ITAT Guwahati Allows Taxpayer Appeal Against ₹5.68 Crore Cash Penalty

Harvinder Singh Sehgal Vs ACIT (ITAT Guwahati)

Surrendered Income Does Not Prove Cash Receipt: Section 271DA Penalty Also Fails on Limitation

Background of the Case

A survey under section 133A was conducted at Navsheen Associates, the assessee’s proprietary concern. Certain documents, including an impounded record identified as “NA-02”, were found during the proceedings.

Based on the entries, the Assessing Officer concluded that the assessee had received ₹5,65,53,927 from various parties, with commission payments of ₹18,26,073 also recorded.

The assessee denied the transactions but could not satisfactorily explain the entries. To avoid prolonged litigation and buy peace, he surrendered ₹5,65,53,927 as additional business income. The Assessing Officer included this amount in the reassessment completed on 28 March 2024.

In the assessment order, the Assessing Officer recorded satisfaction that the alleged cash receipts violated section 269ST and that separate penalty proceedings under section 271DA should be initiated by the competent authority.

A penalty order dated 13 December 2024 imposed a penalty of ₹5,68,04,927. The CIT(A) deleted ₹4,01,78,400 but sustained ₹1,66,26,527, relating to three parties. Both the assessee and the Revenue appealed.

Limitation Runs From Initiation, Not a Later Notice

The assessee argued that the penalty order was barred by section 275(1)(c). His contention was that initiation had to be reckoned from the Assessing Officer’s recorded satisfaction in the assessment order, rather than from a subsequent notice issued by the Joint Commissioner.

The Tribunal accepted this argument.

Under the provision applied by the Tribunal, the relevant deadline was the later of the end of the financial year in which the originating proceedings were completed and six months from the end of the month in which action for imposing penalty was initiated.

Here, the assessment was completed and satisfaction recorded on 28 March 2024. The financial year ended on 31 March 2024, while the six-month period expired on 30 September 2024.

Consequently, the penalty order passed on 13 December 2024 was beyond limitation.

The Tribunal relied on PCIT v. JKD Capital and Finlease Ltd., 378 ITR 614 (Delhi) and other authorities discussing the commencement of limitation for transaction-related penalties. The principle applied was that subsequent action by the competent penalty authority could not postpone the limitation clock where proceedings had already been initiated through the assessment order.

Whether Actual Cash Receipts Were Established

The Tribunal also examined the penalty on merits.

The assessee contended that NA-02 was an unsigned, unverified document containing mixed entries. Partial correspondence between certain RTGS entries and bank transactions did not establish that he had received cash in violation of section 269ST.

The three parties connected with the penalty sustained by the CIT(A)—Calcutta Tools Centre, Sangeeta Hardware Store and Ashok Hardware & Steel Mart—were regular suppliers registered under GST. The assessee maintained that purchases from them were reflected in the GST records.

The Tribunal found that the Department had not conducted an independent investigation or obtained statements from these parties establishing the alleged cash receipts.

There was no identified cash trail, corresponding withdrawals, evidence of utilisation of the alleged cash or undisclosed asset found during the survey. The Assessing Officer had also not clearly established the payer, receipt date and particulars of the transactions constituting the alleged violation.

The Tribunal further observed that the CIT(A) had selectively accepted some portions of the same document while discarding others.

Surrender Was Not Independent Proof of Section 269ST Violation

The Tribunal held that the impounded document could not be treated as a complete, self-proving record of cash receipts.

Offering an amount to tax did not, by itself, establish the separate factual requirement of actual cash receipt for imposing penalty under section 271DA.

The assessee’s regular books had not been rejected, and no independent evidence establishing cash movement had been brought on record.

The Tribunal also relied on Sanjay Kalsi v. DCIT, ITA No. 7152/Del/2025, order dated 25 March 2026, where surrender of income to avoid litigation had been considered insufficient, on the facts, to establish a section 269ST violation.

Final Decision

The Tribunal quashed the penalty both as time-barred and for failure to establish the alleged cash receipts through adequate evidence.

The assessee’s appeal was allowed. Since the entire penalty order had been quashed, the Revenue’s appeal seeking restoration of the deleted portion became infructuous and was dismissed.

Author’s Comments

An income addition and a prohibited cash receipt are distinct matters requiring distinct factual examination. Acceptance of additional business income does not automatically establish who paid cash, when it was received and how the transaction attracted section 269ST.

The decision does not grant immunity merely because an assessee describes a surrender as being made “to buy peace”. Relief rested on the absence of corroborative evidence and the Department’s failure to establish the underlying cash transactions. Where reliable evidence proves the prohibited receipt, that explanation alone would not answer the factual charge.

The limitation finding is equally significant. The Department cannot extend the statutory period by postponing the competent authority’s notice after initiation has already occurred. Practitioners should therefore examine the assessment order, recorded satisfaction and subsequent penalty chronology together.

Finally, the order concerns the section 271DA penalty, not deletion of the surrendered business income. The reassessment addition and the penalty must remain clearly distinguished when reporting or relying on this decision.

