Search penalty under section 271AAB fails where no incriminating material supports the alleged undisclosed income.

Penalty under section 271AAB(1A) was not sustainable where the income in question was not supported by any incriminating material found during search. The Tribunal noted that, in the quantum proceedings, the addition had already been found to lack search-based evidence, and the statutory definition of undisclosed income under the Explanation to section 271AAB requires money, bullion, jewellery, valuable articles, entries, documents, transactions, or false expense entries discovered in the search. As that foundation was absent, the condition for levy of penalty was not met, and the penalty was deleted in favour of the assessee.

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Issues: Whether penalty under section 271AAB(1A) of the Income-tax Act, 1961 was leviable when no incriminating material was found during search and the amount was not covered by the definition of undisclosed income.

Analysis: The addition of Rs. 24 lakhs had already been found, in the quantum proceedings, to be unsupported by any incriminating material found in the search. The statutory definition of undisclosed income under the Explanation to section 271AAB requires the income to be represented by money, bullion, jewellery, valuable article, entry, document, or transaction found in the course of search, or by a false expense entry discovered in search. In the absence of such search material, the statutory foundation for penalty was not satisfied.

Conclusion: Penalty under section 271AAB(1A) could not be sustained and was deleted, in favour of the assessee.

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