M/S PUMARTH INFRASTRUCTURE,INDORE V. THE ASST COMMISSIONER IF INCOME TAX CIRCLE 4(1), AAYKAR BHAWAN , INDORE

ITA 757/IND/2024

AI Insights

The case involves M/s. Pumarth Infrastructure Private Limited, which appealed against the penalties imposed by the ACIT under section 271(1)(c) of the Income-tax Act, 1961, for the assessment years 2009-10, 2010-11, and 2011-12. The penalties were based on additions made to the assessee's income due to alleged concealment and suppression of sale proceeds from real estate projects. The ITAT noted that the assessee had initially not presented crucial evidence regarding disclosures made to the Income Tax Settlement Commission, which was later submitted. The ITAT decided to remand the case back to the CIT(A) for a thorough re-examination of the new evidence and to ensure a fair hearing.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839632 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 29-10-2024
• Other Referred Cases: CIT vs. MWP Ltd., Ms. Madhushree Gupta vs. Union of India
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIASHISHPORWAL
• Assessee Lawyers: SHRISUMITNEMA; ..WITHSHRIGAGAN; WAY OF
• Keywords: Unexplained expenditure; Unexplained investment; Income from undisclosed sources; Principle of natural justice; Search and seizure; Initiation of penalty proceedings
• Section: 271(1)(c); 132; 153A; 40A(3)

Judgement Text

"Page 1 of 9 आयकरअपीलीयअिधकरण, इंदौरɊायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI PARESH M. JOSHI, JUDICIAL MEMBER ITA No.766/Ind/2024 (AY 2009-10) ITA No.757/Ind/2024 (AY 2010-11) ITA No.765/Ind/2024 (AY 2011-12) M/s. Pumarth Infrastructure Private Limited, 5/5A, Navratan Bagh, Near Geeta Bhawan Square, Indore बनाम/ Vs. ACIT 4(1) Indore (Assessee/Appellant) (Revenue/Respondent) PAN: AAACM0901H Assessee by Shri Sumit Nema, Sr. Adv. with Shri Gagan Tiwari, Adv. Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 20.01.2026 Date of Pronouncement 27.02.2026 आदेश/ O R D E R Per B.M. Biyani, AM: The captioned three (3) appeals have been filed by same assessee against three (3) separate orders of first-appeals, all dated 30.08.2024 and passed by learned Commissioner of Income-tax (Appeals)-3, Bhopal [“CIT(A)”], which in turn arise out of respective three (3) separate penalty-orders, all dated 29.11.2019 and passed by ACIT-Circle-4(1), Indore [“AO”] u/s Printed from counselvise.com M/s. Pumarth Infrastructure Private Limited ITA Nos. 766/Ind/2024, 757/Ind/2024, 765/Ind/2024 AYs: 2009-10 to 2011-12 Page 2 of 9 271(1)(c) of the Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2009-10, 2010-11 and 2011-12. 2. The background facts leading to present appeals are as under: (i) The assessee is a private limited company incorporated on 11.10.1982 and engaged in the business of real estate development. At the relevant time, the assessee developed two projects named “Pumarth Park” and “Pumarth Meadows”. A search and seizure u/s 132 was carried upon “Apollo Group/Pumarth Group of Indore” including assessee on 21.09.2012. Pursuant to search, the quantum- assessments of seven AYs 2007-08 to 2013-14 were completed by a consolidated assessment-order dated 29.01.2016 u/s 153A/143(3). (ii) In present appeals, we are concerned three AYs 2009-10, 2010-11 and 2011-12. For these three (3) years, the AO completed quantum- assessments after making certain additions/disallowances and determining total income as under: AY 2009-10 AY 2010-11 AY 2011-12 Income as per Return filed u/s 153A 6,69,950 66,31,440 65,14,440 Addition on account of unexplained investment -- 1,30,53,000 -- Printed from counselvise.com M/s. Pumarth Infrastructure Private Limited ITA Nos. 766/Ind/2024, 757/Ind/2024, 765/Ind/2024 AYs: 2009-10 to 2011-12 Page 3 of 9 Addition on account of unexplained expenditure -- 10,75,000 -- Addition on account of suppression of sale proceeds of plots 96,76,800 3,09,80,760 50,96,575 Disallowance u/s 40A(3) 4,94,220 75,340 14,90,150 Assessed income 1,08,40,970 5,18,15,540 1,31,01,170 (iii) Against quantum-assessments so made, the assessee carried matters in first-appeals before CIT(A) and contested the additions/ disallowances made by AO. The CIT(A) granted part-relief. Still aggrieved, the assessee carried matters in next appeals before ITAT, Indore in IT(SS)A No. 175 to 177/Ind/2017. The ITAT disposed of those appeals through a consolidated order