Cases Discussed

• Sanjay Kalsi Vs DCIT (ITAT Delhi) – ITA No. 7152/Del/2025; order dated 25.03.2026. Relied upon. Surrender of income to buy peace and avoid prolonged litigation did not, by itself, establish actual cash receipts violating Section 269ST. The decision also considered the dropping of related Section 270A penalty proceedings.
• MSN Laboratories Private Limited Vs Addl. CIT (ITAT Hyderabad) – ITA No. 2164/Hyd/2025; order dated 25.02.2026. Relied upon and extensively reproduced. The limitation period under Section 275(1)(c) was computed from the Assessing Officer’s reference initiating penalty proceedings, rather than a subsequent notice issued by the competent authority.
• Sireesha Pochareddy (ITAT Hyderabad) – ITA No. 1270/Hyd/2024; date printed as 12/093/2025. Discussed through MSN Laboratories. The decision concerned limitation for imposing penalty under Section 271D and followed the principles governing initiation of penalty proceedings.
• Sunil Kumar Agarwal Vs ACIT (Rajasthan High Court) – [2025] 172 taxmann.com 54. Cited by the assessee in support of the challenge to penalty proceedings.
• Grandhi Sri Venkata Amarendra Vs JCIT (Andhra Pradesh High Court) – [2024] 167 taxmann.com 352. Cited by the assessee. The decision was among the authorities advanced in support of the penalty challenge.
• Union of India Vs Rajeev Bansal (Supreme Court) – [2024] 167 taxmann.com 70 (SC). Discussed through the quoted Sireesha Pochareddy decision. Considered concerning statutory extensions under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) framework.
• PCIT Vs Thapar Homes Limited / Thapar Home Limited (Delhi High Court) – CM APPL. 64814/2023; 2023:DHC:7808:DB. Cited by the assessee. The order records two variations of the case name in the list of authorities concerning penalty limitation.
• PCIT Vs K. Umesh Shetty (Karnataka High Court) – Discussed through the quoted MSN Laboratories decision. The reference made by the Assessing Officer to the Additional Commissioner was treated as the triggering point for commencement of penalty proceedings. A delayed subsequent show-cause notice could not postpone limitation.
• PCIT Vs Rishikesh Buildcon (P.) Ltd. (Delhi High Court) – Discussed through MSN Laboratories. The date when penalty proceedings were initiated by the Assessing Officer was treated as relevant for computing limitation under Section 275(1)(c).
• PCIT Vs Mahesh Wood Products Pvt. Ltd. (Delhi High Court) – Discussed through the quoted Sireesha Pochareddy decision. The decision was followed for determining the commencement of limitation from action taken by the Assessing Officer for initiating penalty proceedings.
• PCIT Vs JKD Capital and Finlease Ltd. (Delhi High Court) – (2015) 378 ITR 614 (Delhi). Expressly relied upon. The Tribunal followed the principle that limitation for transaction-related penalty proceedings is governed by Section 275(1)(c), and delay in issuing a notice by the competent authority cannot extend the prescribed period where proceedings have already been initiated.
• CIT Vs Jai Laxmi Rice Mills Ambala City (Supreme Court) – Civil Appeal No. 1457/2008; (2015) 379 ITR 521 (SC). Cited by the assessee. The decision concerns the importance of the Assessing Officer’s recorded satisfaction for valid penalty proceedings.
• D.M. Manasvi Vs Commissioner of Income Tax (Supreme Court) – (1973) 3 SCC 207. Quoted within the K. Umesh Shetty judgment. The Supreme Court discussed the Assessing Officer’s role in initiating penalty proceedings before referring the case to the authority competent to impose the penalty.
• CIT Vs Worldwide Township Projects Limited (Delhi High Court) – Discussed in the quoted JKD Capital decision. The court explained that penalties for prescribed banking-transaction violations are independent of quantum assessment proceedings for purposes of determining the applicable limitation provision.
• CIT Vs Hissaria Bros. (Rajasthan High Court) – (2007) 291 ITR 244 (Raj.). Quoted within JKD Capital. The decision distinguished independent penalty proceedings under Sections 271D and 271E from assessment proceedings, supporting application of Section 275(1)(c).
• CIT Vs Tam Tam Pedda Guruva Reddy – Considered and distinguished in the quoted K. Umesh Shetty judgment. The decision was treated as fact-specific and did not support the Revenue’s contention regarding delayed initiation of penalty proceedings.
• Grihalakshmi Vision Vs Additional Commissioner of Income Tax (Kerala High Court) – Considered and distinguished in the quoted K. Umesh Shetty judgment. The decision favoured commencement from notice issued by the competent penalty authority. The Karnataka High Court distinguished it on the absence of an earlier reference by the Assessing Officer.
• DCIT Vs Shri Subramaniam Thanu (ITAT Chennai) – Followed within the quoted Sireesha Pochareddy decision. The decision supported computing penalty limitation by reference to the Assessing Officer’s action recommending initiation of penalty proceedings.

FULL TEXT OF THE ORDER OF ITAT GUWAHATI

These two Appeals are filed by the Assessee and the Revenue against the order of the Commissioner of Income Tax (‘Ld. CIT(A)’ for short) dated 16.09.2025, passed u/s 250 of the Income Tax Act, 1961 (“the Act”, for short) for the Assessment Year 2021-22 & 2021 respectively, wherein the Ld. CIT(A) has partly allowed the Appeal of the Assessee challenging the Order of penalty imposed u/s 271DA of the Act.

2. Brief facts of the case are that, a survey operation u/s 133A of the Act was conducted in the case of M/s Navsheen Associates, wherein Assessee is the proprietor. During the survey operation, certain incriminating materials were found and impounded. Subsequently, an Assessment Order came to be passed u/s 147 r.w.s. 143(3) of the Act on 28.03.2024. During the assessment proceedings, it is found that Assessee has received a sum of Rs.5,65,53,927/- from various parties and made the commission payment of Rs.18,26,073/- which was recorded in the ledger book of the Assessee. Though the Assessee has denied those transactions, however not able to explain the transactions recorded in the ledger book. The Assessee in order to ‘save himself from protracted litigation’ and to ‘buy peace of mind’, surrendered an amount of Rs.5,65,53,927/- as his additional business income for the year under consideration. Accordingly, the Assessing Officer made an addition of Rs.5,65,53,927/- as additional income of the Assessee. The Assessing Officer while passing the Assessment order dated 28.03.2024, recorded the satisfaction that Assessee was in receipt of cash of Rs.5,65,53,927/- which is in contravention of Section of 269ST of the Act, hence, penalty by the Competent Authority. Subsequent to passing of the Assessment Order on 28.03.2024 and recording the satisfaction thereon for initiation of penalty against the Assessee, an order of penalty came to be passed on 13.12.2024 u/s 271DA of the Act wherein, by Assessing Officer observed that Assessee has received cash of Rs.5,65,53,927/- in contravention of provisions of Section 269ST of the Act on 13.12.2024. Accordingly, imposed the penalty of Rs.5,68,04,927/- u/s 271DA of the Act. Aggrieved by the order of penalty dated 13.12.2024, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 16.09.2025, restricted the penalty to Rs.1,66,26,527/- by deleting the penalty of Rs.4,01,78,400/-. Aggrieved by the order dated 16.09.2025, Assessee preferred the Appeal in ITA No.374/GTY/2025 and the Revenue preferred the Appeal in ITA No.379/GTY/2025.

