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Facts
The assessee filed an original return which was processed. Subsequently, search and seizure proceedings were conducted, and a notice under Section 153A was issued. The AO made an addition based on commission received. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal held that Section 69A of the Income Tax Act was wrongly invoked by the Revenue authorities as no unexplained money, bullion, or jewellery was found. The Tribunal directed the AO to consider 20% of the gross commission as the income of the assessee after allowing relevant expenses.
Key Issues
Whether Section 69A of the Income Tax Act was rightly invoked for addition of gross commission, and whether expenses should be allowed against the commission income.
Sections Cited
139, 143(1), 132, 127(2), 153A, 143(3), 142(1), 69A, 234A, 234B, 234C, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
Before: SHRI S RIFAUR RAHMAN & SHRI VIMAL KUMAR
Assessee by: S/Shri Amit Kaushik & Himanshu Sharma, Advs. Department by: Shri Sanjeev Kaushal, CIT DR Date of Hearing: 21.08.2025 Date of pronouncement: 14.11.2025 O R D E R
PER VIMAL KUMAR, JUDICIAL MEMBER:
1. The appeal of the assessee is against order dated 07.03.2024 of Learned Commissioner of Income-Tax (Appeals), New Delhi (hereinafter referred as “the Ld. CIT(A)”), under Section 250 of the Income Tax Act, 1961 ( hereinafter referred as “the Act”) arising out of assessment order dated 30.09.2021 of the Learned Assessing Officer/Deputy Commissioner of Income Tax, Central Circle-3, New Delhi (hereinafter referred as “Ld. AO") under Sections 153A read with section 143(3) of the Act for assessment year 2015-16.
Brief facts of case are that original return under Section 139 of the Act was e-filed by the assessee on 28.03.2016 declaring total income of Rs.13,60,600/- which was processed under Section 143(1) of the Act on 22.07.2016 at returned income. Search and seizure proceedings under section 132 of the Act was conducted in the case of Shri Dinesh Tyagi/Sh. Pradeep Tyagi /M/s. Dkrrish Builders Pvt. Ltd. & others on 16.05.2018. The case of the assessee was also covered in operation under Section 132 of the Act. The case of the assessee was centralized with this charge by the Pr. Commissioner of Income Tax-18, New Delhi, vide order under Section 127(2) dated 25.09.2019. Notice under Section 153A of the Act dated 15.01.2020 was served. The assessee filed his return of income on 30.01.2021declaring total income of Rs.5,47,170/-. Detailed questionnaire along with Notices under Section 142(1) of the Act were issued on 22/12/2020 & 08/04/2021.The assessee submitted his reply to the queries and documents. On completion of proceedings, Ld. AO vide order dated 30.09.2021 made addition of Rs.11,63,955/-.
Against order dated 30.09.2021, of Ld. AO, the appellant/assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 07.03.2024.
Being aggrieved, the appellant/assessee preferred present appeal with following grounds:
“1. That the Ld. CIT (A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 30.09.2021 passed by the Ld. Assessing Officer under section 153A of the Act without appreciating that the same was without jurisdiction and bad in law.
2. That the Ld. CIT (A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 30.09.2021 passed by the Ld. Assessing Officer under section 153A of the Act without appreciating that the same was without jurisdiction as no mandatory notice under section 143(2) of the Act was issued.
3. That the Ld. CIT (A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 30.09.2021 passed by the Ld. Assessing Officer under section 153A of the Act in violation of the principles of natural justice 4. That the Ld. CIT (A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 30.09.2021 passed by the Ld. Assessing Officer under section 153A of the Act without application of mind to the material on record.
That the Ld. CIT (A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the confirming the order dated 30.09.2021 passed by the Ld. Assessing Officer under section 153A of the Act making addition of Rs.19,77,385/- to the income of the Appellant.
That the Ld. CIT (A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 30.09.2021 passed by the Ld. Assessing Officer under section 153A of the Act making addition of Rs. 11,63,955/- to the income of appellant under section 69A of the Act.
7. That the Ld. CIT (A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Appellant by confirming the order dated 30.09.2021 passed by the Ld. Assessing Officer under section 153A of the Act making addition of Rs. 8,13,430/- to the income of appellant as compared to ITR filed under section 153A of the Act.
