SHWETA A AVARSEKAR ,MUMBAI vs. ACIT, CENTRAL CIRCLE 45, MUMBAI

PDF · subscribers
ITA 7125/MUM/2025Status: DisposedITAT Mumbai09 July 2026AY 2012-137 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 held that since the quantum additions were deleted by allowing telescoping, the basis for levying penalty under Section 271AAA no longer existed. Therefore, the penalty order was set aside.

What were the facts?

The assessee declared undisclosed income from property sale in AY 2009-10 and later had additions for unexplained jewellery and cash in AY 2012-13. The ITAT allowed telescoping the AY 2009-10 income against the AY 2012-13 additions, leading to deletion of these additions.

What were the issues?

Whether penalty under Section 271AAA can be sustained when the underlying quantum additions are deleted due to telescoping of income from a prior year.

Which sections of the Income-tax Act were involved?

Section 271AAA,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Before: SHRI JUSTICE (RETD.) C. V. BHADANG & SHRI PRABHASH SHANKAR

For Appellant: Shri Apurv Gandhi,AR
For Respondent: Shri Kavan Limbasiya, (Sr. DR)
Hearing: 10.06.2026Pronounced: 09.07.2026

IN THE INCOME-TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI JUSTICE (RETD.) C. V. BHADANG, PRESIDENT & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.7125/MUM/2025 (A.Y. 2012-13) Shweta A.Avarsekar v/s. Asst. Commissioner of 1252, Pushpanjali Apartment, Income Tax, Central Circle – बनाम Old Prabhadevi Road, 45, AaykarBhavan, Prabhadevi, Mumbai – Maharishi Karve Road, 400025, Maharashtra Churchgate, Mumbai – 400020, Maharashtra स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No: AAEPA2258E Appellant/अपीलार्थी .. Respondent/प्रतिवादी

Assessee by : Shri Apurv Gandhi,AR Revenue by: Shri Kavan Limbasiya, (Sr. DR)

Date of Hearing 10.06.2026 Date of Pronouncement 09.07.2026 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal emanating from the appellate order dated 10.09.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax, Appeal, CIT(A) 48, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to penalty levied u/s.271AAA of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 31.03.2017 for the Assessment Year [A.Y.] 2012-13.

P a g e | 2 ITA No. 7125/Mum/2025 A.Y. 2012-13 Shweta A Avarsekar 2. The grounds of appeal are as under: 1. On facts and in law, the Ld. CIT(A) erred in confirming penalty u/s 271AAA of ₹7,86,983/- despite the entire quantum addition of 78,69,837/-being deleted by the Hon’ble ITATs order dt. 29.04.2022. Once the addition is deleted on merits by allowing telescoping, no "undisclosed income" survives for A.Y. 2012-13 and the penalty, being consequential, cannot be sustained. 2. Without prejudice, the Ld. CIT(A) erred in holding that the manner of derivation was not substantiated u/s 271AAA(2)(ii) even though the Hon’ble ITAT, vide order dt. 29.04.2022, accepted the source as undisclosed cash receipts from Matunga property sale declared in A.Y. 2009-10 and directed telescoping after verification. The ITAT’s finding conclusively establishes the source and satisfies the immunity condition. 3. On facts and in law, the Ld. CIT(A) has acted unlawfully in sustaining penalty u/s 271AAA despite Hon’ble ITAT’s binding order dt. 29.04.2022, which rendered the quantum deletion valid and final. Upholding penalty after ITAT-directed deletion of addition is legally untenable and against the principles of natural justice. 3. In this case, penalty u/s 271(1)(c) was levied on the issue of Undisclosed income on account of cash received on sale of certain immovable property. At the very outset,the ld.AR submitted that as per ITAT order dated 29.04.2022 and the order giving effect dated 30.03.2024, the quantum additions made on account of unexplained assets stand deleted. Thus, the telescoping benefit sought by the assessee treating cash received on sale of Matunga property of Rs. 1,22,93,321/-in AY 2009-10 as the source for unexplained jewellery and cash in AY 2012-13 was allowed.The unaccounted cash of Rs. 1,22,93,321/- hadalready suffered penalty u/s 271(1)(c) of Rs. 30,26,077/- vide penalty order dated 31.03.2017 in AY 2009-10.

P a g e | 3 ITA No. 7125/Mum/2025 A.Y. 2012-13 Shweta A Avarsekar 4. Brief facts of the case are that a search and seizure action under section 132 of the Act was conducted on 10.02.2012 at the office premises of M/s Unity Infraprojects Ltd. and at the residences of its directors, including the residential premises of the appellant, who is the wife of one of the directors. For the relevant assessment year, the assessee filed the original return of income on 22.09.2012, declaring a total income of Rs. 16,25,500/-. Subsequently, on 16.03.2013, she filed a revised return of income declaring a total income of Rs. 43,96,428/-, which included an amount of Rs. 27,70,930/- declared on account of a discrepancy in jewellery found during the search.