3. The revised Grounds of Appeal of the Assessee are reproduced as under:-

“1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the penalty of Rs. 1,66,26,527 under section 271DA of the Act, which is bad in law and liable to be quashed.

2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the penalty under section 271DA of the Act without appreciating that the penalty order dated 13.12.2024 is barred by limitation under section 275(1)(c) of the Act, as the date of initiation of penalty proceedings is to be reckoned from the date on which the Assessing Officer recorded satisfaction in the assessment order dated 28.03.2024 and not from the subsequent date of issuance of notice by the Joint Commissioner and therefore the impugned penalty order is liable to be quashed.

3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the penalty without appreciating that the satisfaction recorded by the Assessing Officer was vague, mechanical and not in accordance with law, thereby vitiating the entire penalty proceedings.

4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the penalty under section 271DA of the Act without establishing that the appellant had actually received any Sum 1n contravention of section 269ST.

5. On the facts and in the circumstances of the case and in law, the learned 7. CIT(A) erred 1n confirming the penalty based On unverified and uncorroborated loose sheets, which was not part of the appellant’s books, unverified, unreliable, unsigned and not supported by any confirmation or evidence from parties named therein.

6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the penalty without any conclusive evidence of cash receipt, without establishing nexus with actual transactions and without rejecting the books of account.

7. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the penalty by wrongly invoking the presumption under section 292C, without proper basis and without granting adequate opportunity.

8. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the penalty without appreciating that the appellant had reasonable cause within the meaning of section 273B, and therefore no penalty was leviable.

9. The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing.”

4. The Grounds of Appeal of the Revenue are reproduced as under:-

“1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty imposed u/s 271DA without appreciating the fact that the assessee had received cash on different dates after making corresponding RTGS payments to the same party as reflected in the impounded document “NA-02” in contravention of the provisions of section 269ST of the Act.

2. Whether on the facts and in the circumstances of the case and the law, the Ld. CIT(A) erred in holding that the RTGS transactions recorded in the impounded book “NA-02,” did not, in certain instances, exactly reflected in those bank statements without considering that the RTGS amounts recorded in the impounded document do, in fact, match the corresponding entries either in aggregate or, in many cases, individually in the bank statements of the assessee.

3. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty of Rs.4,01,78,400/- despite the fact that the RTGS transactions recorded on various pages of the impounded document NA-02 are reflected in the assessee’s bank statements and the assessee even recorded RTGS transactions of three parties totalling Rs.1,66,26,527/- in his books, implying that all RTGS and cash receipt transactions in the impounded documents pertain to the assessee and that the assessee received cash in contravention of Section 269ST of the Income Tax Act, 1961.

4. Whether, on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the penalty of Rs.4,01,78,400/- despite the factual finding that the RTGS transactions recorded in the impounded document ‘NA-02 are duly reflected in the assessee’s bank account statement, leaving no doubt that the impounded NA-02’ unquestionably pertains to the assessee.

5. The appellant craves leave to add, alter, modify or amend any of the grounds of appeal during the course of proceedings before the Hon’ble ITAT.”

5. The Learned Counsel for the Assessee arguing on Revised Ground No.2 contended that the order of penalty dated 13.12.2024 is barred by limitation as per Section 275 (1)(c) of the Act. Further submitted that it is well- settled law that the date of initiation of the penalty proceedings has to be reckoned from the date on which the Assessing Office recorded the satisfaction in the Assessment Order. Thus submitted that Assessing Officer has recorded the satisfaction for initiation of penalty on 28.03.2024 and passed the penalty order on 13.12.2024 which is beyond the period of limitation prescribed u/s 275(1)(c) of the Act. Thus, sought for deleting the penalty by allowing revised Ground No.2 of the Assessee. The Learned Counsel for the Assessee has relied on following judicial precedents:-

1) CIT Vs. Jai Laxmi Rice Mills Ambala City (Civil Appeal No(s).1457/2008)

2) Sunil Kumar Agarwal Vs. ACIT [2025] 172 taxmann.com 54 (Rajasthan High Court)

3) Andhra Pradesh High Court in Grandhi Sri Venkata Amarendra Vs. JCIT [2024] 167 taxmann.com 352 (Andhra Pradesh)

4) PCIT Vs. Thapar Homes Limited [CM APPL. 64814/2023]

5) Pr. CIT Vs. Thapar Home Limited. 2023: DHC:7808:DB.

6. Per contra, the Ld. DR submitted that the contention of the Assessee that the passing of the penalty order is barred by limitation has been raised before the Ld. CIT( A) as well and the Ld. CIT(A) has elaborately dealt the said issue and decided against the Assessee in Para 6.5 to 6.22. Thus, relying on the said findings of the Ld. CIT(A), the Ld. DR submitted that the said findings and the conclusion of the Ld. CIT(A) require no interference at the hands of the Tribunal. Therefore, sought for dismissal of revised Ground No.2 of the Assessee.

7. We have heard the parties and perused the material available on record. In the present case, the Assessment Order came to be passed on 28.03.2024, wherein the satisfaction has been recorded by the Assessing Officer for initiating the penalty u/s 271DA observing that the ‘ receipts of cash of the Assessee is in contravention of provisions of Section 269ST of the Act’. Based on the said satisfaction recorded in the Assessment order, penalty proceedings have been initiated and an order of penalty came to be passed on 13.12.2004. It is the contention of the Ld. AR that the order of penalty passed u/s 271DA of the Act dated 13.12.2024 is barred by limitation prescribed u/s 275(1)(c) of the Act. Further contended that as per Section 275(1)(c) of the Act, the penalty shall not be issued after the expiry of financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.

