IRFAN AHMAD SHAH,VASAI EAST vs. SHASHI BHUSHAN SINGH, INCOME TAX OFFICER, THANE, THANE

PER SMT. BEENA PILLAI, JUDICIAL MEMBER:

The above appeals are directed against separate orders of the learned CIT(A)-National Faceless Assessment Centre, Delhi [in short “Ld.CIT(A)”], tabulated hereinbelow. Since common issues are involved in all these appeals therefore, for the sake of convenience, these appeals are clubbed together for the purpose of hearing and adjudication.

ITA Ld. Commissioner of Income Tax (Appeals) 5493/MUM/2026 vide DIN: ITBA/NFAC/S/250/2025- (AY: 2018-19) 26/1087187343(1) dated 11-Mar-2026.

ITA Ld. Commissioner of Income Tax (Appeals) 5504/MUM/2026 vide DIN: ITBA/NFAC/S/250/2025- (AY: 2017-18) 26/1087188601(1) dated 11-Mar-2026. ITA Ld. NFAC, DELHI vide DIN: 6538/MUM/2026 ITBA/NFAC/S/250/2025-26/1087187343(1) (AY: 2018-19) dated 11-Mar-2026.

2.1. The assessee has raised various grounds challenging the addition sustained by the Ld.CIT(A) out of the cash deposits made in the bank accounts during the year under consideration. The substantial grievance of the assessee is that the cash deposited in the bank accounts represented amounts collected from customers in the course of acting as an intermediary/commission agent for various telecom and payment service providers and did not constitute income belonging to the assessee.

Assessee is the proprietor of Irfan Enterprises. For A.Y. 2017-18, and filed his return of income declaring total income of Rs.3,28,950/-. The case was selected for scrutiny, inter alia, to verify high-value cash receipts and abnormal increase in cash deposits during the demonetisation period.

3.1. The Ld.AO noticed cash deposits aggregating to Rs.36,78,300/- in various bank accounts during the demonetisation period. The assessee explained that he was working as a commission agent/distributor for service providers such as Idea Money Wallet, Airtel Payment Bank, Vodafone M-Pesa 3 and Money on Mobile, besides providing allied services such as mobile recharge, domestic money transfer, payment of electricity bills and railway ticket booking.

3.2. It was the case of the assessee that cash was collected from retail customers and deposited into the assessee’s bank accounts only as part of the transactional mechanism. Corresponding amounts were thereafter transferred to the respective principal/service provider companies, and the assessee earned only commission from such activities. It was submitted that the commission so earned was reflected in Form No.26AS and was offered to tax in the return of income.

3.3. The assessment order itself records that the assessee furnished computation of income, Profit & Loss Account, Balance Sheet, Form No.26AS, bank statements and month-wise cash deposit details. However, the Ld.AO was not satisfied with the explanation primarily on the ground that the assessee could not furnish complete particulars of individual retail customers or confirmations. The Ld.AO treated entire cash deposits of Rs.36,78,300/- as unexplained money u/s.69A of the Act.

Aggrieved, by the assessment order, the assessee preferred an appeal before the Ld.CIT(A).

3.4. Before the Ld.CIT(A), the assessee reiterated that the monies deposited in the bank accounts did not belong to him and represented amounts collected from retail customers in the course of rendering services on behalf of the principal companies. The assessee also explained the business cycle and furnished documentary material in support thereof.

3.5. The material to support assessee’s contention that were placed before the lower authorities included:

• Copy of the acknowledgement of the return of income filed for A.Y. 2017-18 vide Acknowledgement No.363944980130118; • Form No.26AS for A.Y. 2017-18; • summary of cash deposits in bank account during the period of demonetisation; • summary of deposits made in the account held with Idea Money during the period of demonetisation; • bank statements from 01/11/2016 to 31/12/2016; and statement of account held with Idea Money.

The assessee also furnished transactional flow demonstrating how cash received from retail customers was deposited in the bank account and thereafter remitted to the principal/service provider companies.

3.6. The Ld.CIT(A), after examining the nature of the assessee’s business, accepted that the assessee was only acting as an intermediary and that the entire amount deposited in the bank accounts could not be treated as income. However, observing that complete transaction-wise details had not been furnished, the Ld.CIT(A) estimated the income element at 5% of the total cash deposits and accordingly restricted the addition to Rs.1,83,915/-, being 5% of Rs.36,78,300/-.

Aggrieved by the order passed by the Ld.CIT(A), the assessee is in appeal before this Tribunal.

4.1. The Ld.AR further submitted that the assessee operates in an unorganised sector, dealing with a large number of retail customers and small shopkeepers. In such a line of business, detailed customer-wise records, confirmations and identification particulars in respect of each individual cash transaction are ordinarily not maintained. However, the aggregate bank movement, bank statements, Idea Money statements, Form No.26AS, cash- deposit summaries and corresponding remittances to the principal companies were available before the authorities below.