dated 12.02.2019 granting further part-relief to assessee. (iv) Simultaneous with passing of assessment-order dated 29.01.2016 as aforesaid, the AO also initiated proceedings for imposition of penalties u/s 271(1)(c) and issued show-cause notices to assessee. However, the AO kept penalty proceedings in abeyance till the quantum- proceedings were pending before ITAT. Ultimately, after passing of ITAT’s order dated 12.02.2019 as aforesaid, the AO resumed penalty- proceedings. Finally, the AO passed three (3) separate penalty-orders dated 29.11.2019 imposing following penalties upon assessee: Printed from counselvise.com M/s. Pumarth Infrastructure Private Limited ITA Nos. 766/Ind/2024, 757/Ind/2024, 765/Ind/2024 AYs: 2009-10 to 2011-12 Page 4 of 9 AY 2009-10 AY 2010-11 AY 2011-12 Income concealed 24,19,200 77,45,190 12,74,144 Penalty imposed 8,00,000 24,00,000 4,00,000 (v) Aggrieved by penalties so imposed, the assessee filed first-appeals before CIT(A) but did not get any success. (vi) Now, the assessee has come before us in next appeals. 3. Thus, the present appeals before us are against the penalties of Rs. 8,00,000/-, Rs. 24,00,000/- and Rs. 4,00,000/- imposed by AO for AY 2009-10, 2010-11 and 2011-12 respectively. Ld. Representatives of both side are ad idem that the concealed income of Rs. 24,19,200/-, 77,45,190/- and 12,74,144/- considered by AO for imposition of penalties are qua one item of additions i.e. the suppressed sale proceeds of plots/raw houses in aforesaid two projects “Pumarth Park” and “Pumarth Meadows” developed by assessee. For an immediate reference, we may mention here that the AO made additions of Rs. 96,76,800/-, Rs. 3,09,80,760/- and Rs. 50,96,575/- in assessment-order on account of suppression of sale-proceeds, out of which the ITAT sustained the quantum of addition to 25% on account of estimated element of ‘net income’ earned by assessee after giving deduction of estimated expenses incurred for earning supressed sale proceeds. Accordingly, after ITAT’s order, the surviving additions for three years were like this: 25% of 96,76,800/- amounting to Rs. 24,19,200/- for AY 2009-10; Printed from counselvise.com M/s. Pumarth Infrastructure Private Limited ITA Nos. 766/Ind/2024, 757/Ind/2024, 765/Ind/2024 AYs: 2009-10 to 2011-12 Page 5 of 9 25% of Rs. 3,09,80,760/- amounting to Rs. 77,45,190/- for AY 2010-11; 25% of 50,96,575/- amounting to Rs. 12,74,144/- for AY 2011-12. For these sustained additions, the AO imposed impugned penalties u/s 271(1)(c). 4. Originally, the assessee raised grounds in Form No. 36. Since these grounds are identical in all three years, we re-produce below the grounds of first AY 2009-10 for an immediate reference: “a. That on the facts and circumstances of the case the order passed by Ld. AO and sustained by Ld. CIT(A) is illegal, bad in law, burred by limitation and in violation of principle of natural justice. b. That on the facts and circumstances of the case the Ld. CIT(A) erred in levying penalty u/s 271(1)(c) amounting to Rs. 8,00,000/- alleging concealment of income despite the fact that the Assessee has disclosed income before Hon'ble Income Tax Settlement Commission. c. The order passed u/s 250 on 30/08/2024 for A.Y. 2009-10 by CIT(Appeals)-3 Bhopal upholding the penalty of Rs. 8,00,000/- imposed u/s 271(1)(c) in respect of addition sustained by the Hon'ble ITAT in quantum Appeal is wholly illegal, unlawful and against the principles of natural justice. d. That on the facts and circumstances of the case, the levy of penalty to the tune of Rs. 8,00,000/- is illegal, bad in law, arbitrary and perverse. e. That Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned penalty addition. f. That the assessee craves this Hon'ble Tribunal leaves to add, amend, alter or delete any of the grounds of appeal.” 