Raj Kumar Daga Vs ACIT (ITAT Delhi)
Commission Disallowance Based on Suspicion Quashed: ITAT Deletes ₹41.55 Lakh Addition as Conjectural and Unsupported
The Delhi ITAT allowed the assessee’s appeal and deleted the disallowance of ₹41.55 lakh towards commission expenses, holding that the addition was based on conjectures, surmises and hypothetical presumptions rather than concrete evidence. The Assessing Officer had disallowed the commission mainly because payments were concentrated in March, many recipients shared common addresses, confirmations were incomplete, and parties were not produced for verification. The CIT(A) confirmed the addition by relying on the AO’s theory of a common modus operandi for booking bogus commission.
The Tribunal noted that payments were made through banking channels with due deduction of TDS and the books of account were not rejected. Mere non-production of agents, booking of expenses at year-end, or low disclosure of income by recipients could not by themselves render the expenditure non-genuine. The AO also failed to exercise his powers under section 131 to summon the agents. Importantly, the Tribunal held that judicial findings cannot rest on general theories of tax evasion or human probability without corroborative material establishing that no services were rendered. Since the disallowance was founded only on suspicion and presumptions without any positive evidence, the addition was directed to be deleted. Accordingly, the assessee’s appeal was partly allowed
FULL TEXT OF THE ORDER OF ITAT DELHI
