Supreme Court Dismisses Review Petition Under Section 68

Supreme Court Dismisses Review Petition Under Section 68 As Publicly Available Documents Do Not Constitute New Evidence

Issue

Whether a review petition can be entertained under Order XLVII Rule 1 of the Code of Civil Procedure, 1908 to reconsider additions made under Section 68 on the basis of documents that were publicly available during original proceedings but not produced due to lack of due diligence.

Facts

The assessee, engaged in the civil contract business, filed his return of income for AY 2007-08 declaring an income of ₹16.27 lakhs.
During a survey, the tax department discovered bank credits amounting to approximately ₹10 crores in the personal bank account of the assessee.
The assessee claimed that the credit was merely an accommodation entry executed at a friend’s request, wherein he retained ₹3 lakhs as commission and transferred the remaining ₹9.97 crores to a jeweller.
The Assessing Officer reopened the assessment and added ₹10 crores to the assessee’s income as unexplained cash credits under Section 68.
The addition of ₹10 crores was sequentially upheld by the CIT(A), the Income Tax Appellate Tribunal (ITAT), and the High Court on appeal.
The Supreme Court dismissed the Special Leave Petition (SLP) filed by the assessee against the High Court’s order.
The assessee subsequently filed a review petition before the court, citing newly discovered sale deeds (dated 2007) and a Tribunal order in a co-party’s case (dated 2015) to seek relief.

Decision

The court held that the sale deeds from 2007 and Tribunal orders from 2015 were part of public records and were available during the original assessment and appellate proceedings.
The court observed that the assessee failed to demonstrate due diligence in producing these documents during the initial proceedings.
It ruled that re-evaluating the same set of factual explanations under the guise of “new material” amounts to seeking an impermissible re-hearing of the appeal, which review jurisdiction strictly forbids.
The court concluded that there was no error apparent on the face of the record, and the review petition was dismissed in favor of the revenue.

Key Takeaways

Strict Scope of Review Jurisdiction: Review proceedings under Order XLVII Rule 1 of the CPC (read with Section 114) cannot be used as an appeal in disguise to re-argue facts or re-evaluate evidence already considered.
Requirement of Due Diligence: “New material” or newly discovered evidence can only justify a review if the petitioner proves that such evidence was not within their knowledge or could not be produced despite exercising due diligence during original proceedings.
Public Documents Are Not Hidden Evidence: Documents available in public records during the pendency of lower court proceedings do not qualify as newly discovered evidence if the party simply failed to retrieve and submit them on time.

HIGH COURT OF MADRAS

V. Babu

Deputy Commissioner of Income-tax

SUSHRUT ARVIND DHARMADHIKARI, CJ.
and G. Arul Murugan, J.

REV. APPL. No. 107 of 2021
C.M.P. No. 7209 of 2023

SEPTEMBER 28, 2026

N.V. Balaji for the Appellant. T. Ravikumar, Sr. Standing Counsel and Umesh Rao K., Jr. Standing Counsel for the Respondent.

JUDGMENT

Sushrut Arvind Dharmadhikari, CJ. – This review application seeks to review the judgment dated 23.02.2016 passed by this Court in Tax Case Appeal No.104 of 2016. By the said judgment, this Court dismissed the assessee’s appeal on the ground that no substantial question of law arose for consideration against the order of the Income Tax Appellate Tribunal (ITAT), Chennai ‘C’ Bench, dated 21.08.2015 in V. Babu v. Dy. CIT [IT Appeal No. 296 (Mds) of 2015, dated 21-8-2015].

2.1. The facts in a nutshell are that the review petitioner (assessee) is an individual engaged in the civil contract business. For the Assessment Year 2007-08, the assessee filed return of income on 13.11.2007, declaring a total income of Rs.16,27,456/-.

2.2. During a survey conducted on 03.03.2010 under Section 133A of the Income-tax Act, 1961, the Revenue discovered a bank entry of Rs.10 Crores credited to the assessee’s account on 09.02.2007. The assessee explained that the deposit was received from Commercial Buildwell Private Limited as an accommodation entry requested by his friend, K.R.Elangovan. He stated that he retained Rs.3 Lakhs as commission and transferred Rs.9.97 Crores to Mohanlal Jewellers.

2.3. The Assessing Officer reopened the assessment under Section 147 of the Act by issuing notice under Section 148 of the Act. The Assessing Officer added Rs.10 Crores to the assessee’s income under Section 68 of the Act as unexplained cash credits. Both the Commissioner of Income Tax (Appeals) and the ITAT upheld the addition made by the Assessing Officer.

2.4. The assessee filed Tax Case Appeal No.104 of 2016, which was dismissed by this Court on 23.02.2016 due to the absence of any substantial question of law.

2.5. The assessee filed a Special Leave Petition (SLP (C) No.27530 of 2016) before the Supreme Court. The SLP was dismissed by order dated 11.9.2017.

