I have already offered the profit on the disputed transactions. Can the officer add the broker's commission on top under s.69C?
Not where the commission is already inside the profit you offered. The Tribunal deleted a s.69C addition for cash commission paid to a broker for arranging bogus purchases and sales, in each of six consolidated appeals covering two assessees and five assessment years, because in every year the gross profit the assessee had already declared on those transactions exceeded the commission the Assessing Officer himself had determined. For the leading year the gross profit was Rs. 14,57,154 at 1.60 per cent against a determined commission of Rs. 5,31,795, and the Rs. 3,32,371 the first appellate authority had sustained was deleted. The rates differ year by year.
Decided by the ITAT (ITAT Chandigarh Bench 'B' - Aakash Deep Jain (Vice President) and Vikram Singh Yadav (Accountant Member); ITA Nos. 307 to 310, 617 and 618 (Chd.) of 2022) on 2024-03-27, reported as [2024] 163 taxmann.com 668 (Chd.)(Trib.); (2024) 111 ITR (Trib.) 681 (Chd.)(Trib.); ITA Nos. 307 to 310, 617 and 618 (Chd.) of 2022; the (2025) 235 TTJ 35 (UO) reference is not on the reporter's citation line and remains unconfirmed. It bears on section 69C, section 69, section 153A, section 132(1) of the Income Tax Act 1961, in Cash Credits & Unexplained Money, Evidence & Burden of Proof and Search, Survey & Block Assessment matters.
Officers routinely stack a commission addition — usually 0.5% to 2% — on top of whatever profit element has been offered or estimated on bogus purchases. This is the arithmetic answer to that: one set of transactions cannot yield both a declared gross profit and a separate unexplained expenditure for the cost of arranging them.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
A search under s.132(1) was carried out on 1 November 2017 and assessments followed under s.153A read with s.143(3). From material seized in the search the Assessing Officer found bogus purchases of Rs. 8,74,87,448 and bogus sales of Rs. 9,10,72,110, together Rs. 17,85,59,558, routed through a broker, Shri Satish Kapoor, on which cash commission was paid; a partner, Shri Shivam Singla, had admitted on oath on 13 April 2018 that the commission was paid and never entered in the books. For AY 2013-14 the Assessing Officer show-caused at 1 per cent, then excluded inter-group bogus purchases and sales of Rs. 4,56,10,807 on the assessee's plea and applied 0.40 per cent to the balance of Rs. 13,29,48,751, adding Rs. 5,31,795 under s.69C. The first appellate authority accepted the assessee's rate of 0.25 per cent, because the Assessing Officer had brought nothing on record to show the exact commission paid, sustained Rs. 3,32,371 and deleted the rest; he rejected the gross-profit argument on the footing that the assessee also carried on genuine business whose profit was taxable anyway, and recorded but did not decide the assessee's grievance that the broker was never produced for cross-examination despite repeated requests. Six appeals were before the Tribunal, five by Seo Lehenga House for AYs 2013-14, 2015-16, 2016-17, 2017-18 and 2018-19, and one by M/s Seo Bridal Studio Pvt. Ltd. for AY 2018-19. There is a separate and much earlier survey under s.133A of 26 October 2012, which figures only in an unrelated set-off argument.
The commission addition was deleted in every year. Where the assessee had itself disclosed the bogus sales in its books and offered gross profit on them, and the Revenue never disputed that fact, the commission is covered by the gross profit already taxed and there can be no separate addition; both lower authorities had failed to give effect to that. For AY 2013-14 the gross profit disclosed at 1.60 per cent on the bogus sales, Rs. 14,57,154, covers the commission of Rs. 5,31,795 as determined by the Assessing Officer, and the Rs. 3,32,371 the first appellate authority had sustained was deleted (para 12). The same comparison is made year by year, always against the Assessing Officer's determined commission rather than the reduced figure sustained below: AY 2015-16 at para 28, AY 2016-17 at para 36, AY 2017-18 at para 44, AY 2018-19 for Seo Lehenga House at para 50 and AY 2018-19 for Seo Bridal Studio at para 58. Each appeal as a whole is recorded as partly allowed because other grounds were not pressed, but nothing on the commission point was restored to the Assessing Officer. The order also decides a separate issue under s.69 at para 22 and applies a collateral rule at paras 31, 39 and 53 that a gross-profit addition sustained by the authorities is itself an intangible addition available to be set off against additions for unexplained expenditure in the same year.
