RUPESH SOLANKI,ULHASNAGAR THANE vs. INCOME TAX OFFICER, KALYAN

The brief facts of the case are that the assessee filed his return of income for the AY 2017-18 declaring total income of Rs.2,22,950/-. The case was selected for limited scrutiny under CASS. During the course of assessment proceedings, the Ld. AO noticed that the assessee had deposited cash aggregating to Rs.10,35,500/- in his bank account during the demonetisation period and called upon the assessee to explain the nature and source thereof. The assessee explained that he was engaged in the activity of facilitating the obtaining of liquor licences from the Maharashtra Government for various customers, including wine shops, banquet halls and other parties. According to the assessee, amounts were collected in advance from the customers and subsequently utilised for payment of the requisite licence fees to the Government Treasury. The assessee claimed that the impugned cash deposits represented such advances received from customers. The Ld. AO did not accept the explanation on the ground that the assessee failed to furnish confirmations or other supporting evidence from the concerned parties and also failed to substantiate his activity of facilitating liquor licences. Accordingly, the cash deposit was treated as unexplained money and addition was made under section 69A of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) observed that the assessee had not furnished adequate documentary evidence either to establish his activity of obtaining liquor licences for customers or to substantiate that the cash deposits represented advances received from such customers. The Ld. CIT(A) further noticed a discrepancy regarding the cash-in-hand as on 08.11.2016 and, accordingly, sustained the addition made by the Ld. AO. Being aggrieved, the assessee is in appeal before the Tribunal. 3. The Ld. AR submitted that the assessee has filed a paper book, which has been placed on record. The Ld. AR further furnished additional evidence in 2 support of the assessee’s claim relating to the facilitation and operation of the liquor licence. The said additional evidence is supported by an affidavit duly sworn by the assessee himself on 12.08.2026. The relevant portion of the affidavit is reproduced here in below:

That learned Income by way of Salaries for working with liquor shops from 2012 onwards after retirement of my Father. Thereafter I started earning Commission Income from 2015 by facilitating and obtain temporary liquor licenses from the Maharashtra Government for various customers of banquet halls, wine shops, caterers and event organisers. 2. That during the Financial Year 2016-17 (Assessment Year 2017-18) I have e-filed my Return of Income for the First time on 2nd September 2017 after the due date of submission as I did not have any person to guide me in this regard. 3. That I earned Income by way of Commission Net of Expenses amounting to Rs.78,950/- for facilitating the process of obtaining liquor licenses. 4. That I maintained record of my activities in note books and diaries to serve as timely reminder for follow up with the customers and to keep track of status of applications made, licenses issued and no separate books of Accounts were maintained at that time. 5. That I received a notice dated 08th August 2018 under CASS for Limited Scrutiny and there after another notice u/s 142(1) dated 10 January 2019. 6. That during the assessment proceedings before the Income Tax Officer, Ward 2(3), Kalyan, a document described 'Cash Book' was prepared and submitted on my behalf by my previous Authorised Representative (AR) in response to the aforesaid notices. 7. That I state on oath that the said Cash Book was prepared and submitted by the previous AR on the basis of available records without taking into consideration that the amount of Cash Deposited by me during the month of December 2016 (Demonetisation Period) aggregating to Rs.850,000/-comprised of NEW NOTES having denomination of Rs.2,000, which were issued by Reserve Bank of India only after 8th November 2016 vide press release No. 2016-2017/1144 & 1145. 8. That the actual amount of cash in hand Rs.185,500 as on 8th November, 2016 was deposited on various dates during period of Demonetisation from 8th November, 2016 onwards.

