MOHAMMED SHAFI MOHAMMED SAI ANSARI,MUMBAI vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 27(2), MUMBAI, NAVI MUMBAI

We have heard the counsels for both the parties, perused the material placed on record, the judgments cited before us, and the order passed by the Revenue Authorities. From the records we noticed that the assessee has challenged the said addition by way of filing written submissions, and at Para No. 11 of its written statement, it appears that the assessee has wrongly mentioned that the learned CIT(A)/NFAC had deleted the addition, whereas, on the contrary, the addition was confirmed in the present case by the Ld. CIT(A) as well.

Although the assessee has argued at length in order to substantiate that the proper source of the cash deposit of Rs. 16,80,000 was explained before the Revenue authorities, and in this regard, has drawn our attention to Paper Book pages 1 to 40.

Whereas, on the contrary, the Ld. DR vehemently argued, while relying upon the orders of the Revenue authorities, that the assessee had not been able to substantiate the source of the cash deposit. Moreover, since the assessee has taken a specific stand that the cash deposited by the assessee pertains to the cash sales made by the assessee.

In order to get a clear picture, we had directed the Ld. DR to file a report from the AO as to how and in what manner the documents submitted by the assessee were not found to be reliable. In this regard, the Ld. DR has placed on record its submissions dated 10/07/2026, which contain the report of the Assessing Officer.

In this report, the Assessing Officer specifically submitted that the documents placed on record before the Tribunal in the Paper Book, particularly at pages 22 to 44, were not filed at all by the assessee before the Assessing Officer.

Moreover, it was submitted by the Ld. DR that even before the Tribunal, the assessee has only provided a month-wise cash flow statement, which cannot be termed as genuine in the absence of corroboratory documentary evidence, such as cash bills, cash register, or any document which validates the cash sales and subsequent cash deposits in the bank of Rs. 16,80,000 and emanates solely from cash sales.

Be that as it may, without going into the merits of the counterarguments raised by both the parties and considering the report of the Assessing Officer, one thing is very clear that the AO has not verified or investigated the cash flow summary filed by the assessee, as the same was not placed before the AO.

Therefore, the Bench is of the view that the matter requires to be restored back to the AO with a direction to pass a fresh order on the cash deposit made by the assessee during the period of demonetization. Further, the assessee shall also be at liberty to place on record any other supporting documents in order to substantiate the source of the said transaction in the bank.

Needless to mention that the AO shall provide adequate opportunity of hearing to the assessee. The assessee shall not seek any adjournment on frivolous grounds and shall remain cooperative during the course of proceedings.

Before parting, we make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the AO independently in accordance with law.

Since we have restored the main ground challenging the addition to the file of the AO, therefore, other connected grounds are also restored back with the same directions.

In the result, appeal filed by the Assessee stands allowed for statistical purposes.