The Tribunal compared two figures and held the smaller to be absorbed in the larger, and did so separately for each year. The comparison is always against the commission the Assessing Officer himself determined, not against the reduced figure the first appellate authority sustained, and the figure sustained is then deleted. The gross profit rates are not a single number: they are 1.60 per cent for AY 2013-14, then 5.09, 5, 3.65, 3.5 and 2.39 per cent across the other appeals, and in each year the gross profit disclosed exceeds the commission determined. What made the argument work was that the assessee had contended from the assessment stage that it had disclosed and offered gross profit on the bogus sales, that the Revenue never disputed it, and that both lower authorities failed to give effect to it. The result is an anti-double-counting rule rather than a finding that the transactions were genuine: the purchases were admitted to be bogus, and the gross profit on them was already in the returns and was never disturbed. The Tribunal separately applied Anantharam Veerasinghaiah & Co. v. CIT at para 22 on an unrelated ground, holding that an intangible addition already brought to tax is real income available as a fund from which the assessee may later draw.
the assessee has disclosed gross profit at the rate of 1.60% on bogus sales of knitted cloth which comes to Rs 14,57,154/- and therefore, the commission for procuring the bogus purchase and sale amounting to Rs 5,31,795/- as so determined by the AO stand covered by the said gross profit of Rs 14,57,154/- and there cannot be any separate addition in this regard.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppNot where the commission is already inside the profit you offered. The Tribunal deleted a s.69C addition for cash commission paid to a broker for arranging bogus purchases and sales, in each of six consolidated appeals covering two assessees and five assessment years, because in every year the gross profit the assessee had already declared on those transactions exceeded the commission the Assessing Officer himself had determined. For the leading year the gross profit was Rs. 14,57,154 at 1.60 per cent against a determined commission of Rs. 5,31,795, and the Rs. 3,32,371 the first appellate authority had sustained was deleted. The rates differ year by year. This was decided by the ITAT (ITAT Chandigarh Bench 'B' - Aakash Deep Jain (Vice President) and Vikram Singh Yadav (Accountant Member); ITA Nos. 307 to 310, 617 and 618 (Chd.) of 2022) and bears on section 69C, section 69, section 153A, section 132(1) of the Income Tax Act 1961. It is reported as [2024] 163 taxmann.com 668 (Chd.)(Trib.); (2024) 111 ITR (Trib.) 681 (Chd.)(Trib.); ITA Nos. 307 to 310, 617 and 618 (Chd.) of 2022; the (2025) 235 TTJ 35 (UO) reference is not on the reporter's citation line and remains unconfirmed. Officers routinely stack a commission addition — usually 0.5% to 2% — on top of whatever profit element has been offered or estimated on bogus purchases. This is the arithmetic answer to that: one set of transactions cannot yield both a declared gross profit and a separate unexplained expenditure for the cost of arranging them. If it applies to you, the first step is this: Put the two figures side by side in the reply: the gross profit already offered on the disputed transactions, and the commission the officer proposes to add.
A search under s.132(1) was carried out on 1 November 2017 and assessments followed under s.153A read with s.143(3). From material seized in the search the Assessing Officer found bogus purchases of Rs. 8,74,87,448 and bogus sales of Rs. 9,10,72,110, together Rs. 17,85,59,558, routed through a broker, Shri Satish Kapoor, on which cash commission was paid; a partner, Shri Shivam Singla, had admitted on oath on 13 April 2018 that the commission was paid and never entered in the books. For AY 2013-14 the Assessing Officer show-caused at 1 per cent, then excluded inter-group bogus purchases and sales of Rs. 4,56,10,807 on the assessee's plea and applied 0.40 per cent to the balance of Rs. 13,29,48,751, adding Rs. 5,31,795 under s.69C. The first appellate authority accepted the assessee's rate of 0.25 per cent, because the Assessing Officer had brought nothing on record to show the exact commission paid, sustained Rs. 3,32,371 and deleted the rest; he rejected the gross-profit argument on the footing that the assessee also carried on genuine business whose profit was taxable anyway, and recorded but did not decide the assessee's grievance that the broker was never produced for cross-examination despite repeated requests. Six appeals were before the Tribunal, five by Seo Lehenga House for AYs 2013-14, 2015-16, 2016-17, 2017-18 and 2018-19, and one by M/s Seo Bridal Studio Pvt. Ltd. for AY 2018-19. There is a separate and much earlier survey under s.133A of 26 October 2012, which figures only in an unrelated set-off argument. The matter was decided on 2024-03-27 by the ITAT (ITAT Chandigarh Bench 'B' - Aakash Deep Jain (Vice President) and Vikram Singh Yadav (Accountant Member); ITA Nos. 307 to 310, 617 and 618 (Chd.) of 2022). On those facts the ITAT held as follows. The commission addition was deleted in every year. Where the assessee had itself disclosed the bogus sales in its books and offered gross profit on them, and the Revenue never disputed that fact, the commission is covered by the gross profit already taxed and there can be no separate addition; both lower authorities had failed to give effect to that. For AY 2013-14 the gross profit disclosed at 1.60 per cent on the bogus sales, Rs. 14,57,154, covers the commission of Rs. 5,31,795 as determined by the Assessing Officer, and the Rs. 3,32,371 the first appellate authority had sustained was deleted (para 12). The same comparison is made year by year, always against the Assessing Officer's determined commission rather than the reduced figure sustained below: AY 2015-16 at para 28, AY 2016-17 at para 36, AY 2017-18 at para 44, AY 2018-19 for Seo Lehenga House at para 50 and AY 2018-19 for Seo Bridal Studio at para 58. Each appeal as a whole is recorded as partly allowed because other grounds were not pressed, but nothing on the commission point was restored to the Assessing Officer. The order also decides a separate issue under s.69 at para 22 and applies a collateral rule at paras 31, 39 and 53 that a gross-profit addition sustained by the authorities is itself an intangible addition available to be set off against additions for unexplained expenditure in the same year.
The Tribunal compared two figures and held the smaller to be absorbed in the larger, and did so separately for each year. The comparison is always against the commission the Assessing Officer himself determined, not against the reduced figure the first appellate authority sustained, and the figure sustained is then deleted. The gross profit rates are not a single number: they are 1.60 per cent for AY 2013-14, then 5.09, 5, 3.65, 3.5 and 2.39 per cent across the other appeals, and in each year the gross profit disclosed exceeds the commission determined. What made the argument work was that the assessee had contended from the assessment stage that it had disclosed and offered gross profit on the bogus sales, that the Revenue never disputed it, and that both lower authorities failed to give effect to it. The result is an anti-double-counting rule rather than a finding that the transactions were genuine: the purchases were admitted to be bogus, and the gross profit on them was already in the returns and was never disturbed. The Tribunal separately applied Anantharam Veerasinghaiah & Co. v. CIT at para 22 on an unrelated ground, holding that an intangible addition already brought to tax is real income available as a fund from which the assessee may later draw. In the words reproduced by the source cited on this page: "the assessee has disclosed gross profit at the rate of 1.60% on bogus sales of knitted cloth which comes to Rs 14,57,154/- and therefore, the commission for procuring the bogus purchase and sale amounting to Rs 5,31,795/- as so determined by the AO stand covered by the said gross profit of Rs 14,57,154/- and there cannot be any separate addition in this regard." The decision followed or applied Anantharam Veerasinghaiah & Co. v. CIT [1980] 16 CTR 189/123 ITR 457 (SC) - applied at para 22, on an intangible addition already brought to tax being real income available as a fund; it goes to the separate s.69 issue and not to the commission point.
It was decided by the ITAT on 2024-03-27 and is reported as [2024] 163 taxmann.com 668 (Chd.)(Trib.); (2024) 111 ITR (Trib.) 681 (Chd.)(Trib.); ITA Nos. 307 to 310, 617 and 618 (Chd.) of 2022; the (2025) 235 TTJ 35 (UO) reference is not on the reporter's citation line and remains unconfirmed. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 69C, section 69, section 153A, section 132(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The commission addition was deleted in every year. Where the assessee had itself disclosed the bogus sales in its books and offered gross profit on them, and the Revenue never disputed that fact, the commission is covered by the gross profit already taxed and there can be no separate addition; both lower authorities had failed to give effect to that. For AY 2013-14 the gross profit disclosed at 1.60 per cent on the bogus sales, Rs. 14,57,154, covers the commission of Rs. 5,31,795 as determined by the Assessing Officer, and the Rs. 3,32,371 the first appellate authority had sustained was deleted (para 12). The same comparison is made year by year, always against the Assessing Officer's determined commission rather than the reduced figure sustained below: AY 2015-16 at para 28, AY 2016-17 at para 36, AY 2017-18 at para 44, AY 2018-19 for Seo Lehenga House at para 50 and AY 2018-19 for Seo Bridal Studio at para 58. Each appeal as a whole is recorded as partly allowed because other grounds were not pressed, but nothing on the commission point was restored to the Assessing Officer. The order also decides a separate issue under s.69 at para 22 and applies a collateral rule at paras 31, 39 and 53 that a gross-profit addition sustained by the authorities is itself an intangible addition available to be set off against additions for unexplained expenditure in the same year. It arises in Cash Credits & Unexplained Money, Evidence & Burden of Proof and Search, Survey & Block Assessment matters, on section 69C, section 69, section 153A, section 132(1) of the Income Tax Act 1961, and was decided by ITAT Chandigarh Bench 'B' - Aakash Deep Jain (Vice President) and Vikram Singh Yadav (Accountant Member); ITA Nos. 307 to 310, 617 and 618 (Chd.) of 2022. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Show the commission rate the officer is using and apply it yourself, so the comparison is on his own numbers - the Tribunal compared against the rate the Assessing Officer determined, not the reduced rate sustained on first appeal. Tie the declared gross profit to the specific transactions rather than to the year as a whole, and do the comparison year by year: the gross profit rates here ranged from 1.60 to 5.09 per cent across the appeals. Establish from the assessment stage that the profit on the disputed transactions was disclosed and offered, and that the Revenue has not disputed it - the failure of both authorities below to give effect to an undisputed fact is what carried this case. Keep the point separate from the quantum argument on the purchases themselves - this one survives even if the profit-element approach is accepted. Do not cite this order for the cross-examination point: the grievance that the broker was never produced was recorded but never decided.