4.1 During assessment proceedings, the assessee further admitted an amount of Rs. 48,99,912/- on account of unexplained jewellery and Rs. 1,99,000/- on respect of unaccounted cash. The Assessing Officer completed the assessment under section 143(3) of the Act on 31.03.2014, making additions for these amounts and initiated penalty proceedings under section 271AAA of the Act. Aggrieved by the additions, the assessee appealed to the ld.CIT(A), who dismissed the appeal. On further appeal, the Hon’ble Income Tax Appellate Tribunal (ITAT), vide its order dated 29.04.2022, restored the matter to the file of the Assessing Officer. The ITAT directed the AO to consider the appellant’s claim for telescoping the unexplained jewellery and cash against

P a g e | 4 ITA No. 7125/Mum/2025 A.Y. 2012-13 Shweta A Avarsekar undisclosed income of Rs. 1,22,93,321/- declared by her in A.Y. 2009-10 from the sale of a property in Matunga.

4.2 In pursuance of the ITAT’s directions, the Assessing Officer passed an order u/s 254 r.w.s. 143(3) of the Act on 30.03.2024, deleting the additions by allowing the benefit of telescoping. Consequently, the assessed income was revised to Rs. 16,25,503/-. However, prior to the ITAT order, the AO had already passed the penalty order under section 271AAA of the Act on 31.03.2017, levying a penalty of Rs. 7,86,983/- (being 10% of the undisclosed income of Rs. 78,69,837/-) on the ground that the assessee had failed to substantiate the manner in which the undisclosed income was derived. It is against this penalty order that the presentappeal has been filed.

5.

In the course of hearing, a querry was made to the Ld.AR regarding the contentions that in the previous AY 2009-10,theassessee had already been penalized u/s 271(1)(c) of the Act in respect of the Undisclosed income. Referring to the said penalty order, it was stated that as per the said order dated 31.03.2017, penalty u/s 271(1)(c) of the Act was levied on the issue of undisclosed income on account of cash received on sale of Matunga Property. Thus, the assessee had already suffered a total penalty of Rs. 30,26,077/- in relation to the matter.

P a g e | 5 ITA No. 7125/Mum/2025 A.Y. 2012-13 Shweta A Avarsekar 5.1 In respect of the instant appeal, it was contended as evidenced by ITAT order dated 29.04.2022 and the order giving effect dated 30.03.2024, the quantum additions made on account of unexplained assets stand deleted. Thus, the telescoping benefit sought by the appellant treating cash received on sale of Matunga property of Rs. 1,22,93,321 in AY 2009-10 as the source for unexplained jewellery and cash in AY 2012-13 was allowed.

5.2 The ld.DR does not controvert the factual submissions made by the ld.AR as aforesaid.

6.

We have carefully considered the relevant facts of the case. The ld.AR has primarily argued that the basis for levying the penalty under section 271AAA of the Act no longer existed following the order of the Hon’ble ITAT and the subsequent assessment order passed by the AO on 30.03.2024. The penalty was levied on the ground that the assessee had not substantiated the source of the unaccounted income. The AO, in the penalty order, had noted that merely stating the source as cash receipts from the sale of property in A.Y. 2009-10 did not satisfy the condition of section 271AAA(2) (ii) of the Act. However, the ITAT, in its order dated 29.04.2022, had accepted her contention and allowed the telescoping benefit and remanded the matter to the AO for verification,

P a g e | 6 ITA No. 7125/Mum/2025 A.Y. 2012-13 Shweta A Avarsekar who passed an order on 30.03.2024 deleting the additions. This, according to the assessee, established the fact that the source of the undisclosed assets i.e. jewellery and cash had been substantiated as being theundisclosed income from the sale of property offered to tax in A.Y. 2009-10.

6.1 Considering the above factual matrix of the case and in view of the deletion of impugned sum in the quantum appeal effect by the AO in pursuance of the directions of Tribunal, we concur with the assessee that the very basis for levying the impugned penalty no longer exists. Accordingly, agreeing with the contentions of the assessee, we find no merit in the appellate order which is, set aside. We direct the AO to delete the penalty.

7.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 09/07/2026.

Sd/- Sd/- [Justice (Retd.)C. V. BHADANG] [PRABHASH SHANKAR] P PRESIDENT ACCOUNTANT MEMBER

Place: म ुंबई/Mumbai ददनाुंक /Date 09.07.2026 Lubhna Shaikh / Steno

P a g e | 7 ITA No. 7125/Mum/2025 A.Y. 2012-13 Shweta A Avarsekar आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण/ ITAT, Bench, Mumbai.

More judgments on Section 271AAA

All 606 judgments and leading authorities on Section 271AAA →

Recent GST High Court judgments

Search GST case law →