The Income Tax Appellate Tribunal (ITAT), Chandigarh bench has held that the penalty under Section 271AAB of the Income Tax Act was rightly imposed in the case where the assessee surrendered the short stock not accounted.
The department initiated a search against the assessee under section 132 of the Act. During the course of the search, the assessee surrendered short stock which had not been accounted in the books of accounts. The Assessing Officer levied penalty under section 271AAB of the Act, which deals with levy of penalty in pursuant to search made under section 132 on or after 1st July 2010.
On appeal, the first appellate authority upheld the order. Before the Tribunal, the assessee claimed that the penalty is not authorized by law.
The Tribunal observed that the sole reason for levying by the Assessing Officer is that the surrendered income was in the nature of undisclosed income under the provision.
“We are in agreement with the same. Admittedly, the surrender had been made on account of discrepancy/s shortage in stock. Clearly, this short stock had not been accounted for by the assessee. The same, therefore, we hold, has been rightly held to qualify as “undisclosed income” as per the definition of the same in section 271AAB of the Act,” the Tribunal observed.
