Shreemukh Realtors Vs DCIT/ACIT (ITAT Hyderabad)
Conclusion: Penalty under section 271DA could not be sustained merely on the basis of unverified seized data without independent corroborative evidence. Revenue must conclusively establish violation of section 269ST, and where assessee had disclosed the income and paid due taxes, penalty was not automatic and must satisfy the test of reasonableness and statutory conditions.
Held: During a search, Revenue relied on Tally data found in a seized pen drive to allege that assessee had accepted cash exceeding the threshold prescribed under section 269ST for sale of flats and commercial units, and accordingly levied penalty under section 271DA. No sale bills, cash receipts, or corroborative documents evidencing receipt of cash beyond the statutory limit were found. AO selectively relied on entries from books that had otherwise been rejected during assessment and conducted no independent enquiry with the alleged cash payers. Assessee contended that the Tally data represented consolidated group transactions, that the burden to establish violation rested on the Revenue, and that it had already disclosed the additional income and paid due tax. Revenue argued that the seized Tally entries established receipt of cash in excess of ₹2 lakh from individual buyers, attracting penalty under section 271DA for contravention of section 269ST. Assessee submitted that the penalty proceedings were quasi-criminal in nature, requiring Revenue to conclusively prove the violation through cogent evidence. It was further argued that tRevenue failed to corroborate the Tally entries through sale documents or independent enquiries, and that assessee had voluntarily disclosed the additional income and discharged the tax liability, making the levy of a 100% penalty disproportionate and unreasonable. It was held that the primary burden of proving violation of section 269ST rests on the Revenue. Mere reliance on uncorroborated Tally entries, unsupported by sale bills, cash receipts, or verification from alleged purchasers, was insufficient to establish contravention. AO could not selectively rely on books rejected during assessment while imposing penalty. Tribunal also observed that penalty under section 271DA was not automatic and must satisfy the statutory preconditions. Considering that assessee had admitted the additional income and paid taxes thereon, the levy of a 100% penalty on gross cash receipts was held to be unreasonable and contrary to the legislative intent reflected in section 115BFA(2). Accordingly, the penalty under section 271DA was deleted.
The captioned appeals filed by the assessee firm i.e. “Shreemukh Realtors” are directed against the separate, but identical orders of the learned Commissioner of Income Tax (Appeals), Hyderabad – 11, [for short “Ld. CIT(A)”] dated 20.03.2026 pertaining to the assessment years 2020-21 to 202324, respectively, which arise out of the separate penalty orders passed u/s. 271DA of the Income Tax Act, 1961 by the Addl. Commissioner of Income Tax, Central Range-3, Hyderabad, dated 26.02.2025. Since facts are identical and common issues are involved in all the four appeals, the same were heard together and are being disposed of by this single consolidated order for the sake of convenience and brevity.
