INCOME TAX ACT, 1961

Section 271AAB

Penalty under section 271AAB - Income surrendered during search - -

During the course of search assessee admitted undisclosed income of Rs. 1.90 crores under section 132(4). AO initiated penalty proceedings under section 271AAB and levied penalty @ 30% on undisclosed income. Assessee contended that it was not a case where assessee was found to be possessed of cash amount of which assessee could not disclose the source. It was a case where assessee during search action had surrendered an amount of Rs. 1.90 cores on account of discrepancies in accounts/unaccounted sales, etc. and explained that aforesaid surrender of income was on account of unrecorded business income. The assessee had also returned said amount as business income which had been admitted by AO as such even in assessment order.Held: As apparent, assessee surrendered undisclosed income in statement under section 132(4) and specified and substantiated the manner in which income had been derived and paid due taxes together with interest in respect of such undisclosed income before specified date, therefore, disclosure, made by assessee fell within the scope of undisclosed income as provided under Explanation (C) to section 271AAB. In view of this, the case of the assessee does not fall under section 271AAB(3) of the Act but under the provisions of section 271AAB(1) and minimum penalty@ 10% of undisclosed income was leviable.

Followed:Palace Jewellrs (P.) Ltd. v. Dy. CIT (ITA No. 697/chd./2017 Dt. 20-12-2018)

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. :

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