5. Subsequently, the assessee filed applications under Rule 11 of Income-tax (Appellate Tribunal) Rules, 1963 raising additional grounds. Since these additional grounds are identical in all three years, we re- produce below the additional grounds of first AY 2009-10 for an immediate reference: Printed from counselvise.com M/s. Pumarth Infrastructure Private Limited ITA Nos. 766/Ind/2024, 757/Ind/2024, 765/Ind/2024 AYs: 2009-10 to 2011-12 Page 6 of 9 “Additional Ground No. 1: Whether the penalty proceedings initiated under Section 271(1)(c) of the Income-tax Act, 1961, are without jurisdiction and bad in law, as the Assessing Officer failed to record any prima facie satisfaction or reasons in the assessment order justifying the initiation of penalty proceedings. The mere mention of Penalty proceedings u/s 271(1)(c) initiated' in the assessment order is insufficient and does not comply with the mandatory requirement of recording such satisfaction, as held by the Hon'ble Karnataka High Court in CIT vs. MWP Ltd. (2014) 41 taxmann.com 496 (Karn.), the Hon'ble Delhi High Court in Ms. Madhushree Gupta vs. Union of India, 317 ITR 107 (Del.), and subsequently confirmed by the Hon'ble Supreme Court. Consequently, the penalty proceedings without any satisfaction in the assessment order are liable to be quashed.” 6. We have heard learned Representatives of both sides and carefully perused the case record including the orders of lower authorities. 7. At first, we re-produce below the relevant portion of impugned order passed by Ld. CIT(A) for AY 2009-10, identical orders have been passed in all three years: “3. After taking into consideration the AO's findings, penalty order passed by the Ld. AO, decision of Hon'ble ITAT, Indore and the facts of the case, the issues involved in appeal are discussed and decided as under :- 3.1 Ground No. 1:- Through this ground of appeal, the appellant has contested that the Ld.AO has erred in levying penalty u/s 271(1)(c) amounting to Rs. 8,00,000/- alleging concealment of income despite the fact that assessee has disclosed income before Hon'ble Income Tax Settlement Commission. I have considered the facts of the case, material evidences on record and to the facts and findings of the AO and the decision of Hon'ble ITAT. On perusal of record, I find that the Ld. AO has passed the Penalty Order U/s 271(1))c) of the 'Act' in compliance to Hon'ble ITAT's direction given to the Ld. AO. in ITA(SS) No. 175 to 177/Ind/2017 dated 12/02/2019. The appellant has not produced the order issued by the \"Hon'ble Income Tax Settlement Commission\" in this regard. 3.2 Ground Nos. 2:- Through these grounds of appeal, the appellant has challenged the legality of the penalty order passed by the Ld. AO. I perused the case records & facts of the case. I find that during search assessment proceedings, on the basis of incriminating documents unearthed during the search, it was evident that the appellant has received \"on-money\" amounting Printed from counselvise.com M/s. Pumarth Infrastructure Private Limited ITA Nos. 766/Ind/2024, 757/Ind/2024, 765/Ind/2024 AYs: 2009-10 to 2011-12 Page 7 of 9 to Rs.96,76,800/- during the F.Y. 2008-09 relevant to the A.Y. 2009-10 by the appellant company was treated as unaccounted income on sale of plots/row houses and penalty proceedings u/s 271(1)(c) was initiated and penalty was levied in compliance to ITAT's direction given to the Ld. AO in ITA(SS) No.175 to 177/Ind./2017 dated 12/02/2019. 3.2.1. During appellate proceedings, the appellant has not filed any written submission to substantiate its claim. However, on examination of records it was found that the appellant while filing appeal has submitted the statement of facts which for ready reference is reproduced hereunder:- That on the basis of application filed by assessee before Honorable Income Tax Settlement Commission (ITSC) wherein assessee has admitted that the plots were sold on higher rates than the rates shown in the books, i.e., assessee has received on money. Ld. AO in the quantum assessment order U/s 153A on the basis of this disclosure has added Rs. 96,76,800/- on account of assessee. Assessee then challenged the said quantum addition made by Ld. AO in appeal before Ld. CIT(A) and thereafter in second appeal before Hon’ble ITAT Indore Beach ITAT has sustained the addition to the extent of 25 percent of on-money i.e. 25 percent of 96,76,800/- which comes to Rs. 24,19,200. Ld. AO on the basis of this appellate order has initiated penalty proceedings U/s 271(1)(c) alleging concealment of income against the assessee and went on to levy the penalty of Rs. 8,00,000 on the assessee. The said levy of penalty in the impugned penalty order is made by Ld. AO despite the fact that nothing was concealed in application filed before Hon'ble ITSC, the basis on which quantum addition was made by Ld. AO. Therefore, there is no question of any concealment on the part of the assessee and consequent imposition of penalty U/s 271(1)(c) amounting to Rs. 8,00,000 is illegal and bad in law and therefore is this appeal. 