The Madras High Court dismissed V. Babu’s review application over a ₹10 crore bank credit treated as unexplained income under Section 68 of the Income-tax Act. According to reports of the September 28, 2026 decision, the court found that the documents Babu presented as new had been available in public records during the earlier proceedings, and that he had not shown due diligence in producing them then.
What was the ₹10 crore credit dispute?
The case concerned Assessment Year 2007–08. A survey under Section 133A reportedly detected a ₹10 crore credit in Babu’s personal bank account on February 9, 2007. Babu, described in the reports as a civil contractor, said Commercial Buildwell Pvt Ltd routed the money at the request of his friend K.R. Elangovan. He said he retained ₹3 lakh as commission and transferred the remaining ₹9.97 crore to Mohanlal Jewellers. These details are reported by LiveLaw Biz; they describe Babu’s account of the transaction, not findings that the explanation was accepted.
The Assessing Officer treated the full credit as unexplained under Section 68. The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal upheld the addition. The High Court dismissed Babu’s tax appeal in 2016 for lack of a substantial question of law, and the Supreme Court dismissed his special leave petition in 2017, according to the report.
What did Babu present in the review application?
Babu relied on sale deeds obtained under the Right to Information Act and an ITAT order concerning P. Elango. He argued that the deeds identified the recipient as Babu & Associates, a partnership represented by C. Karthikeyan, rather than Babu individually. The Revenue opposed review, pointing to the credit in Babu’s personal account and disputing whether he had established the creditor’s identity and creditworthiness or the transaction’s genuineness.
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Why did the court reportedly reject the review?
The Section 68 explanation had already been assessed
As reported, the bench treated Section 68 as placing an initial burden on the taxpayer to establish the creditor’s identity, creditworthiness and the genuineness of the transaction. It said the authorities had already evaluated the explanation involving an accommodation entry and the alleged onward transfer, and had found it unsatisfactory. The review application did not, on the reported account, establish an error in that earlier decision merely by revisiting the same factual explanation.
The documents were not shown to be unavailable earlier
The decisive review issue was whether the sale deeds and tribunal material justified reopening the earlier decision. Reports say the bench found that the documents were public records available during the original assessment and appellate proceedings. Babu had not demonstrated due diligence in producing them earlier. The court therefore treated the request as an attempt to rehear factual matters under the label of new material, not as a demonstrated error apparent on the record.
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LiveLaw Biz attributes the following statement to the bench: “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.” Because the signed order was not available for verification, this quotation and the court’s detailed reasoning should be read as reported rather than checked against the primary text.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the decision does—and does not—say
- It was a review dismissal, not a fresh assessment appeal. The application followed the earlier merits proceedings and sought to reopen the High Court’s prior decision.
- The due-diligence point was case-specific. The reports say the documents were already available in public records and that Babu did not show why he could not have produced them earlier.
- It does not mean every accommodation-entry explanation or review application must fail. The reported result turned on this record, the earlier evaluation of the explanation, and the availability of the documents.
LiveLaw Biz identifies the matter as REV.APPL.No. 107 of 2021, V. Babu v. Deputy Commissioner of Income Tax. Law Chronicle reports the neutral citation as 2026:MHC:3956. The case number, citation and quoted reasoning are reported details; the underlying signed order was not retrievable for independent verification.
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