8. For the sake of ready reference, provisions of section 275 is reproduced as under:-

“275. No order imposing a penalty under this Chapter shall be passed—

in a case where the relevant assessment or other order is the subject – matter of an appeal to the 5[***] Commissioner (Appeals) under section 2466[or section 246A] or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed7, or six months from the end of the month in which the order of the 8[***] Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the 9[Principal Chief Commissioner or] Chief Commissioner or 9 [Principal Commissioner or] Commissioner, whichever period expires later:

[Provided that in a case where the relevant assessment or other order is the subject- matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the 11[Principal Chief Commissioner or] Chief Commissioner or 11 [Principal Commissioner or] Commissioner, whichever is later;]

(b) in a case where the relevant assessment or other order is the subject- matterof revision under section 26311a[or section 264], after the expiry of six months from the end of the month in which such order of revision is passed;

(c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.]”

9. In the present case, the satisfaction for the initiation of penalty has been recorded on 28.03.2024 and at the end of the month of initiating the penalty proceedings/ recording the satisfaction would be 31.03.2024, the six months period would end on 30.09.2024 as per section 271(1)(c) of the Act, however, the order of penalty has been passed on 13.12.2024, therefore, the same is barred by limitation.

10. The Hon’ble Delhi High Court in the case of Principal Commissioner of Income Tax-5 Vs. JKD Capital and Finlease Limited[2015] 378 ITR 614 Delhi] held that statutory limitation period for imposing penalty must falls into the timeline prescribed u/s 275(1)(c) of the Act and confirmed the order of the Tribunal in deleting the penalty in following manners:-

“8. We are unable to agree with the above submission of learned Standingcounsel for the Revenue. Section 275 (1) (c) reads as under:

275. (1) No order imposing a penalty under this Chapter shall be passed

(a)….

(b)…..

(c) in any other case, after the expiry of the financial year in which theproceedings, in the course of which action for the imposition ofpenalty has been initiated, are completed, or six months from the endof the month in which action for imposition of penalty is initiated,whichever period expires later.

9. In terms of the above provision, there are two distinct periods of limitationfor passing a penalty order, and one that expires later will apply. One is theend of the financial year in which the quantum proceedings are completed inthe first instance. In the present case, at the level of the AO, the quantumproceedings was completed on 28th December 2007. Going by this date, thepenalty order could not have been passed later than 31st March 2008. Thesecond possible date is expiry of six months from the month in which thepenalty proceedings were initiated. With the AO having initiated the penaltyproceedings in December 2007, the last date by which the penalty ordercould have been passed is 30th June 2008. The later of the two dates is 30th June 2008.

10. Considering that the subject matter of the quantum proceedings was thenon- compliance with Section 269 T of the Act, there was no need for theappeal against the said order in the quantum proceedings to be disposed ofbefore the penalty proceedings could be initiated. In other words, theinitiation of penalty proceedings did not hinge on the completion of theappellate quantum proceedings. This position has been made explicit in thedecision in CIT v. Worldwide Township Projects Limited (supra) in whichthe Court concurred with the view expressed in Commissioner of Income- Tax v. Hissaria Bros. (2007) 291 ITR 244(Raj) in the following terms:

“The expression other relevant thing used in s. 275(1)(a) and cl. (b) ofSub- s. (1) of S. 275 is significantly missing from cl. (c) of s. 275(1) tomake out this distinction very clear. We are, therefore, of the opinion that since penalty proceedings for default in not having transactions through the bank as required under ss. 269SS and 269T are not related to the assessment proceeding but are independent of it, therefore, the completion of appellate proceedings arising out of the assessment proceedings or the other proceedings during which the penalty proceedings under ss. 271D and 271E may have been initiated has no relevance for sustaining or not sustaining the penalty proceedings and, therefore, cl. (a) of sub- s. (1) of s. 275 cannot be attracted to such proceedings. If that were not so cl. (c) of s. 275(1) would be redundant because otherwiseas a matter of fact every penalty proceeding is usually initiated whenduring some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default e.g. penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter not making payment through cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if cl. (a) was to be invoked, no necessity of cl. (c) would arise.” (emphasis supplied).

11. In fact, when the AO recommended the initiation of penalty proceedingsthe AO appeared to be conscious of the fact that he did not have the powerto issue notice as far as the penalty proceedings under Section 271-E was concerned. He, therefore, referred the matter concerning penalty proceedingsunder Section 271- E to the Additional CIT. For some reason, the Additional CIT did not issue a show cause notice to the Assessee under Section 271-E(1) till 20th March 2012. There is no explanation whatsoever for the delay of nearly five years after the assessment order in the Additional CIT issuing notice under Section 271-E of the Act. The Additional CIT ought to have been conscious of the limitation under Section 275 (1) (c), i.e., that no order of penalty could have been passed under Section 271-E after the expiry of the financial year in which the quantum proceedings were completed or beyond six months after the month in which they were initiated, whichever was later. In a case where the proceedings stood initiated with the order passed by the AO, by delaying the issuance of the notice under Section 271- E beyond 30th June 2008, the Additional CIT defeated the very object of Section 275 (1) (c).

12. In that view of the matter, the order of the CIT (A) which has been affirmed by the impugned order of the ITAT does not suffer from any legal infirmity.”

11. In an identical circumstances, the Co- ordinate Bench of Hyderabad Bench in the case of MSN Laboratories Private Limited Vs. Addl. CIT in ITA No.2164/Hyd/2025 vide Order dated 25.02.2026, considered the various Judgements of the Hon’ble High Court as Supreme Court an deleted the penalty as barred by limitation in following manners:-

“15. We have heard both the parties, perused the material available on record and had gone through the orders of the authorities below. We have also carefully considered the relevant legal ground taken up by the assessee challenging the validity of the order passed by the A.O under section 271DA of the Act in light of provisions of section 275(1)(c) of the Act. We have also carefully considered the relevant circulars issued by the CBDT and also the case laws referred to by the learned Counsel for the assessee and the Ld. Sr. AR present for the Revenue. The assessee had taken a legal ground challenging the validity of penalty order passed by the A.O on limitation for the A.Ys 2018-19 and 201920. The assessee claims that the penalty order is invalid in law as the same is time barred. Admittedly, in the present case, the penalty proceedings were triggered from the A.O with a reference to the Jt. CIT for taking necessary action for imposition of penalty under section 271DA of the Act. The A.O had sent information regarding the violation of provisions of section 269ST of the Act for the A.Ys 2018-19 and 2019-20 on 25/05/2023. Based on the reference received from the A.O, the Addl. CIT, Central Range-2 issued a show cause notice under section 274 r.w.s. 271DA of the Act, on 7/3/2024 and passed the order under section 271DA of the Act on 27/09/2024. Therefore, it is necessary for us to examine, whether the penalty order passed by the A.O under section 271DA of the Act dated 27/09/2024 is within the limitation provided under section 275(1)(c) of the Act or is barred by limitation.

