RAJENDER MACHA,WARANGAL vs. ITO, WARD-2, WARANGAL, WARANGAL

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad �ी रवीश सूद, माननीय �या�यक सद�य एवं �ी मधुसूदन साव�डया, माननीय लेखा सद�य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A. No.1807/Hyd/2025 (�नधा�रणवष�/ Assessment Year: 2017-18) Rajender Macha, VS. Income Tax Officer, Warangal. Ward-2, PAN: ATXPM3349N Warangal. (अपीलाथ�/ Appellant) (��यथ�/ Respondent)

करदाताका��त�न�ध�व/ : Shri A V Raghuram, Advocate Assessee Represented by राज�वका��त�न�ध�व/ : Dr. Sachin Kumar, Sr AR Department Represented by सुनवाईसमा�तहोनेक��त�थ/ : 16/04/2026 Date of Conclusion of Hearing घोषणा क� तार�ख/ : 08/05/2026 Date of Pronouncement ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 26/08/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 143(3) of the Income Tax Act, 1961 (for short, “the Act”), dated

2 ITA No.1807/Hyd/2025 Rajender Macha vs. ITO 25/12/2019 for the Assessment Year (AY) 2017-18. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal:

“1. On the facts and in the circumstances of the case, the order of the ld. CIT(A) is erroneous both on facts and in law. 2. The Id. CIT(A) erred in sustaining the addition made by the AO of Rs.1,53,71,408 as unexplained money u/s.69A of the Income Tax Act, 1961. 3. The Id. CIT(A) having observed that the Appellant. is, working for Raja Motors and Rangaraya Auto Agency and received income for which TDS has been done and further that some of the deposits in the bank account are being forwarded to Raja Motors, TVS Credit Services Ltd., Raghuram Motors and Rangaraya Auto Agency, however proceeded to sustain the addition on the ground that the Appellant has not. filed confirmation letters from Raja Motors and TVS Credit Services Ltd. Any other ground that may be urged at the time of hearing.” 4.

3 ITA No.1807/Hyd/2025 Rajender Macha vs. ITO his bank account. The AO based on the aforesaid facts called upon the assessee to explain the source of the credits entries in his bank account. However, the assessee despite having been afforded sufficient opportunities failed to come forth with any explanation. Accordingly, the AO was constrained to hold the entire amount of credits (including cash deposits made during the demonetization period) of Rs.1.53 crores (approx.) in the above mentioned bank account of the assessee as having been sourced out of his unexplained money under section 69A of the Act.

4 ITA No.1807/Hyd/2025 Rajender Macha vs. ITO 6. Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success. For the sake of clarity, the observations of the CIT(A) are culled out, as under:

“Decision: - 7. In the above background, the grounds of appeal are taken for adjudication. I have considered the facts of the case and submission made by the appellant. 8. Ground No. 1 to 4 are related the same are adjudicated together. In the appellant's case, it was observed that as seen from the assessee's bank account the Andhra Bank, Parkal total credits into the bank account are Rs. 1,53,71,408/-. The e Rs. 5,20,500/- The assessee cash deposits during the demonetization period are Rs. filed income and expenditure account wherein gross receipts are reported at Rs.3,85,454/- which is not commensurate with the total credits in the bank account. The assessee did not explain with supporting evidences the basis for calculation of gross receipts before the AO, hence the AO has treated the entire deposits of Rs 1,53,71,408/- under section 69A of the Act. 8.1. During the appellate proceedings, it was submitted that the appellant is an authorized commission dealer to two TVS authorized dealers viz., Raja Motors and Rangaraya Auto Agency and also for various other agencies on a smaller scale. The Appellant secures business and pass on the same to the above authorized dealers and the Appellant is paid commission. Apart from the above, the Appellant also assists the customers in securing finance for the two wheelers and also insurance for the vehicles. 8.2. In support of his claim, the appellant filed Form 26AS (which was filed before the AO) where tax was deducted by Shriram City Union Finance Ltd., TVS Motor Company Limited, TVS Credit Services Limited, Raja Motors under section 1940 (against the income of Rs. 45,227) and 194H (against the income of Rs. 3,40,227) of the 1.T.Act. The Appellant also filed copies of ledger accounts of the Appellant with Raja Motors and Rangaraya Auto Agency along with the copy of SBI, Parkal bank statement. 8.3. The submission of Form 26AS proves that the appellant has been working for Raja Motors and Rangaraya Auto Agency and has received income for which TDS has been done. On verification of the Bank Statement of the appellant, it is noticed that some deposits are being for warded to Raja Motors, TVS Credit Services Ltd. Raghuram Motors and Rangarya Auto Agency. The appellant has not been able to furnish any confirmation from Raja Motors and TVS Credit Services Ltd that he has been authorized to receive payments including cash from their clients. Merely furnishing a ledger does not conclusively prove that these receipts are accounted for by the principal in the absence of any confirmations from them. Therefore, without any credible evidence, the argument of the appellant is not acceptable.

