SOMNATH JANARDAN WAMAN,THANE vs. INCOME TAX OFFICER, WARD 28(3)(1), NAVI MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER

ITA No.2494/Mum/2026 (Assessment year: 2019-20)

Somnath Janardan Waman vs Income Tax Officer, Ward 28(3)(1) C-102, Laxmi Narayan Income Tax Office, Vashi railway Complex, Plot No.-3, Sector station building, Navi Mumbai, 12A, Koper Khairne, Thane, Mumbai – 400703. Mumbai – 400709. PAN: AAAPW7491H APPELLANT RESPONDENT Assessee by : Shri Nikhil Mutha Revenue by : Shri Pasale Naganath Bhimrao (Sr.DR)

Date of hearing : 21/05/2026 Date of pronouncement : 25/05/2026 O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2019-20, date of order 19.12.2025. The impugned order emanated from the order of the Assessment Unit, Income Tax Department order passed under section 147 r.w.s. 144B of the Act date of order 28.02.2024. 1

ITA No. 2494/Mum/2026; A.Y. 2019-20; Somnath Janardan Waman 2. The brief facts of the case are that the assessee is an individual and carrying on business as Onion Potato Merchant and Commission Agent. He is running the business in the name and style of “M/s. Waman and Company”. During the impugned assessment year, the assessee had not filed the return under section 139(1) of the Act. But in response to the notice under section 148, the assessee filed the return by declaring total income amount to Rs. 4,95,123/-. The assessee declared the turnover amount to Rs. 67,92,909/- and taxable profit amount to Rs. 4,80,669/- being rate of Net Profit @7.07% of the turnover. The assessee contended that the assessee is suffering a severe medical issue and so the assessee was not able to comply the notices issued by the Ld. AO and accordingly, the assessment order was passed ex-parte with an addition amount to Rs.19,30,600/- as cash deposited in the bank account under section 69A of the Act. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) called the remand report. But considering the same the Ld. CIT(A) uphold the impugned assessment order. Being aggrieved the assessee filed an appeal before us. 3. The Ld. AR argued and filed a paper book comprising pages 1 to 54 which has been placed on record. The Ld. AR contended that the assessee was running the business as a Commission Agent and Trader of the Onion and Potato. In this respect, the APMC licence in forced since 29.08.2008 is duly submitted in APB page 91 to 92 which establishes that the assessee had been carrying on regulated business as a licenced Commission agent (kaccha arhtia) in agricultural commodities since 2008. The assessee has regularly filed its return from A.Y. 2012-13 to A.Y. 2018-19 in ITR 3 and ITR 4. The Ld. AR further contended that in impugned assessment year out of the total turnover of Rs.67,92,909/- out of that 2

ITA No. 2494/Mum/2026; A.Y. 2019-20; Somnath Janardan Waman the assessee’s cash sales amount to Rs. 29,34,000/- and after incurring the expenses the cash was deposited amount to Rs. 19,30,600/-. The relevant cash book is duly enclosed in APB page 121 to 132. The Ld. AR further contended that the doctor’s certificate and medical reports are duly enclosed in APB page 113 to 117 which evidencing the assessee is undergoing medical treatment since FY 2017-18. 4. All the relevant documents are duly submitted before the Ld. AO. In this connection, the Ld. AR invited our attention to the relevant paragraphs of the impugned assessment order which are reproduced as below: “4. Synopsis of the reply of the assessee to SCN and additional SCN (if any): - In response to the showcause notice issued, the assessee has submitted reply, along with copy of cash book, on 22.02.2024 which is reproduced as under: “Thanks very much for giving me time for submission of reply till 26.02.2024. In earlier submission, I have submitted only details of cash deposit of Rs 19,30,600/- in bank and not complete cash book. Now I am submitting herewith complete cash book wherein you can verify opening cash, receipts, payments and closing cash balance. As I mentioned in my earlier reply my source of cash deposit is from day to day sales and cash received from debtors. 4.1 Summary of information evidence collected after SCN (if any)- NA 4.2 Point wise rebuttal of reply of the assessee including analysis of any case law relied upon. In his reply, the assessee submitted that actual cash deposit in his bank account held with Nagpur Nagarik Sahakari Bank Ltd was Rs. 19,30,600/-, furnished the cash for the year under consideration only with credit entries, and the source of such cash deposit of Rs. 19,30,600/- was of cash received by way of day-to-day cash sale and cash received from debtors in the course of the business. However, no documentary evidences establishing the source of such cash receipt were furnished. A show-cause notice is issued to the assessee. In response to the same, the assessee submitted copy of cash book only. However, no documentary 3

