Din Dayal Jalan Textile Pvt. Ltd. Vs ACIT (ITAT Mumbai)
Additions Based Solely on Investigation Report & Assumed 3% Commission Unsustainable – ₹2 Cr Additions Deleted – ITAT Mumbai
The assessee company, engaged in textile trading, faced additions of ₹1 crore u/s 69A as alleged unaccounted commission and ₹1 crore as estimated business income based on information from a search conducted on a third party (JM Jain LLP). The AO relied on entries found in a “JSK Server” and extrapolated alleged unaccounted purchases of ₹33.33 crore by assuming commission @3%, without independent enquiry or assessee-specific evidence.
ITAT held that addition u/s 69A requires proof of ownership of unexplained money and actual cash payment, which was absent. The assessment was based largely on third-party material, contradictory statements, and investigation reports without corroboration, cross-examination, or supply of relied documents, thereby violating principles of natural justice.
The Tribunal further observed that estimation of profit by reverse-calculating turnover from an assumed commission rate, without rejection of books or identifying specific off-book transactions, was purely conjectural. Since the foundation of alleged unaccounted commission itself failed, both additions were deleted and the assessee’s appeal was allowed
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”], dated 16.10.2025for the Assessment Year 2022–23, arising out of the assessment order passed under section 143(3) read with section 144B of the Income Tax Act, 1961 [hereinafter referred to as “CIT(A)”]dated 25.03.2024.
