Undisclosed Income Penalty Requires Search-Based Proof, Not Merely Surrendered Diary Advances, Preventing Automatic Sanctions in Searches

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....Section 271AAB imposes penalty only where the amount falls within its exhaustive definition of undisclosed income; a surrender during search proceedings alone is insufficient. Diary entries recording advances indicate an outflow or application of funds, rather than unreported income, unless a corresponding undisclosed asset or source is established. Deeming rules for unexplained sums do not automatically apply to this self-contained penalty provision. The Assessing Officer must specifically establish that the amount was found in, or resulted from, the search as undisclosed income. Penalty on surrendered advances reflected in vague diary notings was therefore deleted.....