5 ITA No.1807/Hyd/2025 Rajender Macha vs. ITO

8.4. Further it was also noticed by the AO that the appellant has also deposited a cash of Rs 5,20,500/- The appellant has stated that said money is received from customers. It is further submitted by the appellant that once the source of cash receipts are explained the deposit of the same amount cannot be treated as unexplained money. However, as discussed above the source of cash deposits as submitted by the appellant pertains to receipts from customers but no confirmation has been furnished by the appellant if he was authorized to receive the said sum from the principal and if the said amount is duly disclosed by the principal in his accounts. Therefore, the contentions of the appellant are rejected and the view taken by the AO is upheld. Accordingly, Ground No. 1 to 4 stand Dismissed. 9. In result, the appeal stands Dismissed.”

6 ITA No.1807/Hyd/2025 Rajender Macha vs. ITO his customers in securing finance for the two wheelers and also insurance for the vehicles. The Ld. AR to buttress his aforesaid contention submitted that the fact that the assessee was rendering his services as a commission agent can safely be gathered from Form 26AS, where the aforesaid registered authorized dealers/finance companies, viz., (i) M/s. Shriram City Union Finance Limited; (ii) TVS Motor Company Limited; (iii) TVS Credit Services Limited; and (iv) M/s. Raja Motors had deducted tax at source (TDS) under section 194C of the Act (against the income of Rs.44,227/-) and under section 194H of the Act (against the income of Rs.3,40,227/-). Carrying his contention further, the Ld. AR had taken us through the copy of the subject bank account of the assessee with Andhra Bank, Branch Parkal, Form 26AS and copy of account of the assessee in the books of account of the aforementioned authorized dealers, viz., M/s. Raja Motors and M/s. Rangaraya Auto Agency. The Ld. AR submitted that the amounts credited in the bank account of the assessee were the sale proceeds received by him from his customers which thereafter were transferred to the aforementioned authorized dealers to facilitate the purchase of vehicles by them and the assessee was only in receipt of the commission income on the subject transactions. The Ld. AR to fortify his contention had taken us through certain transactions appearing in the subject bank account which revealed that the amounts credited in the bank account of the assessee were either on the same date or on a

7 ITA No.1807/Hyd/2025 Rajender Macha vs. ITO nearby date transferred to the account of the aforementioned authorized dealers, viz., (i) M/s. Rangaraya Auto Agency; (ii) M/s. Sri Sai Motors; (iii) M/s. Raju Motors; (iv) M/s. Devi Motors etc. The Ld. AR based on his aforesaid contention submitted that as the money belonging to the customers was routed through the bank account of the assessee, i.e., a commission agent to the bank accounts of the aforesaid dealers, wherein the assessee was only entitled for the commission on the subject transactions, the AO was by no means justified in treating the subject amount as the unexplained money of the assessee under section 69A of the Act.

8 ITA No.1807/Hyd/2025 Rajender Macha vs. ITO an intermediary between the purchasers/customers and the aforementioned authorized dealers. In fact, the Form 26AS wherein some of the dealers/companies as well as certain finance companies which have deducted tax at source (TDS) under section 194H of the Act further instills confidence regarding the veracity of the aforesaid claim of the assessee. However, we are of firm conviction that the said standalone assertion which falls substantially short of a duly substantiated explanation regarding the source of the credits in the bank account of the assessee, cannot be summarily accepted. In our view, the assessee remains under a heavy onus to substantiate the source of the credits in his bank account based on supporting documentary evidence per the mandate of section 69A of the Act. We thus, are of firm conviction that the matter in all fairness requires to be restored to the AO who is directed to readjudicate the case. Needless to say, the AO shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at liberty to substantiate his explanation based on fresh documentary evidence, if any.

9 ITA No.1807/Hyd/2025 Rajender Macha vs. ITO AO to follow the SOP laid down by the CBDT in the course of the set aside proceedings before drawing any inferences regarding the cash deposits made by the assessee in his bank account during the demonetization period.

Order pronounced in the open court on 08th May, 2026.

Sd/- SSd/- Sd/ Sd/-- (मधुसूदन साव�डया) (रवीश सूद) (MADHUSUDAN SAWDIA) (RAVISH SOOD) लेखासद�य/ACCOUNTANT MEMBER �या�यकसद�य/JUDICIAL MEMBER d/-Sd Hyderabad, dated 08/05/2026. OKK/sps आदेशक���त�ल�पअ�े�षत/ Copy of the order forwarded to:- 1. �नधा�रती/The : Rajender Macha #1-89/2, Musthyala pally Village, Parkal Mandal, Warangal, Assessee Warangal, Telangana-506164 2. राज�व/ : Income Tax Officer, Ward-2, Warangal The O/o. Income Tax Office, DNo. 1-8-610, 3rd Floor, Mayuri Revenue Complex, Opp. TSNPDCL Bhawan, Nakkalagutta, Hanamkonda, Warangal, Telangana-506001 3. The Principal Commissioner of Income Tax, Hyderabad. 4. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण /DR,ITAT, Hyderabad. 5. The Commissioner of Income Tax 6. गाड�फ़ाईल / Guard file आदेशानुसार / BY ORDER KAMALA KUMAR Digitally signed by KAMALA KUMAR ORUGANTI ORUGANTI Date: 2026.05.08 17:07:25 +05'30' Sr. Private Secretary ITAT, Hyderabad.