MADHAVI SWARUP ,NEW DELHI vs. ACIT CENTRAL CIRCLE- 20 , NEW DELHI

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ITA 985/DEL/2026Status: DisposedITAT Delhi28 July 2026AY 2023-2412 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the assessee's appeal, directing the deletion of the penalty of Rs. 75 lakhs imposed under Section 271D. The Tribunal noted that while the lower authorities relied on a statement under Section 131(1A) of the Act where Shri Rajesh Kumar admitted to the impugned on-money payment, there was no specific material seized from the assessee herself or against her to support these allegations. The Tribunal referred to CBDT Circular No. 1/2003, which states that admissions made during search/survey do not carry significant weight. Therefore, the Tribunal concluded that the penalty levied based on a mere admission was not sustainable in law. The Tribunal also addressed the issue of cross-examination, stating that while it is generally a principle of natural justice, the technical rules of the Indian Evidence Act are not strictly applicable to Income-Tax proceedings. However, it found that the primary onus was on the assessee to rebut the presumptions under Section 132(4A) of the Act, which it had not discharged. Despite this, the core reason for allowing the appeal was the lack of independent corroborative evidence against the assessee to substantiate the cash receipts, beyond the admission of a third party.

What were the facts?

The assessee, Madhavi Swarup, is appealing an order from the Commissioner of Income Tax(Appeals)-27, which upheld a penalty of Rs. 75 lakhs imposed by the Assessing Officer (AO) under Section 271D of the Income Tax Act, 1961. The penalty pertains to the assessment year 2023-24. A search and seizure action under Section 132 was conducted on the assessee's premises on January 30, 2023. During post-search investigation, the AO noted the sale of two immovable properties. One property was sold to Mrs. Garima Lalwani for Rs. 2.55 crore, with Rs. 2.05 crore paid by cheque and Rs. 50 lakh allegedly in cash. Another property was sold to M/s Raj Lakshmi Enterprises Pvt. Ltd. for Rs. 3,84,97,500, with Rs. 50 lakh allegedly paid in cash. The AO, based on WhatsApp chats and employee statements, concluded that the assessee received Rs. 75,00,000 in cash against these property sales, adding this amount to her total income as Long Term Capital Gain and initiating penalty proceedings under Section 271D.

What were the issues?

1. Whether the penalty imposed under Section 271D of the Income Tax Act, 1961, is liable to be set aside due to the absence of proper jurisdictional prerequisites, as argued by the assessee. 2. Whether the computation of alleged cash receipts by the AO lacks a rational basis and was determined arbitrarily, relying solely on third-party digital data (WhatsApp chats) and employee statements without conclusive findings or independent verification of the actual cash payer, as contended by the assessee. 3. Whether the addition to the assessee's income, which formed the basis for the penalty, was made solely on the basis of an assessee's agreement without legal backing under the Act. Assessee's Arguments: The assessee argued that the penalty proceedings were flawed due to a lack of jurisdiction and that the AO erred in initiating and concluding them without satisfying jurisdictional prerequisites. The assessee also contended that the computation of cash receipts was arbitrary, based on vague WhatsApp chats and employee statements without corroborative documentary evidence or examination/cross-examination of alleged payers. Furthermore, the assessee argued that the addition to income was unsustainable as it was based on an agreement without legal backing. Revenue's Arguments: The revenue contended that the assessee had indeed received the on-money component of Rs. 75 lakhs, supported by seized material found during the search.

Which sections of the Income-tax Act were involved?

Section 271D,Section 132,Section 48,Section 139(1),Section 143(3),Section 143(2),Section 142(1),Section 269SS,Section 131(1A),Section 132(4),Section 56,Section 132(4A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘H’, NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI KRINWANT SAHAY

For Respondent: Ms. Priyanka Durbey, Sr. DR
Hearing: 15.07.2026Pronounced: 28.07.2026

This assessee’s appeal for Assessment Year 2023-24 arises against the Commissioner of Income Tax(Appeals)-27’s order dated 14.11.2025, passed order No. 10036/2022-23, involving proceedings u/s 271D of the Income Tax Act, 1961; hereinafter referred to as, “the Act”.

Heard both the parties at length. Case file perused.

2.

Coming to the sole substantive issue between the parties herein, we note that the learned CIT(A) as confirmed the Assessing Officer’s findings levying section 271D penalty of Rs. 75 lakhs in order dated 24.09.2024; reading as under:

3.

The Revenue vehemently submits in this factual backdrop that it stands very well proved that the assessee had indeed received the corresponding on-money component herein amounting to Rs. 75lakhs going by the relevant seized material found during the course of search.

4.

The assessee, on the other hand, takes us to the relevant findings in the above extracted lower appellate discussion that all what the learned lower authorities have referred in the statement u/s 131(1)A of the Act wherein Shri Rajesh Kumar admitted the impugned on-money payment as forming part of the property transaction. We sought to know as to whether there is any specific material found/seized from the assessee herself or

against her to the very effect or not. There is no such indication forthcoming in the department’s favour which could support the on-money allegations against the assessee in the Assessing Officer order as well as in the lower appellate discussion. So far as such a statement admitting on- money payment is concerned, we quote the CBDT’s landmark circular issued wayback on 10.01.2003 that such an admission even made during search/survey does not carry any significance. We thus conclude in this factual backdrop that the impugned penalty of Rs. 75 lakhs u/s 271D of the Act levied in the assessee’s hands based on a mere admission is not sustainable in law. The same is directed to be deleted in very terms.

All other remaining pleadings between the parties stand rendered academic.

4.

This assessee’s appeal is allowed.

Order Pronounced in the Open Court on 28.07.2026 .

Sd/- Sd/- (KRINWANT SAHAY) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 28.07.2026 *Pooja Mittal, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

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