Section 271AAB penalty requires specific seized material; a search statement alone is insufficient to sustain the levy.

Penalty under section 271AAB requires a sufficient nexus with specific seized material; a search statement under section 132(4) by itself was treated as inadequate to sustain the levy. Applying a strict construction of the provision and its explanation, the stated undisclosed income could not be penalised solely on the basis of the assessee's disclosure during search. The penalty was therefore held not sustainable in law and was directed to be deleted.

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Issues: Whether penalty under section 271AAB of the Income-tax Act, 1961 could be sustained when it was founded on the assessee's statement recorded during search under section 132(4) and not on specific seized material.

Analysis: The penalty was levied at 30% of the undisclosed income disclosed in the search statement. The governing provision and its explanation were read to require linkage with specific seized material for sustaining such penalty. Applying strict interpretation, the search statement by itself was treated as insufficient to justify the levy.

Conclusion: The penalty was held not sustainable in law and was directed to be deleted.

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