Tribunal upholds penalty for undisclosed income under section 271AAB for AY 2015-16. Appeal dismissed.

The Tribunal upheld the penalty imposed under section 271AAB for the Assessment Year 2015-16. It dismissed the appeal challenging the initiation of penalty proceedings, stating that the charge was adequately specified in the show cause notice. Additionally, the Tribunal affirmed the levy of penalty, ruling that the disclosed income constituted undisclosed income as per the Act. The decision was pronounced on 05/02/2020.

---

---

Issues:
1. Validity of initiation of penalty proceedings u/s 271AAB for lack of specifying the charge in the show cause notice.
2. Merits of levy of penalty u/s 271AAB of the Act.

Issue 1: Validity of Initiation of Penalty Proceedings:
The appeal challenged the initiation of penalty proceedings u/s 271AAB due to the absence of a specific charge in the show cause notice. The assessee argued that without a specific charge, the penalty order was not sustainable. The assessee cited legal precedents to support the argument. However, the Revenue contended that the penalty was initiated based on undisclosed income disclosed during a search and seizure action. The AO specified the charge in the show cause notice as per Section 271AAB. The Tribunal noted that the disclosed income was based on assets found during the search, making the nature of the charge clear to the assessee. Consequently, the Tribunal dismissed the appeal challenging the initiation of penalty proceedings.

Issue 2: Merits of Levy of Penalty:
The grounds 2 to 4 of the appeal questioned the justification of levying the penalty u/s 271AAB. The AO imposed a penalty of 10% on the undisclosed income disclosed by the assessee. The assessee argued that the disclosed income was declared in the return and did not meet the definition of undisclosed income under the Act. Legal decisions were cited by the assessee to support this claim. On the other hand, the Revenue argued that the disclosure was based on assets found during the search, falling under the definition of undisclosed income. The Tribunal observed that the disclosed amount represented physical assets discovered during the search, meeting the criteria of undisclosed income as per the Act. The CIT(A) confirmed the penalty, stating that the disclosed income fell within the definition of undisclosed income. The Tribunal upheld the CIT(A)'s decision, dismissing the appeal on the grounds related to the merits of the penalty levy.

In conclusion, the Tribunal dismissed the appeal of the assessee challenging the order of the ld. CIT(A) regarding the penalty imposed u/s 271AAB for the Assessment Year 2015-16. The Tribunal found no merit in the arguments presented by the assessee regarding the validity of initiation of penalty proceedings and the justification of the penalty levy. The decision was pronounced in open court on 05/02/2020.

---