2026 (5) TMI 1403

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....rn arose from the penalty order passed under section 271AAB of the Act, for the assessment year 2013-14. 2. In this appeal, the assessee has raised the following grounds: - "On the facts and circumstances the learned CIT(A) erred in confirming penalty of Rs. 9,94,140/- under section 271AAB of the Income Tax Act." 3. The solitary grievance of the assessee is against the levy of penalty under section 271AAB of the Act. 4. The brief facts of the case are that the assessee was subjected to search and seizure action under section 132 of the Act on 08.11.2012. During the search at the premises of the assessee, i.e., Room No.303, 3rd Floor, Bherumal House, Sheikh Memon Street, Mumbai, cash of Rs. 33,19,096/- was found. In his sta....

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..... 33,13,800/-, the AO, vide order dated 27.02.2019 passed under section 271AAB of the Act, levied a penalty of Rs. 9,94,140/-, being 90% of the undisclosed income. 7. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee and upheld the penalty levied by the AO under section 271AAB of the Act. Being aggrieved, the assessee is in appeal before us. 8. During the hearing, the learned Authorised Representative ("learned AR") submitted that as there is no difference between the returned income and the income ultimately assessed in the hands of the assessee pursuant to the appellate orders, no penalty under section 271AAB of the Act can be levied. The learned AR further submitted that if at all, the penalty unde....

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....sclosure of cash of Rs. 33,13,800/- in the return of income was not voluntary, but the same was only pursuant to the seizure of cash from the premises of the assessee during the search and seizure proceedings under section 132 of the Act. Therefore, the fact that there is no difference between the returned income and the income ultimately assessed in the hands of the assessee pursuant to the appellate orders in quantum proceedings cannot lead to the assessee escaping the mischief of penalty proceedings. 11. It is further pertinent to note that the penalty was levied under section 271AAB(1) of the Act, which during the year under consideration, reads as follows: - "Penalty where search has been initiated. 271AAB. (1) The....

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.... (c) a sum which shall not be less than thirty per cent but which shall not exceed ninety per cent of the undisclosed income of the specified previous year, if it is not covered by the provisions of clauses (a) and (b)." 12. Thus, section 271AAB(1)(a) of the Act prescribes a penalty at the rate of 10% of the undisclosed income, in case the assessee admits the undisclosed income, and specifies and substantiates the manner in which the said income was derived. Further, section 271AAB(1)(b) of the Act prescribes a penalty at the rate of 20% of the undisclosed income, in case the assessee does not admit the undisclosed income. Clause (c) of section 271AAB(1) of the Act is a residuary clause and prescribes a penalty at the rate of 30% but n....