16. The provisions of section 275(1)(c) of the Act, deals with time limit for passing the penalty orders. As per the provisions of section 275(1)(c) of the Act, no penalty order shall be passed after the expiry of (a) financial year in which the proceedings, in the course of which action for imposition of the penalty has been initiated are completed or (b) Six months from the end of the month in which the action for imposition of penalty is initiated, whichever is later. In the present case, the assessment under section 153A of the Act was concluded on 31/03/2023 and the action for imposition of penalty under section 271DA of the Act has not been initiated in the course of assessment proceedings. Therefore, clause (a) of section 275(1)(c) of the Act is not applicable. Further, clause (b) of section 275(1)(c) of the Act provides Six months from the end of the month in which the action for initiation of penalty is initiated and in the present case the A.O has sent a proposal or reference to the Jt.CIT for taking necessary action on 25/05/2023. As held by the Hon’ble Karnataka High Court, in the case of Pr. CIT vs. K. Umesh Shetty (Supra), the date of a reference made by the AO to the to be treated as triggering point for initiation of penalty proceedings under section 271DA of the Act. A similar view has been taken by the Hon’ble Delhi High Court in the case of Pr. CIT vs. Rishikesh Buildcon (P) Ltd (Supra) where it has been held that pursuant to the completion of the quantum proceedings by the A.O, further penalty proceedings against the assessee under section 271DA for violating the provisions of section 269ST of the Act was also initiated in Dec. 2008, 6 months from the end of the month in which the penalty proceeding was initiated should be considered. The sum and substance of ratios laid down by various High Courts for determining the limitation for passing the penalty orders as referred to under section 275(1)(c) of the Act, is the date on which the A.O sent proposal to the Addl. CIT/ Jt. CIT should be considered but not from the date on which the Jt. CIT issued show cause notice us 274 r.w.s. 271DA of the Act. In the present case, the A.O sent reference to the Jt. CIT on 25/05/2023 for taking action for imposition of penalty under section 271DA of the Act. Therefore, in our considered view, the starting point for initiation of the action for imposition of penalty within the meaning of section 275(1)(c) of the Act is from 25/05/2025 and for the purpose of determining the limitation period for passing the penalty order, Six months from the end of May 2023 should be considered, but not from 7/3/2024, i.e. date on which the authority issued show cause notice under section 274 r.w.s. 271DA of the Act. Since the A.O sent reference to Jt. CIT on 25/05/2023, in our considered view, Six months period should be considered from the end of May 2023 i.e. 31/05/2023 and if, we consider the starting point from 1/06/2023, then the A.O ought to have passed the order under section 271DA of the Act on 30/11/2023. In the present case, since the A.O has passed the order under section 271DA of the Act on 27/09/2024, in our considered view, it is barred by limitation and the same is non-est in the eyes of law.

17. Coming back to the argument of the Ld. Sr. AR for the Revenue in light of CBDT Circular No.9 of 2016 dated 26/04/2016 and also the decision of the Hon’ble Kerala High Court in the case of Grihalakshmi Vision vs. Assistant Commissioner of Income Tax (Supra) that for commencement of limitation for penalty proceedings under section 271DA of the Act, it is the date on which the JCIT issued a show cause notice under section 274 r.w.s. 271DA of the Act is to be considered, but not on the date on which the A.O sent a proposal to the JCIT for taking action for imposition of penalty under section 271DA of the Act. In our considered view, although the Hon’ble Kerala High Court in the above case has held that the competent authority to levy penalty being a Jt. Commissioner and for the purpose of limitation, the date on which the Jt. CIT issued show cause notice should be considered. However, the fact remains that the above decision of the Hon’ble Kerala High Court and the circular issued by the CBDT had been considered by the Hon’ble Karnataka High Court in the case of Pr. CIT vs. K. Umesh the Hon’ble Kerala High Court on the ground that a perusal of the said judgement does not show that there was any reference from the AO to “competent authority” unlike the case in hand. Since the decision of Hon’ble Karnataka High Court is on later date and also it had taken into account the decision of Hon’ble Kerala High Court and distinguished the above judgment, in our considered view, the arguments of ld. Sr. AR in light of Hon’ble Kerala High Court and the CBDT Circular No.9 of 2016 does not hold good and cannot be accepted. Further, other case laws relied upon by the ld. Ar. AR for the revenue is also not considered, because facts of the above cases are entirely different from the facts of the assessee case.

18. The learned Counsel for the assessee had relied upon the decision of the Hon’ble Karnataka High Court in the case of Pr. CIT vs. K. Umesh Shetty (Supra). The Hon’ble Karnataka High Court had considered an identical issue of levy of penalty under section 271D of the Act, in light of limitation provided under section 275 (1)(c) of the Act and after considering the relevant facts has held as under:

“6.7 In the facts of this case, these twin purposes can be achieved by treating the reference by the ITO to the Additional Commissioner as the triggering point or initiation of penalty proceedings. The ITO vide letter dated 16.11.2016 had admittedly made the reference. The Additional Commissioner of Income Tax issued the Show Cause Notice only on 10.11.2017 (nearly a year later) proposing the levy of penalty u/s 271D of the Act. The Penalty Order was made on 22.02.2018. If the reckoning point is 16.11.2016, it is clear that the proceedings were completed beyond the period of limitation, as rightly contended by the learned counsel appearing for the Assessee. Even otherwise, the concept of delay & latches would crop in; no explanation whatsoever has been offered by the Revenue for the laxity shown in belatedly issuing the show cause notice/proposition notice which they claim, amounted to initiation of penalty proceedings. This view has animated the reasoning of the impugned order of the Tribunal, may be a bit inarticulately.

