TaxTMI 
TaxTMI 
2025 (12) TMI 1352
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....e following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not quashing the order of the A.O levying penalty u/s 271AAB of the Income Tax Act on the appellant is absolutely illegal, arbitrary and ab initio void. 2. On the facts and circumstances of the case, the Ld. CIT (A) has erred in law in not considering the submissions of the appellant that: (i) Initiation of penalty, by the AO without giving any reasons for initiating penalty u/s 271AAB(1A) of the Income Tax Act is bad in law. (ii) Initiation of penalty, without any specific finding in the assessment order as to the discovery, as a result of search action, of any "undisclosed income" within the meanin....
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....g that the appellant is well aware of the clause under which its case is covered ignoring the fact that reply of the assessee in compliance does not absolve the AO nor cure the defect in the notice issued. (ii) The Ld. CIT (A) further erred in law in holding that no prejudice is caused to the appellant because of not specifying of particular clause which is completely in defiance of the settled legal position which categorically holds that prejudice is on the face of the mechanical methods the Revenue adopts in sending a statutory notice. 5. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in ignoring the finding of hon'ble Tribunal in appellant's own case on quantum appeal [ITA No175 to 177 of 202....
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....d. AO"). During the assessment proceedings, the Ld. AO taxed the entire sum of Rs. 35 lakhs, including Rs. 7.00 lakhs in cash seized during the search, by invoking section 69B read with section 115BBE of the Act. The appeal against the quantum addition of Rs. 35.00 lakhs reached this Tribunal, wherein vide order dated 30.08.2023 in ITA No.177/Hyd/2023, this Tribunal held that section 69B read with section 115BBE of the Act would apply only to the cash component of Rs. 7 lakhs, while the balance Rs. 28 lakhs was liable to be taxed under normal rate. In pursuance of this order, the Ld. AO passed a consequential order on 17.10.2023 taxing Rs. 7 lakhs under section 69B read with section 115BBE of the Act and Rs. 28 lakhs at normal rates. Subseq....
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....as defined under clause (c) of the Explanation to section 271AAB of the Act. Since no material, paper, document or evidence was found relating to the sum of Rs. 28 lakhs, the said income cannot be treated as "undisclosed income" and therefore no penalty is leviable. Accordingly, the Ld. AR prayed before the Bench to delete the penalty levied by the Ld. AO. 6. Per contra, the Learned Departmental Representative ("Ld. DR") relied on the order of the lower authorities and submitted that but for the search, the assessee would not have disclosed the income of Rs. 28 lakhs, and therefore the income falls within the scope of "undisclosed income." Accordingly, the Ld. DR submitted that there is no infirmity in the orders of the lower authorities....
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.... directed the Ld. AO to tax the said sum at normal rates. We have further examined the definition of "undisclosed income" as provided in clause (c) of the Explanation to section 271AAB of the Act, which is to the following effect: "271AAB. (1) .................. (1A)...... (2)............ (3)................. Explanation ... (a).................. (b)................... (c) "undisclosed income" means- (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under sec....