 2012-23). To confirm this, they sent a verification letter to Rathee on February 13, 2019 but he failed to respond.

On March 28, 2019, Rathee received a Section 148 tax notice. Subsequently, he was also sent notices under Section 142(1) along with a questionnaire on May 3, 2019, July 2, 2019 and July 29, 2019. However, Rathee still did not respond. So on December 16, 2019, the Income Tax Department issued an order adding Rs 54 lakh to his income.


Only after the order was passed did Rathee realise that he was now liable to pay income tax on Rs 54 lakh income. To contest this, Rathee filed an appeal with the commissioner of appeals (CIT A). On March 30, 2026 CIT (A) dismissed his appeal. Undeterred, Rathee filed an appeal in Income Tax Appellate Tribunal, Delhi. Chartered Accountant Naveen Kumar Goyal represented him in ITAT Delhi.

Vimal Kumar, judicial member and Manish Agarwal, accountant member of ITAT Delhi heard his case on July 22, 2026 and passed their judgement on July 30, 2026. ITAT Delhi deleted the Rs 54 lakh addition and the corresponding tax notice. Thus Rathee won the case.

Also read: Rs 1.33 crore cash deposit, no ITR filing, yet senior citizen wins income tax case; ITAT Bangalore explains why

Keep reading to understand how Rathee won the case.

ITAT Delhi order and discussion

Chartered Accountant Naveen Kumar Goyal who represented Rathee said that he is a property dealer who works as an intermediary for Mr Singh and his family members. Goyal explained that Rathee collects cash from prospective property buyers, deposits it into his personal bank account, and subsequently transfers the amount to the seller to facilitate the registration of various sale deeds.

To support his theory, Goyal presented his bank statements, three affidavits from the sellers, and eight sale deeds executed by Mr Singh and his family as well as seven additional affidavits provided by the property buyers confirming that they had handed over the cash to Rathee specifically for transferring it to the sellers.

Goyal also mentioned that copies of documents were submitted before CIT(A) and AO also.

ITAT Delhi said that after examining the evidence, it was crystal clear that Rathee acting as an intermediary had received cash from property buyers and deposited that in his bank account and subsequently transferred the amounts to the sellers to facilitate registration of various sale deeds.

Also read: Man gets tax notice for depositing Rs 8 lakh in bank account, tax dept deems it as presumptive business income; he wins case in ITAT Delhi

Consequently, ITAT Delhi concluded that given the material facts, receiving money from buyers, depositing it into assessee’s bank account of and subsequently transferring these amounts to the property sellers supported by affidavits of the sellers and buyers, the impugned orders were not fair and reasonable. Therefore, the impugned orders dated 16.12.2019 of Ld. AO and dated 20.03.2026 of ld. CIT(A) were set aside and the grounds of appeal accepted.

Thus, Rathee emerged victorious in the tax case.

Also read: Deposited Rs 80 lakh cash during demonetisation: ITAT rejects property purchase claim, calls it unexplained income

Why Mr. Rathee won the case?

Advocate Shourya Garg from Garg & Garg Tax Associates said to ET Wealth Online that the ITAT Delhi accepted that Rathee was acting purely as an intermediary for the Singh family, collecting cash from property buyers and passing it on to the sellers to facilitate registration of the sale deeds.

This was supported by bank statements, affidavits from the sellers, eight sale deeds and separate affidavits from the buyers themselves confirming they had handed over cash for this specific purpose. Since the money was shown to be a pass-through and not Rathee’s own unexplained income, the addition of Rs 54 lakh could not be sustained.

Garg says that the ITAT’s finding essentially establishes on record that these cash amounts genuinely belonged to the Singh family as sale consideration, routed through Rathee only for convenience. That documentation, now validated by a tribunal, could well draw the attention of tax authorities to whether this income was properly disclosed and taxed in the hands of the actual sellers, rather than closing the matter entirely.