POOJA CRAFTED HOMES PRIVATE LIMITED,HYDERABAD vs. DCIT, CENTRAL CIRCLE-1(2), HYDERABAD

ITA 2243/HYD/2025Status: DisposedITAT Hyderabad30 September 2026AY 2021-2215 pages
AI SummaryAllowed

What were the facts?

The assessee, Pooja Crafted Homes Private Limited, engaged in real estate, is appealing against orders of the CIT(A) for Assessment Years 2021-22 to 2023-24. A search operation on January 4, 2023, led to the recording of a statement from the General Manager (Sales) regarding WhatsApp messages indicating cash received for flat sales in the 'Magic Breeze Apartment Project'. The Assessing Officer (AO) reopened the assessment and made an addition of Rs. 20 lakhs for alleged cash receipts from one Mr. Kartik for a flat sale. The AO also added Rs. 15,74,070/- for belated payment of employee PF & ESI contributions. The assessee accepted these additions and paid taxes. Subsequently, penalty proceedings under Section 270A were initiated for underreporting of income, resulting in a penalty of Rs. 16,13,310/-. For AY 2023-24, a penalty of Rs. 26,40,000/- was levied under Section 271AAB.

What did the Tribunal hold?

The Tribunal held that the penalty levied under Section 270A for AY 2021-22 is not sustainable. The Tribunal noted that the addition of Rs. 20 lakhs was made based on WhatsApp messages and the statement of the General Manager, even though the assessee denied receiving cash. While the assessee accepted the addition to end litigation, this acceptance was not an admission of underreporting of income. The Tribunal distinguished the case of MAK Data (P.) Ltd. by stating that in the present case, the addition was based on third-party information without corroborative evidence, and the assessee consistently denied receipt of alleged cash. Therefore, following the decisions in Suresh Chandra Mittal and Sarath Gopal Bopanna, the penalty under Section 270A was deleted. For AY 2023-24, the Tribunal held that the penalty levied under Section 271AAB is not sustainable. The Tribunal observed that Section 271AAB applies when the assessee categorically admits undisclosed income in a statement recorded under Section 132(4). In this case, the assessee company never admitted undisclosed income. The addition was based on third-party evidence and a statement from a third party without corroboration. The Tribunal concluded that the AO erred in levying penalty under Section 271AAB as the facts did not meet the criteria for its applicability. The order of the CIT(A) was set aside, and the penalty was deleted.

What were the issues?

1. Whether the penalty levied under Section 270A of the Income Tax Act, 1961, for alleged underreporting of income is sustainable when the assessee accepted the addition to buy peace and not as an admission of underreporting, and the AO did not conclusively prove underreporting. - Assessee's contention: Mere admission of additional income and payment of taxes does not amount to underreporting of income. The AO failed to prove underreporting, and the admission was only to end litigation. Relied on CIT v. Suresh Chandra Mittal and Sri Sarath Gopal Bopanna v. ACIT. - Revenue's contention: It is a clear case of underreporting, evidenced by the AO's assessment and penalty orders, and the admission by the General Manager during the search. The income would not have been disclosed without the search. Relied on MAK Data (P.) Ltd. v. CIT. 2. Whether the penalty levied under Section 271AAB of the Income Tax Act, 1961, is sustainable when the assessee company never admitted undisclosed income during the search or assessment, and the addition was based on third-party evidence without corroboration. - Assessee's contention: The company never admitted undisclosed income. The addition was based on third-party evidence and a statement from a third party without corroboration. The penalty under Section 271AAB is not applicable as the assessee did not categorically admit undisclosed income in a statement under Section 132(4). - Revenue's contention: (Not explicitly recorded for this specific issue, but implied support for the AO's order upheld by CIT(A)).

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3),Section 147,Section 148,Section 36(1)(va),Section 270A,Section 271AAB,Section 132(4),Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G

PER MANJUNATHA G, ACCOUNTANT MEMBER:

These appeals are filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals) [in short, “the Ld.CIT(A)], Hyderabad- 11 dated 15-Oct-2025 & 16-Oct-2025, for the Assessment Years 2021-22 to 2022- 23 & 2023-24. ITA No.2243/Hyd/2025 for AY 2021-22:

2.

The brief facts

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 132

All 14,286 judgments and leading authorities on Section 132 →

Recent GST High Court judgments

Search GST case law →