Search penalty under section 271AAB upheld where surrendered income was not substantiated and was later returned.

Penalty under section 271AAB was leviable where the assessee surrendered additional income during search, offered it in the return, and failed to substantiate the manner in which the income was derived. On those facts, the case fell within section 271AAB(1)(b), so the Assessing Officer's invocation of the provision was correct and the view that penalty was merely discretionary did not prevail. The deletion of penalty by the first appellate authority was therefore unsustainable, and the levy was upheld in favour of the Revenue.

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Issues: Whether penalty under section 271AAB of the Income-tax Act, 1961 was leviable on the additional income surrendered during search and offered in the return, and whether the deletion of penalty by the first appellate authority was justified.

Analysis: The assessee had surrendered substantial additional income in the statement recorded during search under section 132(4) and subsequently offered the same in the return after payment of taxes. The assessee did not substantiate the manner in which such income was derived. On these facts, the case fell within the scope of section 271AAB(1)(b), which was correctly invoked by the Assessing Officer. The view that the penalty was discretionary did not prevail on the facts found.

Conclusion: The deletion of penalty was unsustainable and the levy of penalty under section 271AAB(1)(b) was upheld in favour of the Revenue.

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