Maruti Papers Private Limited Vs ACIT (ITAT Delhi)
Delhi ITAT: Mere Book Entry Without Actual Receipt Cannot Be Taxed u/s 68; 60% Rate u/s 115BBE Also Held Inapplicable for AY 2017-18
The Delhi ITAT dealt with two connected appeals concerning a ₹10 lakh unsecured loan. The AO had made the addition in the original assessment without expressly invoking Section 68 and subsequently passed a Section 154 order applying the special 60% tax rate under Section 115BBE.
On the Section 115BBE issue, the CIT(A) had held that failure to specifically mention Section 68 could be cured by Section 292B and that non-levy of the 60% rate constituted a mistake apparent from the record. The ITAT, however, held that the 60% special rate under Section 115BBE was not applicable for AY 2017-18, relying upon S.M.I.L.E. Microfinance Ltd. (Madras HC) and coordinate-bench decisions in Kanchan Chopra and Ankit Garg. The assessee’s appeal against the Section 154 order was accordingly allowed.
On the Section 68 addition itself, ₹10 lakh had been credited in the books on 31.03.2017 against a cheque, but the cheque was not presented/realised during that financial year. The CIT(A) nevertheless treated the book credit as sufficient for invoking Section 68.
The ITAT disagreed and laid down an important principle: for Section 68, there must not merely be a credit entry in the books but an actual receipt of an amount capable of being treated as deemed income. A mere accrual/book entry without actual receipt cannot itself be taxed under Section 68. Since no amount was actually received during the relevant financial year and receipt occurred only in the subsequent year, Section 68 could not be invoked for the year under appeal. The Tribunal relied upon PCIT v. Zexus Air Services (P.) Ltd (Delhi) and V.R. Global Energy (P.) Ltd. v. ITO.
Accordingly, the ₹10 lakh Section 68 addition was deleted and the assessee succeeded in both appeals.
Key takeaway: A credit entry backed by an unrealised cheque is not, by itself, an actual “sum received” taxable under Section 68 in that year; and the enhanced 60% Section 115BBE rate was also held inapplicable for AY 2017-18.
Cases Discussed:
- PCIT versus Zexus Air Services (P) Ltd. (Delhi High Court), [2025] 171 taxmann.com 211 (Del)
- S.M.I.L.E. Microfinance Limited v. The Assistant Commissioner of Income Tax (Madras High Court), W.P. (MD) No. 2078 of 2020 & W.M.P. (MD) No. 1742 of 2020 order dated 19.11.2024
- Kanchan Chopra v. ITO (Delhi ITAT), ITA No. 4205/Del/2024 (A.Y. 2017-18) Order dated 19.11.2025
- Ankit Garg v. ITO (Delhi ITAT), ITA No. 5507/Del/2024 (A.Y. 2017-18). Order dated 14.11.2025
- R. Global Energy (P) Ltd. Versus ITO, Corp. Ward 3(4), Chennai (Madras High Court), [2018] 96 taxmann.com (Mad)
- R. Global Energy (P) Ltd. Versus ITO, Corp. Ward 3(4), Chennai, [2020] 113 taxmann.com 31 (SC)
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals preferred by the Assessee against the order of the Ld. Addl/JCIT(A)-5 Kolkata (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in appeals filed before him against the orders of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short) passed u/s 143(3)/154 of the Income-tax Act, 1961 (hereafter referred to as ‘the Act’). Further details of the orders of the lower authorities are as under: –
| ITA No. & AY | Ld. FAA who passed the appellate order | Appeal No. & Date of order of the Ld. FAA | AO who passed the assessment order & Date of order |
|---|---|---|---|
| 1871/D/262016 -17 |
Addl/JCIT(A)-5 Kolkata | DIN & Order No: ITBA/APL/S /250/2025-26/1084859637 (1) Dated: 16.01.2026 | ACIT, Circle-3(1)(1) Muzzaffarnagar Dated 19.07.2019 |
| 1872/D/262017 -18 |
Addl/JCIT(A)-5 Kolkata | DIN & Order No: ITBA/APL/S /250/2025-26/1084860380 (1) Dated: 16.01.2026 | ACIT, Circle-3(1)(1) Muzzaffarnagar Dated 07.07.2022 |
2. Heard and perused the records. The two appeals are based on common set of facts thus are decided by this common order. The primary facts are that income tax return of assessee for the A.Y. 2017-18 was filed on 24.10.2017 at an income of Rs. 1,46,66,440/-. Later on the case was taken up for scrutiny by issuing notice u/s 143(2), and details called were from time to time. The order u/s 143(3) was passed by 1d. ACIT dated 19.7.2019 at an income of Rs. 1,57,64,480/- by disallowing freight expenses u/s 40A(3) Rs. 54,450/ and also cash payments u/s 40A(3) for Rs. 43588. Besides this addition in respect of unsecured loan amounting to Rs. 10,00,000/- was also made without invoking the provisions of section 68 of the Act. Thereafter the AO has served a notice w/s 154/143(3) dated 4.4.2022 to charge tax u/s 115BBE in respect of addition made for unsecured loan of Rs.10,00,000/- and after taking reply of assessee the AO passed order u/s 154 r.w.143(3) dated 7.7.2022 and charged the addition of Rs. 10 Lakhs to tax on the special rate u/s 115BBE i.e @ 60%.