4.2. The Ld.DR relied upon the orders passed by the authorities below.

We have perused the submissions advanced by both sides in light of the record placed before us.

5.1. Significantly, the Ld.CIT(A) accepted this fundamental factual position. The Ld.CIT(A) recorded that the assessee was engaged in providing such services and that treating the entire cash deposits as unexplained income would be excessive. The only reason for sustaining 5% of the deposits was the perceived absence of complete transaction-wise documentary evidence.

5.2. In our considered opinion, once it is accepted that the assessee is merely an intermediary and that the monies routed through the bank accounts essentially belong to the principal/service provider companies, the gross cash movement cannot acquire the character of income in the hands of the assessee. What accrues to the assessee is only the commission or service income earned for facilitating the underlying transactions.

5.3. It is also relevant that the assessee had not merely offered a bald explanation. The return acknowledgement, Form No.26AS, summaries of cash deposits, bank statements, Idea Money account statements and the transaction-flow details were available before the lower authorities. The bank records demonstrated repetitive inflow and onward movement of funds consistent with the business model explained by the assessee.

5.4. The business carried on by the assessee is essentially part of the unorganised retail/payment-service sector. The assessee dealt with numerous retail customers and small shopkeepers. In such circumstances, the absence of customer-wise confirmations or exhaustive identification particulars in respect of every single small-value retail transaction, by itself, cannot lead to an inference that a portion of the gross cash deposits constituted unexplained income, particularly when the overall banking pattern, Form No.26AS and corresponding remittances are consistent with the explanation furnished.

5.5. We also note that no specific discrepancy has been pointed out by the Revenue in the bank statements or in the movement of funds to establish that any particular deposit represented income belonging to the assessee over and above the commission already disclosed. Nor has any material been brought on record to demonstrate that the assessee earned any commission or income outside what had already been accounted for and offered to tax.

5.6. The estimate of 5% made by the Ld.CIT(A) is therefore founded merely on a possibility that some income element “may” be embedded in the cash deposits. An addition cannot be sustained merely on suspicion, conjecture or a hypothetical possibility, particularly when the underlying character of the receipts has been accepted as business funds handled on behalf of third-party principals.

5.7. In view of the above, we find no justification for sustaining the addition of Rs.1,83,915/- being 5% of the cash deposits. The same is directed to be deleted.

Accordingly, the grounds raised by the assessee for A.Y. 2017- 18 are allowed.

A.Y.2018-19 Assessee’s appeal - ITA No.5493/Mum/2026 Revenue’s appeal - ITA No.6538/Mum/2026.

6.1. For the reasons recorded by us while adjudicating the assessee’s appeal for A.Y. 2017-18, which shall apply mutatis mutandis to A.Y. 2018-19, we hold that there is no basis for sustaining even 5% of the gross cash deposits as unexplained income in the hands of the assessee.

Accordingly, the addition of sustained by the Ld.CIT(A) for assessment year 2018-19 is directed to be deleted.

Accordingly, the assessee’s appeal stands allowed and Revenue’s appeal for AY 2018-19 is dismissed.

In the result appeal filed by the assessee for AY 2017-18 and AY 2018-19 stands allowed and appeal filed by the revenue stands dismissed.

Order pronounced in the open court on 11/09/2026.

Sd/- Sd/- JAGADISH BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai Dated: 11/09/2026 Shamik Sr. P.S.

Copy to: IRFAN AHMAD SHAH SHASHI BHUSHAN SINGH, INCOME TAX OFFICER, MOHAMMED SAEED, HOUSE NO THANE 2879, SUKUR COMPOUND, SHANTI NAGAR, BAPPA OFFICE OF INCOME TAX COMPUND, DHANIV ROAD, VASAI OFFICER, WARD 4(4), THANE EAST, VASAI-VIRAR-401208, THANE-400602, MAHARASHTRA MAHARASHTRA IRFAN AHMAD SHAH SHASHI BHUSHAN SINGH, INCOME TAX OFFICER, MOHAMMED SAEED, HOUSE NO THANE 2879, SUKUR COMPOUND, SHANTI NAGAR, BAPPA OFFICER OF THE INCOME TAX COMPUND, DHANIV ROAD, VASAI OFFICER, WARD 4(4), THANE EAST, VASAI-VIRAR-401208, THANE-400602, MAHARASHTRA MAHARASHTRA ITO, WARD 4(4), THANE IRFAN AHMAD SHAH ASHAR IT PARK, THANE, THANE- HOUSE NO. 2879, SUKUR 400604, MAHARASHTRA COMPOUND, SHANTI NAGAR, NAVJEEVAN, VASAI THANE THANE-401208, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE