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Issues: (i) Whether the addition of Rs. 3,17,00,000 as alleged bonus/commission receivable was sustainable when no receipt, no booking of corresponding liability in the employer's books, and no enforceable right to receive the amount were shown; (ii) Whether the addition under section 69A on account of cash found during search was to be sustained in full or to be reduced on the basis of explanations supported by confirmations and other evidence.
Issue (i): Whether the addition of Rs. 3,17,00,000 as alleged bonus/commission receivable was sustainable when no receipt, no booking of corresponding liability in the employer's books, and no enforceable right to receive the amount were shown.
Analysis: The seized sheets and the assessee's statement did not establish actual receipt of the amount or a crystallised right to receive it. The assessment order itself proceeded on a due-basis assumption, but there was no material showing payment by the employer or any provision made in its books. In the absence of evidence of accrual as real income, the proposed addition could not stand.
Conclusion: The deletion of the addition of Rs. 3,17,00,000 was upheld and the department's challenge failed.
Issue (ii): Whether the addition under section 69A on account of cash found during search was to be sustained in full or to be reduced on the basis of explanations supported by confirmations and other evidence.
Analysis: The explanation for Rs. 85,00,000 was supported by confirmations, revenue records and replies to notices under section 133(6), and the rejection of that explanation as an afterthought was not justified. At the same time, the remaining explanations were only partly substantiated, and the relief granted by the first appellate authority for Rs. 18,00,000 and Rs. 5,00,000 was found to be reasonable on the available material. Accordingly, only the component of Rs. 85,00,000 was held liable to be deleted.
Conclusion: The addition was sustained only to the extent it survived after deleting Rs. 85,00,000, and the assessee succeeded to that extent.
Final Conclusion: The department's appeal was rejected, the assessee's appeal succeeded only in part, and the addition relating to cash of Rs. 85,00,000 was directed to be deleted.
Ratio Decidendi: An addition based on alleged receivables cannot be sustained without evidence of actual accrual or an enforceable right to receive income, and a cash addition under section 69A must be tested against credible explanations supported by corroborative material on the preponderance of probability.
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