Case remitted to verify claim of RTO liaisoner that cash deposited belonged to vehicle owners

Case remitted to verify claim of RTO liaisoner that the cash deposited in his account was of vehicle owners and not his income

In a recent judgment, ITAT Bangalore has remitted the case of a RTO liaisoner/middleman to verify if the cash deposited in his bank account were of vehicle owners and not his income. 

ABCAUS Case Law Citation:
5012 (2026) (01) abcaus.in ITAT

The case of the assessee was reopened for the reason that as per the ITS details, the assessee was selected as a non-filer assessee under NMS.  The assessee had not filed his return of income for the relevant Assessment Year.  However, as per the individual transactions statements, it was seen that the assessee had made large amount of cash deposits in his saving bank account.

In view of the above, the AO was of the opinion that the income chargeable to tax has escaped assessment and hence notice u/s. 148 of the Act was issued with prior approval of the PCIT calling upon the assessee to file return of income.

However, the assessee neither filed any return of income in response to notice u/s. 148 of the Act nor furnished any reply/ submissions to any of the further notices. The AO held that the assessee was concealing his income and willfully avoiding to file return of income and disclose the total cash deposit.

The AO completed the assessment proceedings exparte u/s. 144 r.w.s 147 of the Act by making an addition under the head “Income from other sources” as unexplained cash credits u/s. 68 of the Income Tax Act, 1961.

The CIT(A)/NFAC dismissed the appeal of the assessee by noticing that the assessee had not utilized various opportunities to furnish the required explanation for source of cash deposits in bank accounts backed with adequate documentary proof to support his stand either during the assessment proceedings or during the present appellate proceedings. 

Before the Tribunal the assessee submitted that he was engaged in providing backend services by way of liaisoning between the vehicle owners and the RTO office.  The assessee received amount from the vehicle owners for making the payment towards the expenditure relating to the payment of vehicle tax/ insurance and other miscellaneous expenditure for a meagre renumeration. 

It was stated that the amount found deposited in the bank account represented the amount deposited by a vehicle owner to facilitate incurring expenditure such as vehicle tax, vehicle insurance and other miscellaneous expenses and accordingly submitted that the entire amount deposited in the bank account was not the income of the assessee. 

Further, the assessee submitted that the case may be remanded back to the file of AO as the assessee could not represent his case before the authorities below with a direction that if the assessee demonstrates that the entire deposits are from the consultancy services by way of liaisoning between the vehicle owners and the RTO officers, then the AO may be directed to apply provisions of section 44AD of the Act as the turnover of the assessee is less than one crore.

The Tribunal observed that the submissions of the assessee were not examined by the Authorities below & as the assessee also could not represent his case before the AO and explain his case.

Accordingly, the Tribunal remitted the entire issue in dispute to the file of AO with a direction that in case the assessee is able to substantiate his claim of engaging in the logistics services by way of liaisoning between the vehicle owners and the RTO Office and the amount deposited  in the bank account were found to be of the vehicle owners, the entire deposits may be treated as turnover of the assessee and accordingly net profit of the rate of 8% on the same may be applied as per the provisions containing in section 44AD of the Act. 

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