Validity check could not be completed. Unverified. The order has been read in full and nothing on its record shows any later treatment - no decision applying, following, affirming, doubting or reversing it, and no appeal or special leave petition disclosed. Absence of contrary authority is not good law, so the status stays where it is. What is now settled first-hand is the record: the six appeal numbers, the two assessees, the five assessment years - 2013-14, 2015-16, 2016-17, 2017-18 and 2018-19, AY 2014-15 not being among them - the Bench, the date of 27 March 2024, both citations, and the commission percentages, which are 1 per cent proposed, 0.40 per cent assessed, 0.25 per cent sustained on first appeal and nil after the Tribunal. One development in the same field is worth a practitioner's attention although it does not touch this decision: on 5 February 2026 the Bombay High Court admitted PCIT-17 v. Chandrakant L. Nishar (Income Tax Appeal No. 1879 of 2019) on the questions whether a Tribunal, having accepted that the purchases were bogus, may determine a profit rate without confirming the disallowance and without applying s.69C, and whether it erred in restricting the disallowance to the profit margin. That is a Bombay question about the profit-element approach generally; this is a Chandigarh decision on a narrower point, and the admission neither binds it nor unsettles it. On the provision, no amendment to s.69C since the order was traced, and a published concordance puts the successor at s.105 of the Income-tax Act, 2025, in force from 1 April 2026. That finding was checked against a published source, which is linked on this page, on 2026-08-24. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order has been read in full. It was decided on 27 March 2024 by Chandigarh Bench 'B', Aakash Deep Jain (Vice President) and Vikram Singh Yadav (Accountant Member), in six consolidated appeals, ITA Nos. 307 to 310, 617 and 618 (Chd.) of 2022. Five are by Seo Lehenga House for AYs 2013-14, 2015-16, 2016-17, 2017-18 and 2018-19; the sixth, ITA 617, is a different assessee, M/s Seo Bridal Studio Pvt. Ltd. for AY 2018-19, decided on the same reasoning at para 58. AY 2014-15 is not among the years. The proceeding was a search under s.132(1) on 1 November 2017 followed by notices under s.153A, not a survey: there was a separate and much earlier survey in October 2012 which figures only in an unrelated set-off argument, and the earlier version of this entry merged the two events. The commission rate is not 1 per cent: that was only the rate proposed in the show-cause notice. The Assessing Officer assessed at 0.40 per cent, the assessee admitted 0.25 per cent, the first appellate authority sustained 0.25 per cent and cut the rest, and the Tribunal deleted what remained. The sentence previously quoted here was a commentary paraphrase with rounded figures and has been replaced with para 12 and the exact figures. The gross profit rate is not a single figure either: 1.60 per cent is the AY 2013-14 rate, and the rates across the appeals are 1.60, 5.09, 5, 3.65, 3.5 and 2.39 per cent. The parallel citation is in the ITR (Tribunal) series, and the TTJ reference carried here is not on the reporter's citation line. Nobody has confirmed the order still stands. It does not decide whether the declared gross profit rate was itself adequate, and it does not tell you what happens where no profit was offered on the disputed transactions at all. It is not a profit-element decision: no percentage of the purchases was sustained or reduced to a profit element in these appeals, the purchases being admitted as bogus with the gross profit on them already in the returns and never disturbed. There is no sales-tax listing anywhere in the case; the source is a search and the partner's own admission on oath. And it decides nothing about cross-examination: the assessee's grievance that the broker was never produced was recorded by the first appellate authority but the Tribunal never ruled on it and decided on the arithmetic instead. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The commission addition was deleted in every year. Where the assessee had itself disclosed the bogus sales in its books and offered gross profit on them, and the Revenue never disputed that fact, the commission is covered by the gross profit already taxed and there can be no separate addition; both lower authorities had failed to give effect to that. For AY 2013-14 the gross profit disclosed at 1.60 per cent on the bogus sales, Rs. 14,57,154, covers the commission of Rs. 5,31,795 as determined by the Assessing Officer, and the Rs. 3,32,371 the first appellate authority had sustained was deleted (para 12). The same comparison is made year by year, always against the Assessing Officer's determined commission rather than the reduced figure sustained below: AY 2015-16 at para 28, AY 2016-17 at para 36, AY 2017-18 at para 44, AY 2018-19 for Seo Lehenga House at para 50 and AY 2018-19 for Seo Bridal Studio at para 58. Each appeal as a whole is recorded as partly allowed because other grounds were not pressed, but nothing on the commission point was restored to the Assessing Officer. The order also decides a separate issue under s.69 at para 22 and applies a collateral rule at paras 31, 39 and 53 that a gross-profit addition sustained by the authorities is itself an intangible addition available to be set off against additions for unexplained expenditure in the same year.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
The seized documents say nothing about the years being assessed. Can s.153C still be used for them?
The search was before June 2015 but the notice came later. Which version of s.153C applies?
Can the whole of a bogus purchase be added, rather than a percentage?
Search assessment for a year already completed, but nothing incriminating was found. Can the officer still add?