Penalty under section 271AAA not leviable where disclosed search income was explained and accepted.

Penalty under section 271AAA was not attracted where the assessee disclosed additional income in search-related assessment proceedings and placed an explanation of the items comprising the disclosure on record. Following its earlier decision on identical facts, the ITAT held that acceptance of the disclosure together with the stated source and manner of earning was sufficient to deny penalty. The penalty was therefore cancelled.

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Issues: Whether penalty under section 271AAA of the Income-tax Act, 1961 was leviable on the additional income disclosed by the assessee in the search-related assessment proceedings.

Analysis: The assessee had disclosed the income during the assessment proceedings arising from the search and explained the items comprising the disclosure. The Tribunal followed its earlier decision in a connected group case on identical facts and held that, where the disclosure is accepted and the explanation regarding the source and manner of earning is on record, the penalty provision is not attracted. The assessee's declaration was treated as sufficient to deny penalty in the facts of the case.

Conclusion: Penalty under section 271AAA was held to be not leviable and was cancelled.

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