INCOME TAX ACT, 1961

Section 271AAB

Penalty under section 271AAB - Leviability - Entries found during search relating to undisclosed investment in purchase of land -

During the course of search, a note book (diary) was found wherein there were Certain entries relating to undisclosed investment in purchase of land. Besides, said entries, there were no other document in terms of any agreement to sell, description of property which had been found during the course of search. AO treated undisclosed investment as undisclosed income under section 271AAB and accordingly levied penalty.Held: Definition of 'undisclosed income' under section 271AAB, talks about 'income by way of any entry in books of account or other documents or transactions found in the course of a search under section 132', what perhaps has been envisaged by legislature is an inflow of funds in the hands of assessee which has been found recorded by way of any entry in the books of account or other documents, and which has not been recorded before the date of search in the books of account or other documents maintained by assessee in the normal course. In light of the same undisclosed investment by way of advance for purchase of land could be subject matter of addition in the quantum proceedings under deeming provisions contained in section 69 and section 69B, however, same could not be said to qualify as undisclosed income in the context of section 271AAB read with the Explanation thereto and levy of penalty was not justified.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 271AAB

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