Sanjay Wahi Vs ACIT (ITAT Delhi)
Section 69A Cannot Apply to Mere Seized Documents – Delhi ITAT Recasts Undisclosed Commission, Restricts Addition to 20% of Gross Commission
Delhi ITAT examined an addition made during search proceedings where a seized document reflected gross commission receipts of Rs.11,63,955/-.
AO treated the entire gross commission as unexplained money u/s 69A, & CIT(A) confirmed the view holding that the document was not a dumb paper & that no evidence of expense allocation or sharing arrangement with franchises/investor clinic was produced.
Before the Tribunal, Assessee argued that section 69A applies only when unexplained “money, bullion, jewellery or valuable article” is found, whereas here no money or article was discovered-only a document noting commission computation. ITAT accepted this position, holding that section 69A cannot be invoked merely on the basis of seized notings without physical unexplained assets. Tribunal however noted that the document clearly evidenced that gross commission had in fact been earned, but the Revenue could not bring the entire gross amount to tax; what can be brought to tax is only the profit element. Considering absence of proper books coupled with the nature of commission business, ITAT adopted a reasonable approach & held that 20% of the gross commission is to be assessed as income. Consequently, the order of the lower authorities was modified & the addition was restricted to 20% of Rs.11,63,955/-, granting substantial relief to the Assessee.