6.8. The reliance of Panel Counsel for the Revenue on the Coordinate Bench decision in COMMISSIONER OF INCOME TAX vs. TAM TAM PEDDA GURUVA REDDY does not come to his aid since the same has been rendered largely fact-specific. The other decision namely GRIHALAKSHMI VISION vs. ADDITIONAL COMMISSIONER OF INCOME TAX-7 at para 10 observed as under:

“Question to be considered is whether proceedings for levy of penalty, are initiated with the passing of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the notice issued by the Joint Commissioner. From statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner. Therefore, only the Joint Commissioner can initiate proceedings for levy of penalty…”

These observations arguably support the view of Revenue, is true. However, we respectfully disagree with the said view. That apart, a perusal of the said judgment does not show that there was any reference made by the ITO to the competent authority, unlike the case at hand. Further the following observations in para 10 in D M Manasvi vs Commissioner of Income Tax (1973) 3 SCC 207 would cast some doubt on the correctness of Grihalakshmi supra.

“We are also not impressed by the argument advanced on behalf of the appellant that the proceedings for the imposition of penalty were initiated not by the Income Tax Officer but by the Inspecting Assistant Commissioner when the matter had been referred to him under section 274(2) of the Act. The proceedings for the imposition of penalty in terms of sub-section (1) of section 271 have necessarily to be initiated either by the Income Tax Officer or by the Appellate Assistant Commissioner. The fact that the Income Tax Officer has to refer the case to the Inspecting Assistant Commissioner if the minimum imposable penalty exceeds the sum of rupees one thousand in a case falling under clause (c) of sub-section (1) of section 271 would not show that the proceedings in such a case cannot be initiated by the Income Tax Officer. The Income Tax Officer in such an event can refer the case to the Inspecting Assistant Commissioner after initiating the proceedings. It would, indeed, be the satisfaction of the Income Tax Officer in the course of the assessment proceedings regarding the concealment of income which would constitute he basis and foundation of the proceedings for levy of penalty”.

6.9 The reliance of the Panel Counsel on CBDT Circular No.9/DV/2016 dated 26.04.2016 has been issued in terms of GRIHALAKSHMI supra. Para 4 of the Circular states:

The above judgment reflects the “Departmental View”. However, para 5 in a way suggests to follow the decision of a High Court, within whose territorial jurisdictional limits the penalty proceedings are taken up. The same reads as under:

“Where any High Court decides this issue contrary to the “Departmental View”, the “Departmental View” thereon shall not be operative in the area falling in the jurisdiction of the relevant High Court. However, the CCIT concerned should immediately bring the judgment to the notice of the Central Technical Committee. The CTC shall examine the said judgment on priority to decide as to whether filing of SLP to the Supreme Court will be adequate response for the time being or some legislative amendment is called for.” Therefore, much reliance cannot be placed on this Circular.

In the above circumstances, the questions of law framed by us have to be answered in favour of the respondent assessee and as a consequence, appeal is liable to be and accordingly dismissed, costs having been made easy”.

19. The assessee had also relied upon the decision of the Hon’ble Delhi High Court in the case of Pr. CIT vs. Rishikesh Buildcon (P) Ltd (Supra). The Hon’ble Delhi High Court, in light of penalty levied u/s 271D of the Act and the limitation provided u/s 275(1)(c) of the Act, held as under:

“12. The predecessor bench of this Court in the aforesaid judgments has held that where the AO has initiated the penalty proceedings in his/her assessment order, the said date is to be taken as the relevant date as far as the section 275(1)(c) of the Act is concerned. In these cases, the quantum proceedings were completed by the AO on 17th/18th December 2008, and the AO initiated the penalty proceedings in December, 2008, thus, the last date by which the penalty order could have been passed is 30th June, 2009. The six months from the end of the month from which action of imposition of penalty was initiated would expire on 30th June, 2009. However, in this case, admittedly, the penalty order(s) were passed on 29th September, 2009, and therefore, the ITAT rightly concluded that the order(s) were barred by limitation.

13. Consequently, we answer the question of law against the Revenue and in favour of the Assessee by holding that, in the facts and circumstances of the present appeals, the ITAT was correct in law in deleting the penalty imposed by the Additional Commissioner of Income Tax, under section 271D of the Act, on the ground that the penalty order(s) dated 29th September, 2009, was passed beyond the time period prescribed by Section 275(1)(c) of the Act, the same having been passed after the lapse of six months from the end of the month in which the penalty proceedings were initiated by the AO.”

20. A similar issue has been considered by the Coordinate Bench of ITAT, Hyderabad, in case of M/s. Sireesha Pochareddy in ITA No.1270/Hyd/2024, dated 12/093/2025. The ITAT, Hyderabad bench had considered an identical issue of limitation for passing penalty order u/s 271D of the Act, and after considering provisions of section 275(1)(c) of the Act, and by following the decision of Hon’ble Delhi High Court in the case of PCIT vs. Mahesh Wood products Pvt Ltd(Supra) had held as under.

“6. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. As per the provisions of sec.275(1)(c) of the Act, no order imposing penalty under this Chapter-XXI shall be passed in any other case after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated or completed or six months from the end of the month in which action for imposition of penalty is initiated whichever period expires later. In the present case, although, the date on which, the Assessing Officer has referred to range head is not clear, but, undoubtedly, if we go by the first show cause notice issued by the Assessing Officer, proposing penalty u/sec.271D of the Act, i.e., on 30.03.2021, the order imposing penalty u/sec.271D of the Act ought to have been passed on or before 30.09.2021, whereas, in the present case, the Assessing Officer passed the order imposing penalty u/sec.271D of the Act on 25.01.2022. Therefore, in our considered view, the order passed by the Assessing Officer is beyond the time limit provided under the provisions of sec.275(1)(c) of the Income Tax Act, 1961 and thus, it is invalid, void abinitio, barred by limitation and liable to be quashed. This legal principle is supported by the Judgment of Hon’ble Delhi High Court in the case of PCIT vs., Mahesh Wood Products Pvt. Ltd., (supra) and decision of ITAT, Chennai in the case of DCIT vs. Shri Subramaniam Thanu (supra), wherein it has been clearly held that in terms of sec.275(1)(c) of the Act, it would be the date on which the Assessing Officer wrote a letter to the PCIT recommending to issue show cause notice and if the Competent Authority decide to issue a show cause notice, the limitation would begin to run from the date of letter of the Assessing Officer recommending ‘initiation’ of the penalty proceedings. In the instant case, if we go by the said ‘initiation’ date i.e., 30.03.2021, any order passed beyond the six months from the end of the relevant month in which show cause notice issued u/sec.271D of the Act i.e., dated 25.01.2022 in the instant case, is barred by limitation.

