NIRMAL RAMESHCHANDRA SHAH,KALYAN vs. ITO - WARD 1(1), KALYAN

IN THE INCOME-TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.4341/MUM/2026 (A.Y. 2017-18) Nirmal Rameshchandra Shah v/s. Income Tax Officer, Ward 25/B, Flat No. 101, 1st Floor, बनाम –1(1), Mohan Plaza, Near Kalyan Road, Ashok Nagar, Poddar School, Vaile Bhiwandi,Kalyan – 421 302, Nagar, Khadakpada-Kalyan Maharashtra West, Kalyan – 421 301, Maharashtra स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No: ACKPS4317G Appellant/अपीलार्थी .. Respondent/प्रतिवादी

Assessee by : Shri Aayush Chhajed, CA Revenue by : Shri Suni Mathews,(Sr. AR)

Date of Hearing 16.07.2026 Date of Pronouncement 31.08.2026 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The instant appeal emanating from the appellate order dated 06.01.2026 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax, Appeal, ADDL/JCIT(A)-4, Bengaluru [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 17.12.2019 for the Assessment Year [A.Y.] 2017-18.

P a g e | 2 ITA No. 4341/Mum/2026 A.Y. 2017-18 Nirmal Rameshchandra Shah 2. The grounds of appeal are as under: 1. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in sustaining an addition of Rs. 1,82,000/- u/s 69A i.e.. unexplained money on account of cash deposited in the bank account without appreciating that the said cash was deposited in the ordinary course of business of domestic money transfer and were included in the total business receipts of Rs. 9,75,01,991/-. 2. On the facts and circumstances of the case, the learned CIT (Appeal) erred in estimating the commission income @ 1% without appreciating that the average commission percentage in the money transfer business ranges between 0.1 to 0.5 % depending upon the profile of the customer and various other factors, and that the assessee had received an average commission of 0.45% which had been disclosed in his return of income. 3. It is noted that the appeal is delayed by 14 days, which is hereby condoned. Brief facts of the case are that the assessee is engaged in money transfer business and had earned commission income from such business during the year under appeal. He filed the return of income showing income at Rs. 3,19,450/-. During the course of assessment proceedings, on the basis of AIR information available, it was noticed by the AO that the assessee had made total cash deposits of Rs. 9,75,01,991/- in certain bank accounts. However, no receipts had been disclosed by him in the return filed. It was also seen that no audit report had been filed by the assessee. It was observed by him that the AO on perusal of bank statements and informed gathered from ICICI bank that assessee had made cash deposits in specified bank notes of Rs. 1,82,000/- on 31.12.2016 in his bank account maintained with there but he failed to explain the source of these cash deposits. Since, assessee

P a g e | 3 ITA No. 4341/Mum/2026 A.Y. 2017-18 Nirmal Rameshchandra Shah had not replied to the statutory notices issued and had not furnished any reply in this regard, the source of the above cash deposits made by him during demonetization period remains unexplained and attracted the provisions of section 69A of the Act.

3.1 It was also revealed from the bank statements of the above mentioned bank account that assessee had made cash deposits of Rs.9,75,01,991/- during the year but the source of these cash deposits had not been disclosed by him even after giving reasonable opportunities. On perusal of the bank statement, prima-facie, it seemed that the assessee was engaged in the business of sale of money transfer agent, ticketing agent, Recharge vouchers etc. Considering this, the cash deposits made by the assessee were treated as his business receipts. According to him, as per prevailing market trends in such businesses, the average commission on these transactions was around 2–2.5%. Considering the overhead expenses, net profit was computed at 2% from these receipts. The net profit so computed was at Rs.19,46,400/- [2% of (Rs. 9,75,01,991/- minus Rs. 1,82,000/-)] which was added to the total income of the assessee under the head income from business.