8. That the Ld. CIT (A) on facts and in law erred in not deleting the interest levied by the Ld. Assessing Officer under section 234A, 234B and 234C of the Act.
The Appellant craves for leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal
at any time before or at the time of hearing of the appeal
10. That all the grounds are without prejudice to each other.”
5. Learned Authorized Representative for the appellant/assessee submitted that request for approval and approval under Section 153D of the Act are dated 30.09.2021. The approval under Section 153D of the Act is for several years. The consolidated approval does not discuss specific issue to show as due application of mind. Ld. AO and Ld. CIT(A) failed to consider ITRs, computation mentioned in the order. Reliance was placed on following decisions:
Dalip Jindal, Versus DCIT, CC-08, New Delhi, 2025 (6) TMI 404 - ITAT DELHI (Para 7); 2. Apple Commodities Limited Versus DCIT, Central Circle II, Noida, 2025 (4) TMI 1132-ITAT DELHI (Para 6 to 7); 3. Veena Singh Versus ACIT Central circle-25, Delhi, 2024 (4) TMI 1025-ITAT DELHI (Para 10); 4. Kavita Jain Versus DCIT Central Circle Karnal, 2025 (1) TMI 175 -ITAT DELHI (Para 15); 5. Shri Gurvinder Singh Duggal Versus ACIT, Central Circle -06, Delhi, 2024 (6) TMI 336 - ITAT DELHI (Para 18); 6. Inder Chand Bajaj AE-17 Versus DCIT Central Circle -32, Delhi, 2025 (1) TMI 970 - ITAT DELHI (Para 11);
7. Naresh Balyan Versus ACIT Central Circle-16, Jhandewalan Ext. Delhi, 2024 (12) TMI 1386 - ITAT DELHI (Para 15.1); 8. Shri Neeraj Goel Versus ACIT, Central Circle 28, New Delhi, 2019 (3) TMI 276-ITAT DELHI (Para 16); & 9. Millenium Valley Pvt. Ltd. Vs.ACIT, Central Circle-28, New Delhi and DCIT vs. Central Circle-28, Delhi Vs. Millenium Vinimay Pvt. Ltd. 6. Learned Authorized Representative for the Revenue submitted that assessee failed to comply with direction of Ld. AO. Reliance was placed on order of Ld. CIT(A).
From examination of record in light of aforesaid rival contentions, it is crystal clear that request for approval at page no. 175 of paper books.
“The draft order for approval u/s. 153D of the I.T. Act, 1961 for A.Y. 2013-14 to A/Y/ 2-19-20 are being submitted online through ITBP Portal and requested your good self to approve the same through ITBA Portal.”
7.1 The approval of draft assessment order under Section 153D of the Act dated 30.09.3021 at page nos. 176 & 177 is as under:
“I have gone through the seized materials, appraisal report and other relevant materials pertaining to the case. I am satisfied that proper opportunity of being heard was given to the assessee on all the issues. All the issues emanating from the material available on record have been examined properly and are incorporated in accordance with law in the draft orders. Relevant documents were verified before submitting the draft orders.”
7.2 Perusal of approval under Section 153D of the Act is a consolidated approval for several years i.e. from 2013-14 to 2019-20 by way of single letter refers to relevant material, on record, issues involved and their examination shows due application of mind. Therefore, approval dated 30.09.2021 under Section 153D of the Act granted by the Addl. CIT, Range-I, New Delhi being legal and is valid.
On merits, during the course of search at the residential premises of the assessee, certain documents were found and seized. One of such documents was at page 27 of Annexure A-1 found and seized from the premises of assessee, the relevant copy was reproduced at page 9 of the impugned order. During the course of assessment proceedings, the Assessing Officer asked the assessee to explain the contents of nature of the information found during the search. The assessee was asked to explain the calculation related to commission received and profit earned which is mentioned at the seized document. At page no.27, the Assessing Officer observed that there is calculation of the total commission earned by the assessee after some discount which was mentioned at Rs.11,63,955/-. Further it was asked to explain the accounting treatment of the part commission and profit earned by the assessee with reference to the books of account maintained by the assessee.