That I am a school dropout with limited financial literacy. I was entirely dependent on my then AR for all matters relating to the assessment proceedings as I filed return of Income for the First Time. The said Cash Book contained an incorrect opening balance of Rs.10,35,500/- as on 08.11.2016, which was erroneously compiled by the previous AR. 10. That during the course of appellate proceedings under the E-Appeals Scheme 2023 before the Ld. CIT(Appeals) JCIT (A)-1 Guwahati, I engaged the services of Other Authorised Representative, CA Majhar Khambaty, who asked me to obtain certificate from The State Bank of India, A/c No. 00000033397351666, Branch: Govt Colony, Bandra East, in which I had deposited Rs.2000 notes during demonetisation period i.e. 08.11.2016 to 31.12.2016. A copy of the same is attached herewith dated 06.02.2020. 11. That on the basis of the said SBI Certificate, the document ie. Cash Book submitted before Ld. A.O was corrected and submitted before the Ld. CIT(Appeals). The corrected Cash Book reflecting an actual cash balance of Rs.1,85,500/- as on 08.11.2016. The SBI Certificate was also submitted during the CIT(A) proceedings. 12. That the discrepancy between the figure of Rs.10,35,500/- (stated before Ld. AO) and Rs.1,85,500/-(stated before CIT(A)) is entirely due non availability of SBI Certificate 13. That I am also submitting the copies of the liquor licenses obtained by me on behalf of my 14. That the said liquor licenses were obtained by me from the details of cash deposited in my SBI bank account for the period of demonetization i.e. November-December 2016. The cash so deposited was received from various customers of banquet halls, wine shops and event organisers for the purpose of obtaining liquor licenses, and was deposited in the bank for making the corresponding Government treasury payments. 15. That I have not concealed any income or furnished any inaccurate particulars of my income at any point, as could be seen from the total of Cash Collection and Deposits for the Entire Financial Year 2016-17 remained same already on record. The Copy of comparative documents are enclosed herewith. I have acted in good faith and with complete bona fides throughout.

That the contents of this Affidavit are true and correct to the best of my knowledge, information and belief and nothing material has been concealed therefrom.” 4. The Ld. DR supported the orders of the revenue authorities; however, no strong objection was raised against admission of the additional evidence.

We have heard the rival submissions and perused the material available on record. The dispute relates to the addition of Rs.10,35,500/- under section 69A of the Act, representing cash deposited by the assessee during the demonetisation period. The assessee has consistently claimed that he was engaged in facilitating the obtaining of liquor licences for various customers and that the cash deposits represented amounts received from such customers for obtaining the licences and making the corresponding payments to the Government Treasury. The Ld. CIT(A), however, sustained the addition primarily on the ground that the assessee failed to furnish documentary evidence either in support of the nature of his activity or to establish the source of the cash deposits. During the course of hearing before us, the Ld. AR has furnished additional evidence supported by an affidavit duly sworn by the assessee on 12.08.2026. In the affidavit, the assessee has, inter alia, explained the discrepancy between the cash balance of Rs.10,35,500/- stated before the Ld. AO and Rs.1,85,500/- stated before the Ld. CIT(A), and has also sought to place on record copies of liquor licences stated to have been obtained on behalf of the customers. Considering the nature of the additional evidence and the explanation furnished through the affidavit, we find that these documents have a direct bearing on the controversy and go to the root of the matter. Since the said evidence requires factual examination and verification at the level of the Ld. AO, it would be appropriate to restore the matter to his file for fresh consideration. Accordingly, the additional evidence furnished by the assessee is admitted and the impugned issue is set aside to the file of the Ld. AO with a direction to examine and verify the additional evidence and thereafter adjudicate the issue afresh in accordance with law. We make it clear that no view is expressed on the merits of the addition. Needless to say, the Ld. AO shall afford reasonable opportunity of being heard to the assessee before passing the order. The assessee is also directed to remain diligent, furnish the requisite evidence and extend full cooperation in the set-aside proceedings.

In the result, the appeal of the assessee bearing ITA No.3563/Mum/2026 is allowed for statistical purpose. Order pronounced in the open court on 02nd day of September 2026 Sd/- Sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 02/09/2026 SAUMYA Sr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI