Saurabh Jain Vs ACIT (ITAT Delhi)
Delhi ITAT: Loose Third-Party Papers and WhatsApp Chats Cannot Sustain Addition of Alleged Commission Income
The Delhi ITAT deleted additions made towards alleged commission income for AYs 2022-23 and 2023-24, holding that loose papers recovered from a third party and WhatsApp chats not relating to the relevant assessment years do not constitute incriminating evidence sufficient to sustain an addition.
The assessee, a director of Vintage Distilleries Ltd., was subjected to reassessment following a search on the Vintage Group. The Assessing Officer relied upon the statement of a third party (Shri Dilip Singla), an ‘orange register’ allegedly recording commission at 6 paise per bottle, and certain WhatsApp chats, to add ₹13.90 lakh (AY 2022-23) and ₹16.83 lakh (AY 2023-24) under section 69A as unexplained money. The CIT(A) held that section 69A was inapplicable but sustained the additions by treating them as business income.
Before the Tribunal, the assessee contended that the additions were based merely on assumptions and third-party material, with no incriminating evidence found during the search linking him to the alleged commission income.
The Tribunal observed that, except for the statement of the third party regarding certain loose handwritten scribblings, the WhatsApp chats relied upon by the Revenue related to the year 2024, which was irrelevant for the assessment years under appeal. It also noted that the assessee had already offered the income relating to AY 2024-25 to tax.
The ITAT further found that the Assessing Officer had estimated commission at 6% on figures supplied by third parties, without establishing any verifiable or enforceable transaction involving the assessee. The loose papers contained neither dates nor the assessee’s name, and consisted merely of figures without any narration or supporting evidence. Such documents, even when read with the statement recorded under section 132(4), did not constitute conclusive evidence of undisclosed income.
Referring to the Supreme Court’s decision in PCIT v. Abhisar Buildwell (P.) Ltd., the Tribunal reiterated that additions cannot rest on non-incriminating material or mere presumptions. It held that the Revenue had failed to establish any reliable nexus between the seized material and the alleged commission income for the years under consideration.
Accordingly, the ITAT deleted the additions for both assessment years and allowed the assessee’s appeals.
Cases Discussed
- PCIT Vs. Abhishar Buildwell (P.) Ltd. (SC), (2023) 454 ITR 212
- N. Singh v. CIT (SC), TS-252-SC-2023
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals are preferred by the assessee against the common order dated 11.12.2025 of the Ld. Commissioner of Income Tax (A)-23, Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN & Order No: ITBA/APL/S/250/2025-26/1083582529(1)/ITBA/APL/S/250/2025-26/1083582974 arising out of the assessment order dated 08.04.2025 u/s 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by DCIT, Central Circle-2, Delhi, for AY: 2022-23 & 2023-24.
