ITAT Quashes Rs. 3.90 Crore Section 68 Addition; Holds Only Trading Profit Taxable

The ITAT Ahmedabad partly allowed the company’s appeal, holding only the trading profit of Rs. 3.34 lakh taxable. The reopening and Section 68 additions by the AO on Rs. 3.90 crore transactions were unjustified.

The Income Tax Appellate Tribunal (ITAT), Ahmedabad “D” Bench, has recently announced its decision on an appeal filed by Dharmdeep Commodities Private Limited, challenging an order dated July 01, 2025, passed by the NFAC Delhi. The case belongs to the Assessment Year 2013-14.

Through the impugned order, the tax authorities had reopened the assessee’s case and made certain additions to the assessee’s income. The company had filed its income tax return (ITR) for the year in consideration, declaring total income at Rs. 97.81 lakh. The case got selected for scrutiny, and the Assessing Officer (AO) completed the assessment, declaring the total income at Rs. 1.04 crore.

The AO has observed that the assessee company had made transactions amounting to Rs. 3.90 crore with M/s Anand Rathi Commodities Ltd., with the original client Navratan Amla Gupta. The AO raised allegations against the assessee company that these transactions were not genuine and made additions to the same as unexplained cash credits under Section 68 of the Income Tax Act. The assessee argued that only the profit amounting to Rs. 3.34 lakh from these transactions was taxable, as the principal amounts were only trading values and not credited in its books. In support of the said claims, the assessee furnished all relevant documents as evidence.

The assessee further highlighted the fact that a similar issue for the following assessment year, 2014-15, has already been decided in favour of the assessee, indicating the AO had incorrectly considered the total purchase and sale values instead of the actual profit.

When the tribunal analysed the facts of the case deeply, it held that only the profit portion of Rs. 3.34 lakh should be considered taxable and that the reopening and addition under Section 68 were not justified. In conclusion, the appeal of the assessee has been partly allowed.