Mohammed Umaruddin Khamruddin Vs ITO (ITAT Bangalore)
APMC Commission Agent Cannot Be Taxed on Entire Sale Proceeds-Bengaluru ITAT Remands ₹2.67 Crore Cash Deposit Addition
The Bengaluru ITAT held that cash deposits made by an APMC commission agent cannot automatically be treated as unexplained money under section 69A, merely because they exceed the turnover disclosed in the return of income. The Tribunal restored the matter to the Assessing Officer for fresh verification after finding that the assessee had produced prima facie evidence showing that he was merely acting as a commission agent.
The assessee, engaged in the business of commission agency in the Yeshwanthpur APMC Yard, had deposited ₹2.67 crore in his bank account. The Assessing Officer treated the differential amount as unexplained cash deposits under section 69A, alleging that the deposits were not reflected in the turnover disclosed in the return. The assessee explained that he sold agricultural produce belonging to farmers, collected sale proceeds in cash from buyers, deposited the collections into his bank account and thereafter remitted the amounts to the farmers, retaining only 5% commission as his income. He also produced his APMC licence, computation of income, GST returns, sales summary and bill books in support of his claim.
The Tribunal observed that the entire cash deposited in the bank belonged to the sellers of agricultural produce and not to the assessee, who merely acted as an intermediary earning commission. It also noted that the GST returns reflected commission sales of about ₹2.85 crore, and 5% thereof worked out to ₹14.25 lakh, which exactly matched the commission income disclosed in the return. Thus, the material on record prima facie supported the assessee’s explanation that only the commission constituted his taxable income.
However, since the Assessing Officer had not examined the bill books and supporting records produced by the assessee, the ITAT considered it appropriate to set aside the assessment and remand the matter for fresh verification. The Tribunal directed the Assessing Officer to examine the evidence and delete the addition under section 69A if the claim is found to be genuine. The appeal was accordingly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 17/07/2025 in respect of the A.Y. 2020-21.