P a g e | 4 ITA No. 4341/Mum/2026 A.Y. 2017-18 Nirmal Rameshchandra Shah was also made under Rule 46A which was, however, rejected by the ld.CIT(A). It was further submitted that the date of cash deposit was 31/12/2016 which was afterdemonetization period so the said cash deposit done could not be demonetized notes as bank would have not accepted it on 31/12/2016. The AO has erred in making addition of Rs. 1,82,000/- as unexplained cash money u/s 69A. The cash deposit was in the normal course of Domestic Money Transfer(DMT) business and could not be termed as unexplained money of cash deposit in demonetized notes. The amount was recorded in the books of accounts by the assessee as cash deposit for DMT business. The AO has erred in making addition of Rs. 19,46,400/-, being 2 percent of total cash deposit made by the assessee as its undisclosed business income. The assessee is engaged in the business of Domestic Money Transfer. The AO had also mentioned in the assessment order in Para 13.2 that through primafacie perusal of bank accounts of the assessee seemed to be engaged in business of money transfer agent, ticketing agent, recharge vouchers, etc. which was correct as the assessee was a Domestic Money Transfer Agent. He is agent/distributor of certain service providers on commission basis i.e. Hermes I Tickets Private Limited, EBIX Payment Services Private Limited, Aadharrshila Enroll Systems Private Limited and Vodafone M-Pesa Limited The copy of distributorship/agency

P a g e | 5 ITA No. 4341/Mum/2026 A.Y. 2017-18 Nirmal Rameshchandra Shah Agreements with parties was attached. As per trade practice in DMT business, the cash was received from retailers/Sub agents who collected it from customers. The cash so collected was deposited in assessee’s bank accounts and transferred by banking channels to service providers who, in turn, transferred the same to bank accounts of parties through e- portals as instructed by sub agents. The service providers paidit commission between 0.35% to 0.45 % of the money transferred. The AO has considered commission of 2% which is practically not possible in DMT business as margins are very thin compared to the volume of transactions and extremely competitive business. The assessee in reality only received Rs. 4,39,444/- as commission income from DMT business. Form 26AS was attached for reference. Cash deposited were transferred to the Domestic Money Transfer Service Providers. Total bank transfer amounts to Rs. 9,75,15,243/-. Bank Statements were attached to verify the details.

P a g e | 6 ITA No. 4341/Mum/2026 A.Y. 2017-18 Nirmal Rameshchandra Shah been rendered. Accordingly, the application filed under Rule 46A was rejected.

5.1 In so far as the merits of the addition are concerned,the appellate authority observed that the assessee had not explained the sources for such cash, before the AO. Further, he claimed that the said deposit was in thenormal course of business of DMT and recorded in the books of account. However, these facts were never brought before the AO for examination. The assessee had not maintained books of accounts, but now in this appeal proceedings, appellant claimed that above transactions were recorded in the books of account, which was a contradictory statement. Accordingly, in the absence of any documentary proof for source of such cash deposit, the claims made by the assessee on this issue was rejected.

5.2 He further observed that there was no dispute that the assessee was a money transfer agent, as mentioned in the assessment order. The issue on hand to be decided was whether the commission is 2.0% as estimated by the AO or 0.45% as claimed by the assessee. No books of accounts were maintained in order to examine the actual receipt of commission income and expenditure. Hence, he held that in the absence of books of accounts produced him, the AO had rightly

P a g e | 7 ITA No. 4341/Mum/2026 A.Y. 2017-18 Nirmal Rameshchandra Shah estimated the income. As agreed upon by the assessee that the total turnover of transactions for the year under consideration was about Rs.9.75 cr. and percentage of commission needed to be estimated after taking into consideration of the following points; (a) No books of account maintained and produced by the appellant and (b) None of the details furnished before the AO for examination. After considering the submissions of the appellant, the commission was estimated at 1% as against 2% estimation made by the AO. The AO was directed to recompute the net profit at the rate of 1%.

P a g e | 8 ITA No. 4341/Mum/2026 A.Y. 2017-18 Nirmal Rameshchandra Shah justified who was fair enough to restrict the addition to 1% only as against 2% applied by the AO.

Order pronounced in the open court on 31/08/2026.

Sd/- Sd/-

(CHALLA NAGENDRA PRASAD) (PRABHASH SHANKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: म ुंबई/Mumbai ददनाुंक /Date 31.08.2026 Lubhna Shaikh / Steno

P a g e | 9 ITA No. 4341/Mum/2026 A.Y. 2017-18 Nirmal Rameshchandra Shah आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण/ ITAT, Bench, Mumbai.