TaxTMI 
TaxTMI 
2026 (10) TMI 42
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....turn of income and has ignored the findings of the AO that there was no evidence substantiating the disclosure of such amount of surrendered income during the course of recording of statement u/s 132(4) of the Act? 2. Whether in the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty of Rs. 5,64,90,000/- of the Act by ignoring the fact that the AO in his penalty order dated 25-03-2022 has categorically stated that " there, is no evidence (as per records available) substantiating the disclosure of such of surrendered income during the course of recording of statement u/s 132(4) and hence clause(b) of section 271AAB (1) of the Act, 1961 is applicable in this case where penalty is to be levied @ 20% of the undisclosed income"? 3. Whether in the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty of Rs. 5,64,90,000/- of the Act by ignoring the fact that the surrendered amount has been deducted after the search and seizure conducted u/s 132 and the surrendered amount of Rs. 28,24,50,000/- is covered under the definition of undisclosed income under the explanation to section ....
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.... DSC Group including the assessee. The assessment in the case of assessee was completed under section 143(3) of the Act on 31-03-2016 at the total loss of Rs. 1,04,60,31,501/- against the return loss of Rs. 1,05,45,78,526/- after making the following additions. (i) Addition u/s 69 on the basis of seized documents Rs. 40,00,000/- (ii) Addition u/s 69 on the basis of seized documents Rs. 45,00,000/- (iii) Disallowance u/s 14A Rs. 47, 025/-. During the search operation the assessee surrendered the amount of Rs. 28,24,50,000/-. Penalty proceedings under section 271AAB of the Act was initiated on the surrendered income of Rs. 28,24,50,000/- and notice dated 31-03-2016 was issued to the assessee. In the response of the notice the assessee stated that during the pendency of appeal the penalty proceeding be kept in abeyance. The Ld. CIT(A) has partly allowed the appeal of the assessee vide order dated 18-06-2019 and on the surrender income penalty proceedings was initiated after receipt the order notice dated 21-01-2022 was issued. The Assessing Officer levied the penalty of Rs. 5,64,90,000/- being 20% of surrendered amount of Rs. 28,24,50,000/-. 5. Aggriev....
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....scribed under section 271AAB are satisfied and it is a fit case for levy of penalty and the AO accordingly levied penalty @ 10% of income so surrendered during the course of search. The question is whether the penalty is to be levied solely basis the surrender during the course of search, what was the necessity of bringing a specific definition of "undisclosed income" by the legislature while enacting the provisions of section 271AAB of the Act. In our view, once a specific definition of undisclosed income has been provided in section 271AAB, being a penal provision, the same must be strictly construed and the Assessing officer has to record a clear and specific finding to this effect and cannot be solely guided by the surrender made by the assessee during the course of search. Admittedly and undisputedly, in the instant case, there is no finding in the penalty order to this effect that undisclosed income so found and surrendered during the course of search falls under the definition of "undisclosed income" as so defined in section 271AAB and in absence thereof, on this ground itself, the impugned penalty proceedings deserve to be set-aside. In the case of Principal Commissioner....
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....her documents maintained in the normal course relating to such previous year; or (B) Otherwise not been disclosed to the (Principal Chief CIT or) Chief CIT or (Principal CIT) CIT before the date of search: or (ii) any income of the specified previous year represented either wholly or partly, by any entry in respect of an expenses recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted." 6. Keeping in view the above said provisions, the Tribunal held that in the case of surrender of Rs. 1,77,00,000/- except the seized documents otherwise nothing was found during the search action which would construe undisclosed income of the assessee as defined under the provisions of s. 271AAA of the Act. With these observations, the appeal filed by the assessee was allowed. 7. Learned counsel for the appellant has not been able to dispute the fact that as per definition of s. 271AAA of the Act, amount of Rs. 1,77,00,000/- would fall in the category of undisclosed income. Hence, as per the above said provi....
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.... Hon'ble Karnataka High Court in the case of CIT vs. SSA's Emerald Meadows in [2016]73 taxmann.com 241(Karnataka) dated 23-11-2025, against which the Hon'ble Supreme Court dismissed the SLP. Reliance also placed on the following judgements; (i)Padam Chand Pungliya Vs. ACIT (2020) 181 ITD 0261 (Jaipur) (ii) Ashish Mittal vs. DCIT ITA NO. 8166/2019 dated 23-03-2021 iii) Asst. CIT vs. Marvel Associates (2018) 165 ITR (Trib) 0023 (Vishakhapatnam) iv) M/s Rambhajo's vs. ACIT (2019) 175 DTR 0161(Jaipur) v) Shri Paras Mal Jain vs. DCIT ITA No. 353/2022 dated 22-06- 2023(Jaipur) 10. The notices dated 8.9.2016 13.9.2021 issued by AO are reproduced as under : The provision of section 271ABB(1) of the Act contains two separate defaults (i) where the assessee admits the undisclosed income and specifies the manner in which such income has been derived and (ii) where the assessee does not admit the undisclosed income, The Assessing Officer has not specified in the notice or in the assessment order as to which clause of sub section (1) is being invoked for levy of penalty. The AO has not specified in the notice or in the assessment order as to wh....
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.... assessee. We do not find any reasons to interfere with the findings of the Ld. CIT(A), the appeal of the Revenue is liable to be dismissed. 14. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 18.09.2026. ============= Document 1 OFFICE OF THE Asstt. Commissioner of Income Tax, Central Circle-14,Room No-354, 3rd Floor, ARA Centre, E-2, Jhandewalan Extension, New Delhi-110055. F.No.ADCIT/CC-14/2016-17/ Dated :- 08.09,2016 NOTICE UNDER SECTION 271AA8 OF THE I. T. ACT, 1961 To, M/s DSC Limited, E-9, 3rd Floor, South Extension, Fart-II, New Delhi-110057 (PAN: - AAACD0003D) Where as in the course of proceedings before me for the assessment Year 2013-14 appears to me that you :- "have undisclosed income of the specified previous year, as noted above, 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 transaction found in the course of a search under section 132, which has --- (a) Not been recorded on or before the date of search in the books of- account or other documents maintained in the normal ....