Penalty Under Section 271AAA Waived for Disclosed Income During Search, Upheld for Post-Search Land Transaction Declarations

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....SC held that penalty under Section 271AAA(1) was not applicable on Rs.2,27,65,580/- as the appellant satisfied all conditions by admitting undisclosed income during search, substantiating its source, and paying tax with interest, albeit delayed. However, penalty was upheld on Rs.2,49,90,000/- related to land transactions not declared during search. The court interpreted "found in the course of search" broadly, including documents collected from third parties as a result of initial search. Since this amount was disclosed only during assessment proceedings after AO's intervention, it didn't qualify for exemption under Section 271AAA(2). The court emphasized that while AO's penalty power is discretionary, it must be exercised judiciously and not arbitrarily.....