AMR INFRASTRUCTURES,HYDERABAD vs. DCIT., CENTRAL CIRCLE-2(1), HYDERABAD

ITA 818/HYD/2025Status: DisposedITAT Hyderabad16 October 2026AY 2020-219 pages
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What were the facts?

The assessee, AMR INFRASTRUCTURES, a partnership firm engaged in real estate, filed its return of income for AY 2020-21 declaring a total income of Rs. 96,22,720/-. A survey under Section 133A was conducted on March 6, 2020, where irregularities were noticed. The assessee voluntarily admitted an estimated additional income of Rs. 2.5 Crores. However, the return filed did not reflect this admission. The Assessing Officer (AO) completed the assessment, determining the total income at Rs. 2,62,41,000/-, including the Rs. 2.5 Crores admitted during the survey. Subsequently, penalty proceedings under Section 270A were initiated. The AO levied a penalty of Rs. 1,23,34,734/- under Section 270A(8) for under-reporting of income as a consequence of misreporting. The assessee appealed to the CIT(A), but neither appeared nor filed any explanation, leading the CIT(A) to dismiss the appeal for non-prosecution and uphold the penalty.

What did the Tribunal hold?

The Tribunal held that the show cause notice issued by the AO was not vague, as it clearly specified the reason for issuing the notice as 'underreporting of income as a consequence of misreporting of income'. Therefore, the assessee's argument based on the decision in Ernica Enterprises (P) Ltd. was rejected. Regarding the penalty levied at 200%, the Tribunal found that while the assessee had indeed 'underreported income' to the extent of Rs. 1,66,18,280/- (difference between income processed under Section 143(1) and assessed under Section 143(3)), the AO had not made out a case of 'misreporting of income' as defined under Section 270A(9) (clauses (a) to (f)). The AO levied the penalty at 200% without directing the case under these specific clauses. Therefore, the 200% penalty could not be upheld. The Tribunal set aside the order of the CIT(A) and directed the AO to levy penalty at 50% of the tax on the underreported income under Section 270A(2).

What were the issues?

1. Whether the penalty order passed by the AO under Section 270A is invalid due to a vague show cause notice, specifically regarding the sub-clause under which the assessee falls under Section 270A(9)? (Question of law) 2. Whether the penalty levied at 200% of the tax on under-reported income is justified, given that the addition was on an estimated basis without specific evidence of misreporting as defined in Section 270A(9)? (Question of mixed law and fact) Assessee's Arguments: - The AO's order under Section 270A is invalid because the show cause notice did not refer to the specific sub-clause of Section 270A(9). Relied on ITAT Chennai Bench in Ernica Enterprises (P) Ltd. v. DCIT. - The 200% penalty is incorrect as the addition was estimated, not based on misreporting. The AO failed to establish the case under clauses (a) to (e) of Section 270A(9). The penalty should be deleted. Revenue's Arguments: - The appellate proceedings before the CIT(A) were ex-parte, with no appearance or explanation from the assessee. - The AO's show cause notice was not vague, clearly specifying 'underreporting of income as a consequence of misreporting of income'. - The case is a clear instance of 'underreporting of income as a consequence of misreporting of income' due to the admission of irregularities and additional income during the survey. The penalty levied by the AO and upheld by the CIT(A) should be sustained.

Which sections of the Income-tax Act were involved?

Section 133A,Section 270A,Section 270A(2),Section 270A(8),Section 270A(9),Section 143(1),Section 143(3)

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, AM:

This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-12, Hyderabad, dated 30.09.2024, and pertains to assessment year 2020-21. 2. The assessee has raised the following grounds of appeal:

ITA 818/HYD/2025 AMR INFRASTRUCTURES

1.

The Learned CIT(A) has erred in dismissing the appeal without adequately

The order continues below.

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