In Deputy Commissioner of Income Tax v. HB Estate Developers Ltd. (ITAT Delhi, order dated 09 January 2026), the Delhi Bench of the Income Tax Appellate Tribunal dismissed the Revenue’s appeal and upheld the deletion of an addition made under Section 68 of the Income Tax Act, 1961, in respect of amounts already recorded as sales and offered to tax.

The assessee had booked certain commercial properties in an earlier year and paid the corresponding booking amount. During the relevant assessment year, the assessee sold the booking rights of these properties and received consideration of ₹2,81,87,500, which was duly recorded as sales in the profit and loss account. After accounting for the cost of sales, the resultant profit was offered to tax at the applicable rate. The Assessing Officer, however, treated the entire sale consideration as unexplained cash credit under Section 68 and made an addition accordingly.

The Commissioner of Income Tax (Appeals) deleted the addition, observing that the amount in question had already been credited as sales, the corresponding profit had been taxed, and the books of account had neither been rejected nor found defective. It was further noted that the assessee had not received any share capital, loans, or other tax-free receipts that could attract the provisions of Section 68.

The Tribunal affirmed the findings of the CIT(A), holding that a sum credited to the sales account cannot be treated as unexplained cash credit under Section 68 when it forms part of declared turnover and has already been subjected to tax. Reliance was placed on the decision of the Jaipur Bench of the Tribunal in ACIT v. Chandra Surana, wherein it was held that Section 68 does not apply to genuine sales transactions duly reflected in the books and profit and loss account.

Accordingly, the Tribunal found no infirmity in the order of the CIT(A), dismissed the Revenue’s appeal, and held that the addition under Section 68 was unsustainable in law.

SOURCE LINK

https://itat.gov.in/public/files/upload/1767939958-MmKXxT-1-TO.pdf

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