Is reporting of impurities in %area is correct? Or it should be reported in %w/w?

If you cannot identify the impurities with confidence, you cannot use a %w/w. If they are really unknown, you are best using a % area. The other way is to use an arbitrary % contamination scale. If there is an impurity level in a common product, that could be the "norm", and a later sample would be 125% of that "norm"... If that common product changes, its Jan.17, 2000 impurity would become 105% (of the 1999 nominal) impurity level.
We do routine assay of a whole group of peaks, relating their total area to that of a solution of known effect. The final analytical report might simply say 17% for that analysis, as we have never tried to identify all the peaks, and only know their potential effect. Quite arbitrary, but it serves the client's interests well.