Here’s a detailed explanation of Penalty under Section 271AAB(1A) of the Income Tax Act, 1961, applicable when a search is initiated on or after 15th December 2016 and undisclosed income is found:
1. Key Provisions of Section 271AAB(1A)
- Applicability: Triggered when a search under Section 132is conducted after 15-12-2016, and undisclosed income is discovered.
- Penalty Rates:
- 30% of undisclosed income: If the assessee:
- Admits the undisclosed income during the searchand explains its source.
- Substantiates the manner of deriving such income.
- Pays the tax + interest and files a return declaring the income by the specified due date.
- 60% of undisclosed income: If the above conditions are not met(e.g., non-admission or non-payment).
- 30% of undisclosed income: If the assessee:
2. Example Scenario
- Case: A search on 20th January 2017 reveals ₹1 crore of undisclosed income (e.g., unaccounted cash or fake invoices).
- If compliant: Penalty = 30% (₹30 lakh) if the taxpayer admits, explains, and pays tax promptly.
- If non-compliant: Penalty = 60% (₹60 lakh).
3. Exclusivity Clause
- No other penalty (e.g., under Section 270Aor 271(1)(c)) can be imposed for the same undisclosed income.
4. Comparison with Other Search-Related Penalties
| SECTION | SEARCH PERIOD | PENALTY RATE | CONDITIONS |
| 271AAA | Before 01-07-2012 | 10% | Admission during search. |
| 271AAB(1) | 01-07-2012 to 14-12-2016 | 10%/20%/60% | Varies based on compliance. |
| 271AAB(1A) | On/after 15-12-2016 | 30%/60% | Admission + payment |
