Search Results For: 271AAB


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?
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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.

QUERY: In search cases, penalty is leviable at 10% of the undisclosed income u/s. 271AAB of the Act in certain cases, if the conditions mentioned therein are met. One of such conditions is that in the course of the search in which such income is disclosed, the assessee specifies the manner in which such income is derived and also substantiates the manner in which such income is derived. In case of cash transactions, sometimes there is no evidence to substantiate the manner of earning. Also in some cases, it may be difficult to so prove. For example, case of bogus expenses, etc. How such condition is to be fulfilled?
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Exception 2 to Explanation 5 to section 271(1) also provides similar condition, while interpreting the said Explanation the Gujarat High Court in CIT v. Mahendra C. Shah [299 ITR 305] has held as under:

“In so far as the alleged failure on the part of the assessee to specify in the statement under section 132(4) of the Act regarding the manner in which such income has been derived,