Budget 2025 proposes Amendment for Non-Applicability of Section 271AAB of the Income Tax Act in Certain Cases
In order to clarify that the provisions of section 271AAB of the Act will not apply to the assessee whose search has been started under section 132 on or after September 1, 2024, the FM recommended to alter the section
Finance Minister Nirmala Sitharaman presented the Union Budget 2025 on February 1st, 2025 at 11:00 AM before the Parliament. The FM proposed to amend section 271AAB of the Income Tax Act to provide that its provisions shall not apply to the assessee in whose case search has been initiated under section 132 on or after the 1st day of September, 2024. Read More: Budget 2025: Period...
Finance Minister Nirmala Sitharaman presented the Union Budget 2025 on February 1st, 2025 at 11:00 AM before the Parliament. The FM proposed to amend section 271AAB of the Income Tax Act to provide that its provisions shall not apply to the assessee in whose case search has been initiated under section 132 on or after the 1st day of September, 2024.
Read More: Budget 2025: Period of ‘Stay’ by Court to be excluded to Calculate Time Limit u/s 206C
It is proposed to amend section 271AAB of the Act to provide that its provisions shall not be applicable to the assessee in whose case search has been initiated under section 132 on or after the 1st day of September, 2024.
This amendment will take effect from the 1st day of September, 2024.
Subsection (1A) of section 271AAB of the Act currently contains provisions pertaining to penalties for searches conducted after December 15, 2016. For searches conducted under section 132 of the Act on or after September 1, 2024, the provisions of "Block Assessment" (Chapter XIV-B) were added by the Finance Act, 2024. It is suggested to eliminate any unclear interpretation of section 271AAB's applicability to searches carried out on or after September 1, 2024, even if it is apparent that its provisions do not apply to procedures conducted under section 158BC of the Act.
Read More: Search & Seizure: Budget 2025 Proposes to Amend Provisions of Block Assessment
When concealed income is found after a search conducted pursuant to Section 132 of the Income Tax Act, Section 271AAB comes into play.
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The penalty rate is determined by the assessee’s response when unreported income is found. The penalty will be 10% of the unreported income, provided that the asseessee disclose the undisclosed money during the search, explain how it was generated, provide evidence to support your claim, pay the tax and interest by the deadline, and list the secret income on your income return. 20% of the concealed income will be the penalty if assessee doesn't disclose it during the search but do report it on your income tax return and pay the tax plus interest by the deadline.
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