Section 77 - Insertion of new section 271AAA

Penalty for undisclosed income: search-triggered additional penalty applies unless admission, substantiation and tax payment occur.

Section 271AAA authorises the Assessing Officer to direct payment of an additional penalty, computed as a percentage of the undisclosed income of the specified previous year, where a search under section 132 is initiated on or after 1 June 2007, payable in addition to tax. The penalty does not apply if the assessee, in a statement under section 132(4) during the search, admits and substantiates the manner of derivation of the undisclosed income and pays the tax with interest. The section defines 'undisclosed income' and 'specified previous year' and disapplies penalty under clause (c) of section 273(1) for the same income, while making sections 274 and 275 applicable so far as may be.