MCW INFOTECH PRIVATE LIMITED,DELHI vs. DCIT CC-26, DELHI

ITA 7120/DEL/2026Status: DisposedITAT Delhi25 September 2026AY 2016-177 pages
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What did the Tribunal hold?

The Tribunal found merit in the assessee's contentions regarding the aggregation of debit and credit entries. It held that a mechanical approach of adding both sides of a running ledger account is flawed and leads to double taxation. The Tribunal reasoned that the peak credit or net difference represents the actual unexplained quantum. For AY 2016-17, the Tribunal directed the AO to delete the gross addition of Rs. 1,37,32,990/- and restrict the addition to the net difference of Rs. 14,42,350/-. Consequently, the addition of Rs. 4,11,990/- under Section 69C was also proportionately reduced to the net difference amount. For AY 2017-18, the Tribunal acknowledged that accommodation entries were entered into, but since the debit entry represented the credit entry of the preceding year and the differential amount of Rs. 14,42,350/- was upheld for that year, no separate addition was required. The addition for AY 2017-18 was deleted, being telescoped into the addition made for the preceding year. The Tribunal expressly left no issue undecided.

What were the facts?

The assessee, MCW Infotech Private Limited, is appealing against orders of the CIT(A) for Assessment Years (AY) 2016-17 and 2017-18. These orders confirmed additions made by the Assessing Officer (AO) under Sections 69A and 69C of the Income Tax Act, 1961. The AO initiated proceedings under Section 153C based on material seized during a search on the Alankit Group. The seized material indicated that Alok K Agarwal facilitated accommodation entries and bogus losses. The AO treated certain cash transactions in the assessee's ledger as unexplained money and the commission paid for these entries as unaccounted expenditure. The assessee argued that the AO incorrectly aggregated debit and credit entries, leading to an inflated addition. The CIT(A) dismissed the assessee's appeals.

What were the issues?

1. Whether the CIT(A) was justified in confirming the addition of Rs. 1,37,32,990/- under Section 69A for AY 2016-17 on account of alleged unaccounted cash transactions. The assessee contended that the AO erred by aggregating debit and credit entries in the seized ledger, which represented a running account, and that the net difference should be considered. The revenue relied on the lower authorities' orders. 2. Whether the CIT(A) was justified in confirming the addition of Rs. 4,11,990/- under Section 69C for AY 2016-17 on account of alleged commission. The assessee argued this addition was consequential to the Section 69A addition and should be proportionately reduced. The revenue relied on the lower authorities' orders. 3. Whether the CIT(A) was justified in confirming the addition of Rs. 75,87,670/- under Section 69A for AY 2017-18 on account of alleged unaccounted cash transactions. The assessee argued that the facts were identical to the preceding year and the net difference had already been accounted for. The revenue relied on the lower authorities' orders. 4. Whether the CIT(A) was justified in confirming the addition of Rs. 2,27,630/- under Section 69C for AY 2017-18 on account of alleged commission. The assessee argued this addition was consequential and should be deleted as the principal addition was being telescoped.

Which sections of the Income-tax Act were involved?

Section 69A,Section 69C,Section 153C,Section 132,Section 139(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI

Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL

For Appellant: Shri R.K. Gupta, CA
For Respondent: Shri Lal Ram Sanga Sailo, Sr. DR
Hearing: 14/07/2026Pronounced: 14/07/2026

PER MANISH AGARWAL, AM:

Both appeals are filed by the assessee against the separate order(s) of the Ld. Commissioner of Income Tax (Appeals)-25, Delhi [‘CIT(A)’ in short], both dated 02.02.2026 in Appeal No. CIT(A), Delhi-29/11159/2015-16 and Appeal No. CIT(A), Delhi-29/10786/2016-17 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) arising out of the assessment order dated 20.02.2024 passed u/s 143(3)/153C of the Act for Assessment Years 2016-17 and 2017-18 respectively.

2.

As the facts in both the appeals are identical which fact is fairly admitted by both the parties and therefore, both the appeals are heard together and decided by a common

The order continues below.

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