Search action u/s. 132 of the Income Tax Act was carried out by Investigation Wing of the Income Tax Department at the business/residential premises of Jodhpur based Shekhawati Art Export group consisting of Vinod Johari, his family members and their business concerns, wherein several incriminating documents along with other valuables were found/seized from the various premises group searched. 

During the course of search and seizure operation at the residential premises of the assessee, a note book was found and seized. On the basis of entries in the said notebook Lalit Johari and his father Vinod Johari admitted undisclosed investment of Rs. 70,00,000/- in the construction of factory building and also undisclosed advance of Rs. 3,15,00,000/- for purchase of land

Penalty proceedings under sub-section (1) of section 271AAB was also initiated separately in respect of the surrendered amount of Rs. 3,85,00,000/- by issuing notice u/s. 274 r.w.s. 271AAB(1) of the Act. After taking cognizance of the reply, the Assessing Officer levied penalty @ 10% of undisclosed income thereby imposing penalty of Rs. 3,85,00,000/-. 


The single member bench of Suchitra Kamble, Judicial Member said that as regards, the merits of the case are concerned, the Authorized Representative submitted that the notice issued for initiation of penalty u/s. 271AAB(1)(a) is not appropriate notice and bad in law appears to be not justifiable as the Assessing Officer has invoked the penalty provisions u/s. 271AAB and therefore when there is undisclosed income which has been surrendered at that juncture, the notice is just and proper. 

The Tribunal observed that once the assessee has admitted the undisclosed income and offer the income for taxes accordingly the penalty u/s. 271AAB immediately gets attracted. The penalty u/s. 271AAB is on the basic threshold undisclosed income found and the explanation given by the assessee prior on discovery of the undisclosed income is insufficient then the penalty u/s. 271AAB is very much applicable. 

Case title: Lalit Johri v/s The ACIT, Jodhpur

Citation: ITA No. 493/Ahd/2023 

Amit Sharma

Author of Tax Concept

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