ITA No. 2494/Mum/2026; A.Y. 2019-20; Somnath Janardan Waman evidences establishing the source of such cash receipt in the cash book, were furnished by the assessee. 4.1 Conclusion drawn: 4.1.5 During the course of assessment proceedings, the assessee was specifically asked to furnish detailed explanation along with documentary evidence regarding the cash deposits made during the year under consideration. Further, as per information as well as cash book submitted by the assessee, it is noticed that Assessee has submitted cash book, wherein opening balance is not shown and further, only credit entries are there and no debit entries are recorded in cash book. At the end of the year there is total debit balance of Rs. 19,30,600/-. During the course of assessment proceedings notices u/s. 142(1) of the Act were issued to the assessee for furnish the source of credit entries. However, the assessee has not submitted any documentary evidences regarding the source of credit entries in the bank account made. A final-show cause notice was issued to the assessee was requested to furnish its reply. However, in response to the showcause notice the assessee has again submitted only cash book and failed to furnish the documentary evidences as called for.” 5. The Ld. DR argued and contended that the assessee had filed the return of income for availing the benefit of the presumptive taxation scheme under section 44AD of the Act. However, the assessee had declared net profit at the rate of 7.07%, which is contrary to the provisions of section 44AD of the Act. The Act specifically mandates that the profit should be declared at a minimum rate of 8% of the turnover. He further argued that the assessee was unable to properly substantiate the source of cash deposits before the revenue authorities. Accordingly, the Ld. DR strongly relied upon and supported the orders passed by the revenue authorities. 6. We heard the rival submissions and considered the documents available on record. It is an undisputed fact that the assessee is engaged in the business of Onion and Potato trading and commission agency under the name and style of “M/s. Waman and Company”. The assessee had duly placed on record the APMC 4

ITA No. 2494/Mum/2026; A.Y. 2019-20; Somnath Janardan Waman licence effective from 29.08.2008, evidencing that the assessee has been carrying on regulated business as a licensed Commission Agent (Kaccha Arhtia) in agricultural commodities since 2008. We further find that the assessee had regularly filed returns of income in earlier as well as subsequent assessment years in ITR-3 and ITR-4, thereby substantiating the continuity and genuineness of the business activity carried on by the assessee. We further observe that the assessee had explained that the cash deposits in the bank account were out of day-to-day cash sales and realization from debtors arising in the normal course of business. In support of the same, the assessee furnished the cash book placed in the paper book along with other supporting documents. The medical records and doctor’s certificates placed on record also substantiate the contention of the assessee that he was suffering from severe medical issues during the relevant period, due to which proper compliance before the revenue authorities could not be made and the assessment came to be framed ex-parte. On careful consideration of the impugned assessment order, we find that the Ld. AO has mainly rejected the explanation of the assessee on the ground that supporting documentary evidences for cash receipts were not furnished. However, the existence of business activity itself has not been doubted by the revenue authorities. The turnover declared by the assessee and the cash deposits in the bank account are found to be interconnected with the regular business activities carried on by the assessee. Merely because the assessee declared net profit at 7.07%, instead of 8% as contemplated under section 44AD of the Act, the entire cash deposits cannot automatically be treated as unexplained money under section 69A of the Act. We further find that once the business receipts are accepted and the turnover is not doubted, the corresponding cash deposits arising out of such business 5

ITA No. 2494/Mum/2026; A.Y. 2019-20; Somnath Janardan Waman transactions cannot be separately brought to tax under section 69A of the Act in absence of any cogent material establishing that the deposits represented unexplained or unaccounted money of the assessee. The assessee has duly explained the nature and source of cash deposits through the cash book and business records placed on record. During impugned financial year the assessee’s cash sales was amount to Rs. 29,34,000/- which is part of total turnover amount to Rs. 67,92,909/-. After incurring expenses the assessee deposited the cash amount to Rs. 19,30,600/-. The revenue authorities have failed to bring any contrary material on record to dislodge the explanation furnished by the assessee. Accordingly, considering the totality of facts and circumstances of the case, we find no justification in sustaining the addition of Rs.19,30,600/- made under section 69A of the Act. Therefore, the addition made by the Ld. AO and sustained by the Ld. CIT(A) stands deleted. Accordingly, the grounds raised by the assessee are allowed. 7. In the result, the appeal of the assessee bearing ITA No.2494/Mum/2026 is allowed. Order pronounced in the open court on 25th day of May 2026. Sd/- Sd/- (ARUN KHODPIA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 25/05/2026 Soumili Das, PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 6

ITA No. 2494/Mum/2026; A.Y. 2019-20; Somnath Janardan Waman 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