Section 271AAB penalty requires statutory undisclosed income, a specific charge, and timely completion; a search surrender alone is insufficient.
Penalty under section 271AAB(1) requires a recorded finding that surrendered income falls within the statutory definition of undisclosed income; a search disclosure alone does not satisfy that requirement. The particular clause and default invoked must be specified in the penalty notice and proceedings, and failure to identify the charge invalidates the penalty process. Where the assessment is appealed, penalty proceedings must be completed within six months of receipt of the appellate order; completion beyond that period is time-barred. These independent defects render the penalty legally unsustainable.
Issues: (i) Whether a surrendered amount was "undisclosed income" for penalty under section 271AAB(1) absent a finding that it met the statutory definition; (ii) Whether the penalty notice and order were invalid for failure to specify the applicable clause/default under section 271AAB(1); (iii) Whether the penalty order was barred by limitation.
Issue (i): Whether a surrendered amount was "undisclosed income" for penalty under section 271AAB(1) absent a finding that it met the statutory definition.
Analysis: Section 271AAB(1) applies only to income falling within the statutory definition of undisclosed income. A disclosure in a statement recorded during search, without a recorded finding that the amount fell within the defined categories of unrecorded income or false expenditure, does not by itself meet that requirement. The penalty order proceeded only on the surrender and contained no finding that the surrendered amount satisfied the definition.
Conclusion: The surrendered amount was not established as undisclosed income for section 271AAB(1), and the penalty provision was inapplicable.
Issue (ii): Whether the penalty notice and order were invalid for failure to specify the applicable clause/default under section 271AAB(1).
Analysis: The distinct alternatives under section 271AAB(1) require identification of the particular charge invoked. The notices and assessment record did not specify the applicable clause or default, although the penalty was ultimately imposed under clause (b).
Conclusion: The penalty proceedings were invalid for non-specification of the charge under section 271AAB(1).
Issue (iii): Whether the penalty order was barred by limitation.
Analysis: Where the assessment order is subject to appeal, the applicable limitation framework required completion of penalty proceedings within six months from receipt of the appellate order. The appellate order was passed in June 2019, whereas the penalty order was made in March 2022, beyond the prescribed period.
Conclusion: The penalty order was time-barred.
Final Conclusion: The independent defects concerning statutory characterisation of the surrender, specification of the penalty charge, and limitation rendered the penalty legally unsustainable.
Ratio Decidendi: A penalty under section 271AAB(1) cannot rest solely on a search surrender; the authority must record a finding that the amount satisfies the statutory definition of undisclosed income.