Opinion Of Eminent Legal Luminaries On Controversial Issues

Penalty -Search initiated on or after Ist day of July 2012

QUERY: During the course of search income declared pertaining to the previous year for which the return was not filed and was not due or that pertains to the broken period in the year in which the search took place. The ROI was filed post search disclosing the undisclosed income and taxes and interest due have been paid on or before filing the ROI. In view of this whether penalty u/s. 271AAB(1A) is mandatory?
ANSWER: No. It is optional. Section 271AAB(1A) provides that notwithstanding contained in any other provisions of this Act, the Assessing Officer may direct, that in case where search has been initiated under sections 132 on or after the date on which the Taxation Laws (Second Amendment) Bill, 2016 receive the assent of the President, the assessee shall pay by way of penalty, in addition to tax, if any payable by him:
a) A sum computed @ 30% of the undisclosed income of the specified previous year, if the assessee –
i) In the course of search, in a statement u/s. 132(4) admits the undisclosed income and specifies the manner in which such income has been derived.
ii) Substantiates the manner in which the undisclosed income was derived and
iii) On or before due date of furnishing return of income or the date on which the period specified in the notice issued u/s. 153A for furnishing return,.
A) Pays the tax, together with interest, if any, in respect of the undisclosed income and
B) Furnishes the return of income for specified previous year declaring such undisclosed income thereon:
b) If it is not covered above, a penalty @ 60% of undisclosed income..
As per section 271AAB(3), the provisions of sections 274 and 275 shall apply in relation to the penalty referred to in this section.

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Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material.
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