SKILL PROMOTERS PRIVATE LIMITED,HYDERABAD vs. DCIT, CENTRAL CIRCLE-2(3), HYDERABAD

ITA 875/HYD/2026Status: DisposedITAT Hyderabad30 September 2026AY 2016-1745 pages
AI SummaryAllowed

What were the facts?

The assessee, Skill Promoters Private Limited, engaged in construction and land development, filed its return for AY 2016-17 on 29.09.2016. A search under Section 132 was conducted on 22.10.2019. The assessment for AY 2016-17 was completed under Section 143(3) r.w.s. 153A on 27.09.2021, with additions of Rs. 7,29,00,000/- towards cash receipts. The CIT(A) scaled down additions to Rs. 2,23,00,000/-. The ITAT, in its quantum order dated 31.10.2023, directed the AO to estimate profit at 15% on unaccounted cash receipts, finally determining undisclosed income at Rs. 1,24,34,208/-. Subsequently, the AO issued show-cause notices for penalty under Section 271(1)(c) for AY 2016-17, and under Section 270A for AYs 2017-18 and 2018-19, and under Section 271AAB for AY 2020-21. The assessee contested the penalty on grounds of estimation, time-barring, and lack of proper satisfaction.

What did the Tribunal hold?

The Tribunal held that the penalty under Section 271(1)(c) cannot be levied on additions made purely on an estimation basis, especially when the quantum addition itself was based on an estimation by the ITAT. The Tribunal noted that the AO's reliance on Explanation 5A to Section 271 was not applicable as the ITAT had already determined the income based on estimation. Regarding the time-barring issue under Section 275, the Tribunal found that the show-cause notices were issued beyond the prescribed period, making the penalty unsustainable. For AY 2020-21, the Tribunal held that the penalty under Section 271AAB was invalid due to the AO's failure to record satisfaction and specify the charges in the show-cause notice. Citing the cases of PCIT Vs. Shri R. Elangovan and Kavya Boppana Vs. ACIT, the Tribunal concluded that the notice was defective and the penalty levied was unsustainable. Consequently, the penalty orders were set aside and deleted for all assessment years under appeal.

What were the issues?

1. Whether the penalty under Section 271(1)(c) of the Income-tax Act, 1961, can be levied on an addition sustained purely on an estimation basis, as argued by the assessee, or if it constitutes concealment of income, as contended by the revenue. The assessee relied on the ITAT's quantum order estimating income at 15% of cash receipts and the case of Mahaveer Jain vs DCIT. The revenue argued that additional income offered post-search is deemed concealment under Explanation 5A to Section 271. 2. Whether the penalty order passed by the AO was time-barred under Section 275 of the Act, as the assessee argued it was not passed within six months from the ITAT order, rendering it unsustainable. The revenue did not record specific arguments on this point. 3. Whether the penalty under Section 271AAB of the Act for AY 2020-21 is valid when the Assessing Officer failed to record satisfaction for initiating penalty proceedings and did not specify the charges in the show-cause notice, as argued by the assessee. The revenue did not record specific arguments on this point.

Which sections of the Income-tax Act were involved?

Section 132,Section 143,Section 153A,Section 271(1)(c),Section 270A,Section 271AAB,Section 274,Section 275,Section 69,Section 115BBE,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad “B” Bench, Hyderabad

PER MANJUNATHA G., A.M : The appeals filed by the assessee are directed against the orders of the Ld. Commissioner of Income Tax (Appeals)-12, Hyderabad, dated 09.02.2026, passed under Section 271(1)(c) of the Act for A.Y. 2016-17 (ITA No. 875/Hyd/2026), or

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 →