AO can impose penalty u/s 271AAB in case where a search is initiated u/s 132 and during such operation assessees admits undisclosed income and specifies the manner in which such income has been derived.

Penalty—Penalty where search has been initiated—A search and seizure operation u/s 132(1) was conducted wherein, cash was found and seized in assessee’s office premises—Thereafter, notice u/s 153A was issued and in response assessee filed return of income declaring income—During assessment proceeding, AO noted that assessee owned up entire cash seized as his undisclosed and admitted that it was out of his income and offered to tax—AO completed assessment by recording that penalty proceedings u/s 271AAB was being initiated separately—CIT(A) confirmed AO’s action—Held, there was no dispute in respect of date of search and seizure operation on 24.04.2014—Therefore, applicability of s. 271AAB was justified—There was no dispute in owning cash seized during search and seizure operation as undisclosed income of assessee which was out of his professional income—There was no dispute that assessee offering same for taxation—There was no dispute in respect of payment of tax together with interest in respect of undisclosed income—There was no dispute in respect of filing of return of income to specified PY declaring such undisclosed income—Therefore, present case fulfiled conditions as contemplated clause (a) in sub-section (1) of s. 271AAB to impose penalt— Therefore, no infirmity was found in order of CIT(A) and confirming penalty imposed by AO u/s 271AAB(i)(a)—Action of imposition of penalty u/s 271AAB(a) was independent of enquiries made and subsequent additions made during course of assessment proceedings—This penalty was not based upon facts gathered during course of assessment proceeding—Assessee’s appeal dismissed.

KRISHAN CHANDRA BAJAJ vs. ASSISTANT COMMISSIONER OF INCOME TAX

(2019) 56 CCH 0106 KolTrib