3.1. Learned counsel for the assessee contends that new material documents obtained under the Right to Information Act, which include Sale Deed Document Nos.3200 of 2007 and 3201 of 2007 registered at the Sub-Registrar Office, Sulur, and the ITAT order dated 08.05.2015 in the case of a co-confirming party, P. Elango v. ACIT [IT Appeal Nos. 1392 & 2973 (Mds) of 2014, dated 8-5-2015] have now come to his knowledge.

3.2. Learned counsel submits that the sale deed lists the receiving party as “M/s.Babu & Associates,” a partnership firm represented by C.Karthikeyan, and not the assessee in his individual capacity. He added that in P.Elango’s case, the Tribunal remitted the matter for de novo consideration. In any event, he submitted that the assessee acted merely as an accommodating party and did not keep the sale proceeds.

3.3. Learned counsel for the assessee argued that as per paragraph 17.1 of the judgment of the Supreme Court in Malleeswari v. K. Suguna 2025 SCC Online SC 1927, a review application is maintainable on the ground of discovery of new and important matter or evidence.

4.1. Refuting the aforesaid submissions, learned Senior Standing Counsel for the Revenue submits that there is no error apparent on the face of the record to justify a review.

4.2. Learned Standing Counsel drew our attention to paragraph 8 of the ITAT order dated 21.08.2015, which explicitly records that “Even though the assessee has raised a ground regarding reopening of assessment, no argument was advanced during the course of hearing either by the assessee or by the Revenue.” He, therefore, asserts that the assessee cannot raise pleas in review that were explicitly waived or not argued before the Tribunal.

4.3. It is further submitted that the receipt of Rs.10 Crores in the assessee’s personal bank account is an admitted fact. The assessee failed to establish the identity, financial capacity, and genuineness of the transaction under Section 68 of the Act.

4.4. He also submitted that the proprietor of Mohanlal Jewellers deposed under oath that he supplied gold bullion to “M/s.Babu & Associates”, but could not identify the assessee or establish delivery proof during cross-examination. Therefore, the alleged transfer of Rs.9.97 Crores remains an unsubstantiated outflow.

5. We have heard learned counsel on either side and perused the documents available on record.

6. Section 68 of the Act provides that where any sum is found credited in the books of an assessee and the assessee offers no explanation about the nature and source, or the explanation offered is not satisfactory to the Assessing Officer, the sum may be charged to income-tax.

7. In the case at hand, the receipt of Rs.10 Crores into the bank account of the assessee on 09.02.2007 is uncontroverted. The initial burden lies entirely on the assessee to establish three essential conditions: (i) Identity of the creditor; (ii) Creditworthiness of the creditor; and (iii) Genuineness of the transaction. The explanation offered by the assessee that he received Rs.10 Crores as an accommodation entry and passed on Rs.9.97 Crores to a third party, was tested by the authorities and found completely unsatisfactory. A mere paper arrangement or routing of funds through a personal bank account does not discharge the statutory burden under Section 68 of the Act.

8. The Supreme Court has repeatedly held that Section 68 of the Act places a strict burden of proof on the assessee. Where money is admitted to have entered the assessee’s account, the assessee must offer a plausible, evidence-backed explanation regarding its nature and source. Failure to do so legally justifies treating the entire credit as income.

9. The law governing review applications under Order XLVII Rule 1 read with Section 114 of the Code of Civil Procedure, 1908, is well settled. In Malleeswari (supra), the Supreme Court summarized the scope of review jurisdiction and emphatically held that a review proceeding is not an appeal in disguise and that rehearing of a matter on merits or substituting a view is impermissible.

10. As per paragraph 17.1 of the decision in Malleeswari (supra), on which reliance was placed by learned counsel for the assessee, the discovery of new evidence can be a ground for review, but that ground can be raised only if the review petitioner demonstrates that, despite exercising due diligence, such evidence was not within his knowledge or could not be produced when the original order was passed.

11. In this case, the documents now relied upon by the assessee (sale deeds of 2007 and tribunal orders of 2015) were available in public records during the original assessment and appellate proceedings. The assessee failed to demonstrate due diligence. Re-evaluating the same set of factual explanations under the guise of “new material” amounts to seeking a re-hearing of the appeal, which review jurisdiction strictly forbids.

12. To sum up, we hereby record that the receipt of Rs.10 Crores in the assessee’s bank account remains undisputed. The explanation offered by the assessee was thoroughly evaluated and rightly rejected by the fact-finding authorities. The assessee failed to discharge the statutory burden imposed under Section 68 of the Act. No mistake or error apparent on the face of the record has been demonstrated in the judgment dated 23.02.2016 passed in Tax Case Appeal No.104 of 2016.

For the foregoing reasons, the review application lacks merit and is accordingly dismissed. No costs. Consequently, connected miscellaneous petition stands closed.