7. Coming back to the arguments of the learned Sr. AR Dr. Sachin Kumar, present for the Revenue, in light of CBDT’s Notification No.113/2021, dated 17.09.2021. The CBDT in exercise of the powers conferred by sub-sec.1 of sec.3 of Taxation and Other Laws Amendment Act, 2021 [in short “TOLA”], has extended the time limit up-to 31.03.2022 for the completion of any action referred to in clause(a) of sub-sec.(1) of sec.3 of the said Act relates to passing of any order for imposing of penalty under Chapter-XXI of the Income Tax Act, 1961 and, therefore, the order passed by the Assessing Officer dated 25.01.2022 is well within the extended period of limitation by virtue of the CBDT’s Notification dated 17.09.2021 (supra) and that, the learned CIT(A) without appreciating the facts of the case, simply quashed the assessment order passed by the Assessing Officer. We find that the Hon’ble Supreme Court has examined the issue of Notification issued by the CBDT in exercise of the powers conferred u/sec.3(1) of TOLA in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) and clearly held that in case the completion of any action relates to passing of any order falls between 20.03.2020 and 31.03.2021, then, the said “due dates” are extended by virtue of sec.3(1) of TOLA “up-to 30.06.2021”. In the present case, going by the show cause notice issued by the Assessing Officer, imposing penalty u/sec.271D of the Act, was dated 30.03.2021. Therefore, in our considered view, the completion of action relates to passing of any order for imposing of penalty under Chapter-XXI of the Act falls on or before 30.09.2021 and in our considered view, the said “due date” is beyond the period specified under the provisions of TOLA i.e., between 20.03.2020 and 31.03.2021 and, therefore, the Notification issued by the CBDT dated 17.09.2021 does not extend the due date for passing the order imposing penalty u/sec.271D of the Act in the present case up-to 30.09.2021. Therefore, we are of the considered view that the arguments advanced by the learned Sr. AR for the Revenue in light of CBDT’s Notification dated 17.09.2021 (supra), does not hold good and, therefore, rejected.

8. In this view of the matter, considering the facts of the case and also by following the Judgment of Hon’ble Delhi High Court in the case of PCIT vs., Mahesh Wood Products Pvt. Ltd., (supra) and decision of ITAT, Chennai in the case of DCIT vs. Shri Subramaniam Thanu (supra), we are of the considered view that there is no error in the reasons given by the learned CIT(A) to quash the penalty order passed by the Assessing Officer u/sec.271D of the Act, dated 25.01.2022. We, accordingly, uphold the order of the learned CIT(A) and dismiss the appeal filed by the Revenue. Consequently, the cross objections raised by the assessee are allowed.”

21. In this view of the matter and considering the facts and circumstances of the case and also by following the ratios of case laws discussed herein above, we are of the considered view that the order passed by the Ld. AO u/s 271DA of the Act dated 27/09/2024 is clearly barred by limitation in terms of sec 275(1)(c) of the Act. Therefore, we quash the order passed by the Ld. AO, u/s 271DA of the Act dated 27/09/2024 for AY. 2018-19.”

12. In the present case, as stated earlier the satisfaction has been recorded in the Assessment Order on 28.03.2024 and end of the month of recording satisfaction/ initiating the penalty proceedings would be 31.03.2024 and the six months period ends on 30.09.2024 as per Section 275(1)(c) of the Act, therefore, the impugned order of penalty dated 13.12.2025 is beyond the period prescribed u/s 271(1)(c) of the Act. Accordingly, we find merits in the revised Ground No.2 of the Assessee and the order of penalty dated 13.12.2024 which has been confirmed by the Ld. CIT(A) is liable to be quashed on the said count only. Accordingly, Ground No.2 of the Assessee is allowed.

13. The Learned Counsel for the Assessee arguing on Ground No.4, 5 and 6 submitted that at no point of time, the Assessing Officer has established the fact of actual receipts of cash by the Assessee. T he search materials i.e., NA-02 is a rough and mixed document which does not establish the actual receipts of cash. Further submitted that the Ld. CIT(A) has deleted an amount of Rs.4,01,78,400/- and confirmed Rs.1,66,26,527/-, b ased on the very same document by selectively accepting part of the rough documents treating the same as conclusive proof by selectively discarded remaining portion of very same document. Learned Counsel further submitted that all the three parties i.e., Calcutta Tools Centre, Sangeeta Hardware Store and Ashok Hardware & Steel Mart are Assessee’s regular suppliers duly registered in a GST. Further contended that none of the above parties have confirmed the alleged cash receipts, the Assessing Officer has not made any independent enquiry, there was no cash trail and also no corresponding withdrawals. The Assessing Officer has not brought any fact regarding utilization of such cash and no undisclosed asset found during the survey. Further submitted that the Assessing Officer has not brought the fact as to who paid the cash to whom, on what date and not even mentioned the particular of the transactions. The Assessing Officer has also not connected with alleged cash receipts imposing the penalty by relying on the actual receipt. Further contended that the Assessee had offered Rs.5,65,53,927/- as additional business income during the assessment proceedings only with an intention to buy peace and to avoid prolonged litigation wherein, Assessee has not admitted the correctness, ownership or actual receipt of the alleged cash reflected in the loose document. The Assessing Officer has not rejected the books of the Assessee not brought independent evidence establishing actual cash movement. Further submitted that the penalty proceedings- initiated u/s 270A was ultimately not sustained in respect of the said surrendered income. The Learned Counsel has relied on the judgment of the Co- ordinate Bench of the Tribunal, Hyderabad in the case of MSN Laboratories Private Limited Vs. Addl. CIT in ITA No.2164/Hyd/2025 and the order of the Co- ordinate Bench of the Tribunal, Delhi in the case of Sanjay Kalsi Vs. DCIT, Central Circle- 04, Delhi in ITA No.7152/Del/2025 and other judicial precedents and sought for quashing the order of penalty which has been confirmed by the Ld. CIT(A).

