Sec. 271AAB: Presently Sec. 271AAA of the Income-tax Act provides for Penalty when a search has been initiated and undisclosed income is found. Undisclosed income Includes money, bullion, jewellery or other valuable articles or any entry in books of accounts or other documents or transactions found in the course of a search. The penalty that can be levied at the rate of 10% of the undisclosed income in addition to any taxes payable. However, if the assessee admits to and provides the manner in which the income was derived, then no penalty is to be levied if the tax on the amount along with interest is paid.
The proposed insertion of Sec. 271AAB has been made to strengthen the penal provisions. The new section will be applicable only to searches initiated after 1st July, 2012. The new section provides for the following increased rates
Penalty @ 10% of the undisclosed income
If the Assessee
- admits to the undisclosed income
- specifies & substantiates the manner in which it is derived
- pays tax & interest
- declares such undisclosed income in the return for the specified previous year
Penalty @ 20% of the undisclosed income
If the Assessee
- does not admit to the undisclosed income
- declares such undisclosed income in the return for the specified previous year
- pays tax & interest
Penalty @ 30% - 90% of the undisclosed income
In all other cases
Procedure
The same procedure for implementation of penalty as well as the bar of limitation shall be applicable as far as possible.
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