8.1 In response, assessee submitted that it received gross commission of Rs.11,63,955/- and commission was shared with franchises, the relevant share of the franchises are Rs.9,31,640/- and IC share i.e. share of Investor Clinic (partner of the assessee) is at Rs.2,32,791/-. Further the assessee submitted that the commission is payable to the assessee (receivable). After deducting the charges of office space, other borrowing expenses, such as, utility service used, advertisement, etc. incurred by the IC on cost sharing basis on behalf of the assessee. Further it was submitted that expenses exceeded the commission receivable, therefore, for settling the accounts, it was mutually agreed between Investor Clinic and assessee with no further transactions will be carried on and account got settled on no payment basis after adjusting the commission with expenses allocation by Investor Clinic. Assessee has also submitted the details of expenses as under :-
Expenses Amount (in Rs.) Rent 5,60,000.00 Salaries 10,74,432.28 STS Software Charges 74,800.00 Business Promotion 11,538.00 SMS 11,538.00 Total 17,32,308.28 However, AO rejected the above submissions and proceeded to make the addition of gross commission receivable by the assessee as per the chart.
8.2 Aggrieved assessee preferred an appeal before the ld. CIT (A) and raised several grounds of appeal. After considering the detailed submissions of the assessee, ld. CIT (A) observed that assessee claimed that this amount of commission was for Investor Clinic. However the assessee could not substantiate his claim before the AO. No documentary evidence like agreement for uses of office space between both parties, receipt or payment of expenses/income, agreement for profit sharing ratio etc. not provided by the assessee. Further he observed that during the course of assessment proceedings, assessee claimed that the income belonged to him, however assessee further stated that there were certain expenses also that are required to be made by him. The details of such expenses/bad debts could not be furnished by the assessee. Further he observed that the details of commission found during the search are not dumb document it contains all the details of property, rate of brokerage/commission amount etc. Since the assessee has not disclosed the above commission in his books of account maintained for the year, the issue of deduction does not arise because it is undisclosed income of the assessee. The law does not permit any deduction out of income chargeable u/s 69A of the Act. Aggrieved assessee is in appeal before us.
8.3 At the time of hearing, ld. AR of the assessee brought to our notice relevant facts on record and the documents found during the search which is reproduced by the ld. CIT (A) at page 9 of the impugned order. He submitted 8 that the gross commission received by the assessee is Rs.11,63,955/- however the franchises share is Rs.9,31,164/- and IC of Rs.2,32,791/-. It was submitted that as per the agreement with the IC which were the expenses has to be borne by the parties since expenses are more than commission earned by the parties, they have decided not to continue with the business. Further he submitted that apart from the treatment of the commission by the lower authorities, he submitted that the AO and ld. CIT (A) invoked the provisions of section 69A of the Act. The information found by the authorities are certain documents containing the details of commission received but the addition cannot be proposed u/s 69A of the Act and he relied on several decisions and prayed that the addition may be deleted. 8.4 On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 8.5 Considered the rival submissions and material placed on record. We observe that during search, certain documents were seized and as per the page 27 of Annexure A-1, assessee has received certain gross commission which was not declared in its books of account. Assessee claimed that the gross commission is shared with franchises and IC. Further we observe that even the document found by the Revenue on the receipts of the assessee which was nothing but certain documents along with details of property, details of commission and sharing of such commissions with franchises and IC.
However, we observe that Revenue authorities invoked the provisions of section 69A of the Act. The relevant provisions are as under :- “69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.”
As per section 69A, in any financial year, the assessee found to be owner of any bullion, money or jewellery or any other valuable article and such articles is not recorded in the books of account if any maintained by the assessee for any source of income and it does not offer any explanation to the satisfaction of the AO, the money and value of such article may be deemed to be the income of the assessee. It is fact on record that Revenue has not found any money or bullion or jewellery in the possession of the assessee. Therefore, in the absence of any unexplained money or article, the provisions of section 69A cannot be invoked. In the given case, what is found is certain documents which contained certain details of property and details of commission, therefore, applying the provisions of section 69A in the case of assessee is not proper and bad in law. For the sake of complete justice, it is fact on record that certain documents were found at the possession of the assessee which contains the details of the gross commission received by the assessee. The Revenue cannot make addition gross income 10