Ankit Jain vs ACIT

Parties Involved

Facts Summary

The survey under section 133A of the Income Tax Act was conducted on the business premises of the assessee on 07.11.2019, which was subsequently converted into a search action under section 132 of the Act on 08.11.2019. The assessee had furnished his original return for A.Y. 2018-19 on 30.09.2018, declaring an income of Rs. 3,63,500/-. After the search, a notice under section 153A of the Act was issued on 18.12.2020, and the assessee filed a return in response to this notice on 26.03.2021, declaring the same income. Based on the information collected during the search/survey proceedings and the statement of the assessee recorded on oath, the Assessing Officer made an addition of Rs. 40,36,874/- on account of commission income computed at 2.5% on the bogus accommodation entries provided by the assessee. The assessment was completed at an income of Rs. 79,02,534/- vide order dated 21.09.2021, under section 153A of the Act. Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). Before the CIT(A), the assessee contended that no addition could have been made on the basis of his retracted statement and claimed that regular business sales have been treated as bogus sales without any valid material and evidence by the Assessing Officer. The CIT(A) rejected the assessee’s submission but allowed partial relief by reducing the rate of commission income to 1.25% vide appellate order dated 13.08.2025. Further aggrieved, the assessee preferred an appea…

Legal Issues

• 1. Whether the statement recorded under section 132(4) of the Act, which was retracted immediately thereafter, can be relied upon for making addition of unaccounted commission.
• 2. Whether the WhatsApp messages relied upon by the Assessing Officer have any evidentiary value.
• 3. Whether the addition of commission income at the rate of 1.25% on alleged bogus sales is sustainable.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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