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Informative

Income Tax Appellate Tribunal, Delhi “B” Bench on Addition under Section 68 of Income Tax Act, 1961

Update / Judgement Date

24 Oct 2025

Source

WCP News Bulletin

Author

Sakshi Bhardwaj — WCP Legal Desk

Reading Time

3 min read

Financial ManagementOther Legal Matters
Income Tax Appellate Tribunal, Delhi “B” Bench on Addition under Section 68 of Income Tax Act, 1961
WCP News Bulletin

Headnote

The ITAT Delhi “B” Bench partly allowed the assessee’s appeal relating to unexplained cash transactions under Section 68 of the Income Tax Act, 1961. The Tribunal held that cash transactions corresponding to cheque transactions with the same code should be treated as commission income rather than unexplained income. The Tribunal also reduced the commission rate applied by the AO from 3% to a reasonable 1% on the total funds arranged by the assessee. The Revenue’s appeal challenging CIT(A)’s order on duplicate entries and other deductions was dismissed.


Background

  1. A survey under Section 133A was conducted at the assessee’s business premises on 11.04.2011, during which certain documents were seized.
  2. The assessee filed his return of income on 30.03.2013, and the case was selected for scrutiny; notice under Section 143(2) was issued on 30.09.2013.
  3. AO completed assessment under Section 143(3) on 17.03.2015, making additions of ₹126.58 crore under Section 68.
  4. CIT(A) upheld the additions; ITAT in ITA Nos. 590 & 591/Del/2017 confirmed ₹30 lakh addition and remanded other issues to AO for recomputation based on seized documents and fund flow statements.
  5. AO recomputed income and, following a rectification under Section 154, reduced total addition to ₹10.54 crore on 15.02.2019.
  6. Aggrieved, both the assessee and Revenue filed appeals before ITAT.


Assessee’s Contentions

  1. Deletion of ₹10.08 crore addition not allowed.
  2. Cash transactions with common code parties (₹5.34 crore inflow; ₹2.58 crore outflow) should be excluded.
  3. Peak balance of ₹1.30 crore incorrectly computed.
  4. Tribunal’s earlier directions ignored.
  5. Commission rate of 3% is excessive; should be reduced.


Revenue’s Contentions

  1. CIT(A) deleted ₹1.96 crore addition without proper verification.
  2. AO not given opportunity on additional submissions.
  3. Incorrect handling of entries totaling ₹54.50 lakh.
  4. Multiple/duplicate entries (SKJ) ignored.
  5. Cheque deposits (₹58.31 lakh & ₹58.77 lakh) treated without documentary evidence.


Tribunal Observations

Cash Transactions with Common Codes:

Both cash and cheque transactions shared the same code; cheque entries accepted by Revenue.

Corresponding cash transactions should also be treated as commission income.

Deduction allowed for cash transactions of ₹5.34 crore inflow; ₹2.58 crore outflow.


Peak Balance Method:

Applicable only when inflow/outflow parties differ or are unknown.

In this case, outflow and inflow parties under different codes; peak balance method partially applicable.

Unexplained income from remaining inflows: ₹2.22 crore.


Duplicate Entries:

CIT(A) allowed deduction after verification; Revenue failed to controvert findings.

Commission Rate:

Total funds arranged by assessee: ₹10.06 crore.

Commission rate reduced from 3% to 1%.


Citation: 2025:DEL:1057 & 1739

Case: Parv Bansal v. DCIT, Central Circle-31, New Delhi & Vice Versa

Court: Income Tax Appellate Tribunal, Delhi “B” Bench

Coram: Shri Yogesh Kumar U.S., Judicial Member & Shri Manish Agarwal, Accountant Member

Date of Decision: 24 October 2025