14. Per contra, the Ld. DR submitted that the penalty u/s 271DA of the Act has been rightly imposed on the Assessee as the Assessee has received the sum in the Act. The Ld. DR relying on the findings and conclusion of the Ld. CIT(A), sought for dismissal of the Appeal of the Assessee.

15. We have heard the parties and perused the material available on record. During the course of survey operation u/s 133A of the Act, certain incriminating materials were found and impounded i.e., NA-02. As per the said material, the Assessing Officer was of the opinion that Assessee received an amount of Rs.5,65,53,927/- from various parties. Though the Assessee has specifically denied those transactions, as those transactions were recorded in the ledger book of the Assessee and Assessee could not explain the transactions recorded in the ledger book, in order ‘to save himself from protracted litigation’ and to ‘buy peace of mind’ surrendered an amount of Rs.5,65,53,927/- as his additional business income during the year under consideration. Accordingly, the Assessing Officer made the addition of the said amount and the penalty order came to be passed u/s 271DA of the Act for violating the provisions of Section 269ST of the Act. The said addition has been made by the Assessing Officer based on the incriminating materials found during the search i.e., NA-02. There was no corroborative material brought on record either during the assessment proceedings or during the penalty proceedings. The said seized documents cannot itself be treated as complete and self- receipts by the Assessee has not been established by the Department. The Ld. CIT(A) in the first Appeal, out of Rs.5,68,04,927/- deleted the addition of Rs.4,01,78,400/- and sustained Rs.1,66,26,527/- aggregating to three parties, wherein the Ld. CIT(A) has relied on the very same seized materials. The Ld. CIT(A) selectively accepted certain portion of the documents and selectively discarded the remaining portion of the very same document. The three parties involved in the transactions i.e., Calcutta Tools Centre, Sangeeta Hardware Store and Ashok Hardware & Steel Mart are regular suppliers of the Assessee registered with GST and the Assessee has claimed to be purchasing construction materials from them and the subject purchases were duly reflected in the GST record and the aggregate purchase from those three parties are approximately 2.03 crores. The Assessing Officer has not made any investigation and no statements from those three parties have been obtained and no cash receipts have been identified and no corresponding withdrawals were found. Further no utilization of such alleged cash and no undisclose d asset found during the survey. Therefore, mere RTGS entry mentioned in the seized document cannot by itself be construed into proof of cash receipts by the Assessee.

16. The Assessing Officer has not given any finding or recorded mentioned any particulars of the transactions. The addition has been made solely on the basis of loose sheet without bringing any corroborative material on record and without recording corroborative statement from any of the three parties. As per the Assessee, he offered Rs.5,65,53,927/- as additional business income with the intention to buy peace and to avoid prolonged litigation out of which the Ld. CIT(A) has sustained only Rs.1,66,26,527/-. It is well- settled law that an amount offered to tax cannot by itself, buy peace establish the independent fact of actual receipts of cash for invocation of Section 269ST of the Act and to levying penalty u/s 271 DA of the Act. In the present case, the books of account of the Assessee was not rejected, no independent evidence establishing actual cash movement brought on record.

17. Further, the Co- ordinate Bench of the Tribunal of the Delhi Bench in the case of Sanjay Kalsi Vs. DCIT, Central Circle- 04, Delhi in ITA No.7152/Del/2025, vide Order dated 25.03.2026, deleted the penalty u/s 271DA of the Act observing that surrender of income to buy peace and avoid prolonged litigation does not, buy peace, by itself establish a violation of Section 269ST of the Act, particularly where the corresponding penalty proceedings u/s 270A of the Act were not sustained in following manners:-

“8. We have heard both the parties and perused the material available on record. In this case as discussed above, the assessee paid taxes of Rs. 84,610/- on Rs. 2,35,830/- being determined as undisclosed income as 14% of as GP on the cash sales of Rs. 16,84,500/- recorded in the above excel sheet. However, in this regard, the explanation of the assessee that despite not accepting the contents of the said excel sheet accepted the above income of Rs. 2,35,830/- and paying the due taxes of Rs. 84,610/- on cash sales of Rs. 16,84,500/- was an effort to have peace for himself and to avoid the protracted litigation is also a plausible explanation and it cannot be outrightly rejected in the given facts of the case. Further, as noted above, the penalty proceedings u/s 270A of the Act after considering the explanation of the assessee on similar lines has been dropped by the AO which is relevant to the present proceedings also. Therefore, considering the facts in its entirely, we are of the considered view that the impugned penalty order levying a penalty of Rs. 14,96,500/- u/s 271DA of the Act is not sustainable in this case and the same is deleted. Ground no. 1 and 2 of the appeal is allowed. In view of the fact of ground no. 1 and 2 of the appeal being allowed, the other grounds of appeal nos. 3 and 4 become academic and are left open in this case.”

18. In the present case, t he penalty against the Assessee has been imposed based on the unsigned and unverified loose documents containing mixed entries, partial matching of certain RTGS transactions, however, the Assessing Officer failed to make independent enquiry or bring any material or statement of the parties on record. The mere surrender of income does not itself establish cash receipts that too when the regular book of the Assessee was not rejected no cash trail or corroborative evidence was found. In view of the above circumstances, we find no reason to sustain the order of penalty passed by the Assessing Officer which has been confirmed by Assessee. Accordingly, we delete the order of penalty passed by the Assessing Officer.

19. Since we have allowed the revised Ground No.2 and Ground No. 4, 5 & 6 quashed the order of penalty, other Grounds of Appeal of the Assessee require no adjudication.

20. As we have quashed the impugned order of penalty dated 13.12.2024 while deciding the Appeal of the Assessee, the Appeal filed by the Revenue becomes infructuous.

21. Accordingly, Appeal of the Assessee is allowed and the Appeal of the Revenue is dismissed.

Order pronounced on 09.10.2026.