RAJESWARA RAO ANNE,HYDERABAD vs. DCIT., CENTRAL CIRCLE-1(4), HYDERABAD

ITA 1438/HYD/2025Status: DisposedITAT Hyderabad19 December 2025AY 2019-207 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty levied under section 271AAB(1A) of the Income Tax Act cannot be sustained. The Tribunal referred to its earlier order in the quantum appeal (ITA No.175/Hyd/2023), which recorded a clear and categorical finding that no incriminating material was found during the search concerning the Rs.24 lakhs addition. The Tribunal then examined the definition of "undisclosed income" under clause (c) of the Explanation to section 271AAB, which requires the income to be represented by money, bullion, jewellery, or other valuable article/thing, or by any entry in books of account or other documents or transactions found during the search. Since the Tribunal had already established that no incriminating material was found, the Rs.24 lakhs did not fall within the definition of "undisclosed income". Consequently, the statutory condition for levying penalty under section 271AAB(1A) was not fulfilled. The Tribunal directed the AO to delete the penalty. No issue was expressly left undecided.

What were the facts?

The assessee, Shri Rajeswara Rao Anne, is in appeal against the order of the Ld. CIT(A)-12, Hyderabad, dated 10.07.2025, for Assessment Year 2019-20. A search under section 132 of the Income Tax Act, 1961, was conducted on 05.10.2018, during which excess gold jewellery was found. The assessee admitted an income of Rs.24 lakhs in a statement recorded under section 132(4). Subsequently, the assessee filed a return of income including this Rs.24 lakhs as additional income. The Assessing Officer (AO) brought this amount to tax under section 69A read with section 115BBE. The Tribunal, in a prior quantum appeal (ITA No.176/Hyd/2023), held that section 115BBE was not applicable and directed taxation at normal rates. Subsequently, the AO initiated penalty proceedings under section 271AAB(1A) and levied a penalty of Rs.8,61,120/-. The Ld. CIT(A) upheld this penalty.

What were the issues?

1. Whether the Ld. CIT(A) erred in not quashing the penalty levied by the AO under section 271AAB(1A) of the Income Tax Act, as it is alleged to be illegal and arbitrary. The assessee contends that the initiation of penalty by the AO was without giving any reasons and without a specific finding of "undisclosed income" as defined in the Explanation to section 271AAB(1A). The assessee further argues that the penalty was initiated solely on the basis of a voluntary offer to "buy peace" and without a finding regarding the requirement to maintain books of account. The assessee also argues that the penalty order is bad in law for not specifying the default prescribed under section 271AAB(1A) and for issuing a stereotyped show cause notice. The assessee relies on the Tribunal's finding in its own quantum appeal that no incriminating material was found for the Rs.24 lakhs addition, implying it is not "undisclosed income". 2. The revenue, through the Ld. DR, relied on the orders of the lower authorities and argued that but for the search, the assessee would not have disclosed the income, thus falling within the sweep of "undisclosed income".

Which sections of the Income-tax Act were involved?

Section 132,Section 139(1),Section 143(2),Section 142(1),Section 143(3),Section 69A,Section 115BBE,Section 271AAB,Section 271AAB(1A),Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ A‘ Bench, Hyderabad

Before: Shri Ravish Sood & Shri Madhusudan Sawdia

For Respondent: Shri S. Arun Kumar, Sr. DR

Per Madhusudan Sawdia, A.M.:

This appeal is filed by Shri Rajeswara Rao Anne (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)-12, Hyderabad (“Ld.

CIT(A)”) dated 10.07.2025 for the A.Y. 2019-20. 2. The assessee has raised the following grounds of appeal:

“1. The order passed by the Ld. CIT(A) is opposed to law, equity, weight ofevidences, facts and cireumstances of the case and are therefore liable to be quashed.

ITA No 1438 of 2025 Raje

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 14,598 judgments and leading authorities on Section 132 →

Recent GST High Court judgments

Search GST case law →