High Court of Delhi · Judgments and reasoned final orders
Principal Commissioner of Income Tax-4, New Delhi v. M/s J D Exim Pvt. Ltd.
ITA 669/2026 ·
Unsustainability of Section 68 addition of Rs. 10 crore in AY 2016-17 in respect of an advance for sale of land that was admittedly received by the assessee ten years earlier in FY 2006-07, even if the AO alleges a colourable device to set off capital gains against capital loss.
1. FACTS OF THE CASE
While framing the assessment for AY 2016-17, the Assessing Officer made an addition of Rs. 10 crore under Section 68 on the allegation that the assessee had structured a land sale transaction as a colourable device to set off capital gains against capital losses, even though the advance of Rs. 10 crore had admittedly been received by the assessee in FY 2006-07. Both the CIT(A) (on 26.08.2019) and the ITAT (on 28.11.2024 in ITA No. 8765/DEL/2019) deleted the addition.
2. DISCUSSION BY THE COURT
The Division Bench held that even assuming the assessee had structured its land sale timing to avail set-off of capital loss against capital gain, the AO had other statutory measures available under the Act, but taking recourse to Section 68 in AY 2016-17 was wholly impermissible within the statutory framework when the sum of Rs. 10 crore was admittedly received way back in FY 2006-07. Adding a FY 2006-07 receipt under Section 68 in AY 2016-17 could not be sustained.
3. JUDICIAL DECISION
Finding no error or infirmity in the concurrent orders passed by the CIT(A) and the ITAT, the High Court rejected the Revenue's appeal.
4. OUTCOME
Assessee - Revenue appeal rejected; deletion of Rs. 10 crore Section 68 addition in AY 2016-17 upheld.
5. AKHB REVIEW POINT
Section 68 is strictly year-specific and applies only to sums credited in the books during the relevant previous year; an advance received and recorded in FY 2006-07 cannot be taxed under Section 68 in AY 2016-17 under the guise of attacking a colourable device.
Source and verification
4-page official High Court of Delhi judgment PDF (DLHC011107072025_1_2026-08-18.pdf, 322,551 bytes).
Original PDF: 4 pages · SHA-256: 363aa018db4e3b7a014feffab255f420e65afc4bb2295d33b909b71bbf2a5b6a
Supplied source-reviewed note retained; original bytes and identity validation checked in this release. Substantive re-review is not claimed for this record.
Applies Section 68 of the Income-tax Act, 1961 for AY 2016-17. Income-tax Act, 2025 equivalence is not verified.
Full 4-page primary judgment PDF text read and verified page-by-page. Strictly enforces the 'any sum found credited in the books of an assessee maintained for any previous year' requirement under Section 68.
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