3.2.2 Ground No.1&2:- I have considered the penalty order, issues involved in assessment and the grounds of appeal raised by the assessee against the penalty order. In this case the total amount of Rs. 96,76,800/- on account of \"on-money\" was received by the appellant company during the F.Y. 2008-09 relevant to the A.Y. 2009-10 which was unearthed during the search proceedings and so such income earned by the appellant company was treated as unaccounted income on sale of plots/row houses and penalty proceedings u/s 271(1)(c) was initiated for the assessment year under consideration. Further, during the penalty proceedings, the appellant has produced the copy of ITAT's order for assessment year 2009-10 to 2011-122 in ITA(SS) No.175 to 177/Ind./2017 dated 12/02/2019. The Hon'ble ITAT had sustained the addition to the extent of 25% of \"On-money\" i.e. 25% of Rs. 96,76,800/- which comes to Rs. 24,19,200/- Thereafter, the Ld. AO has passed the penalty order u/s 271(1)(c) of the income Tax Act, 1961 considering the concealment of income of Rs. 24,19,200/- and levied penalty of Rs. 8,00,000/-. The penalty so levied by the Ld. AO is in accordance with the provision made under Income Tax Act, 1961 and is found to be in order. Further, the contention of the appellant that income was disclosed by filing application before the Hon'ble Income Tax Settlement Printed from counselvise.com M/s. Pumarth Infrastructure Private Limited ITA Nos. 766/Ind/2024, 757/Ind/2024, 765/Ind/2024 AYs: 2009-10 to 2011-12 Page 8 of 9 Commission cannot be accepted as there is no documentary evidence to indicate any order by Hon'ble Settlement Commission in this regard. I find the AO had rightly levied the penalty on account of concealment. Therefore, the levying of the above penalty is fully justified and proper. Accordingly the appeal on grounds 1 & 2 is dismissed.” [emphasis supplied] 8. Thus, firstly we find that there was a complete non-representation by assessee as clearly noted by CIT(A) in Para 3.2.1 of impugned order and hence the Ld. CIT(A) has passed ex-parte order of first-appeal. Further, the CIT(A) has mentioned at two places in impugned order, in Para 3.1 as well as 3.2.2, that the assessee did not produce the order issued by the Hon’ble ‘Income-tax Settlement Commission’ or any documentary evidence to indicate any order by Hon’ble ‘Income-tax Settlement Commission’. In fact, by citing this reason, the CIT(A) rejected assessee’s contention that the relevant income was disclosed before Hon’ble ‘Income-tax Settlement Commission’ and upheld the penalty imposed by AO on account of concealment committed by assessee. However, before us the assessee has filed the copy of order dated 24.11.2025 of Hon’ble ‘Income-tax Settlement Commission’ in Paper-Book-I and the copy of application filed by assessee to Hon’ble ‘Income-tax Settlement Commission’ in Paper-Book-II. Further, in the pleadings made before us in support of original grounds as well as additional ground, the Ld. AR has harped heavily on these documents. Since these was a non-presentation by assessee before CIT(A) and also the evidences of settlement were not before CIT(A), in the interest of justice and fair play, we are inclined to give one more opportunity to assessee by way of Printed from counselvise.com M/s. Pumarth Infrastructure Private Limited ITA Nos. 766/Ind/2024, 757/Ind/2024, 765/Ind/2024 AYs: 2009-10 to 2011-12 Page 9 of 9 restoring these matters to the file of CIT(A) for a fresh adjudication. Accordingly, we remand these matters to CIT(A). Needless to mention that the CIT(A) shall give necessary opportunities to assessee and the assessee shall be at liberty to raise all grounds and make all submissions and file evidences to CIT(A) which the CIT(A) shall consider. The CIT(A) shall thereafter pass meritorious order(s) without being influenced by his previous order(s) in any manner. Ordered accordingly. 9. Resultantly, all these appeals are allowed for statistical purposes. Order pronounced in open court on 27/02/2026 Sd/- Sd/- (PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/ Dated : 27/02/2026 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPYSr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore Printed from counselvise.com "