After a search on or after 1 July 2012, can the officer levy penalty under s.271(1)(c) instead of s.271AAB?
No, not for the specified previous year. The Jharkhand High Court held that s.271AAB opens with a non obstante clause and excludes s.271(1)(c) where the undisclosed income relates to the specified previous year. Where the search was on 3 September 2014 the penalty, if any, had to be levied under s.271AAB, and because the assessee had admitted nothing in a s.132(4) statement and paid no tax on admitted income, the case fell under clause (c) of s.271AAB(1). The penalty actually levied under s.271(1)(c) could not stand. The Court also held it immaterial that no incriminating document had been found, because the statute keys the choice of section to the date of the search.
Decided by the High Court (Aparesh Kumar Singh J and Deepak Roshan J) on 2023-02-21, reported as Tax Appeal No. 16 of 2021 (High Court of Jharkhand at Ranchi). It bears on section 271AAB, section 271AAB(1)(c), section 271(1)(c), section 132, section 132(1), section 132(4), section 153A, section 143(2), section 142(1), section 274, section 260A of the Income Tax Act 1961, in Penalty and Search, Survey & Block Assessment matters.
This is a jurisdictional answer, not a merits answer. If the search is on or after 1 July 2012 and the year is a specified previous year, a penalty imposed under s.271(1)(c) is imposed under the wrong section and falls, whatever the merits of the addition. It is worth checking the section quoted in the penalty notice and order before arguing anything else.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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A search and seizure operation under s.132 was carried out on 3 September 2014 at the business and residential premises of the Jagdamba group, of which the respondent company was a member. No incriminating material was found in the respondent's case. Notice under s.153A was issued on 25/26 February 2015 and the respondent filed a return on 7 March 2016 showing a loss of Rs. 2,40,73,444. After notice under s.143(2) on 10/11 August 2016 and a notice under s.142(1) on 15 November 2016 seeking the audited financial statements uploaded on 30 November 2014, the respondent filed a further return manually on 18 November 2016 showing a loss of Rs. 92,68,340, and then on 21 November 2016 a further return showing income of Rs. 19,73,110, after being confronted with audited accounts showing a profit of Rs. 18,95,065. Penalty proceedings were initiated for concealment and inaccurate particulars to the tune of Rs. 2,60,46,553 and notice under s.274 read with s.271 was issued on 27 December 2016. By order dated 29 June 2017 the Assessing Officer imposed penalty of Rs. 1,69,01,620 under s.271(1)(c). The CIT (Appeals) allowed the assessee's appeal on 11 October 2018 on the ground that penalty could only have been imposed under s.271AAB, and the Tribunal dismissed the Revenue's appeal on 5 January 2021. The High Court admitted the appeal on 3 August 2022.
Both questions of law were decided against the Revenue and the appeal was dismissed as devoid of merit. Where a search under s.132(1) is initiated on or after 1 July 2012, penalty for the specified previous year must be levied under s.271AAB and not under s.271(1)(c), s.271AAB carrying a non obstante clause that excludes s.271(1)(c) for that income. On the facts the assessee had not admitted any income in a s.132(4) statement and had paid no tax on admitted income, so clauses (a) and (b) of s.271AAB(1) were not attracted and the case fell squarely under clause (c). Whether or not incriminating material was found was immaterial to the choice of section.
The Court read s.271AAB as a whole and held that on a plain reading, where a search under s.132(1) is initiated on or after 1 July 2012, penalty is leviable on the undisclosed income at the rate and on the conditions specified in s.271AAB(1) for the specified previous year, the section itself defining 'undisclosed income' and 'specified previous year' and opening with a non obstante clause that excludes s.271(1)(c) where the undisclosed income pertains to the specified previous year. Applying that to the facts, the search was after 1 July 2012, the due date for the AY 2014-15 return had not expired on the date of search and the return was furnished on 30 November 2014, the respondent had admitted no income in a s.132(4) statement and had paid no tax on admitted income; the case therefore fell under clause (c) of s.271AAB(1), and by force of sub-section (2) no penalty under s.271(1)(c) could be imposed in respect of that undisclosed income. The Court found the CIT (Appeals) had deliberated the point in detail in accordance with law and that the Tribunal had rightly sustained him, and rejected the Revenue's argument that the absence of incriminating material altered the position.
At the cost of repetition, a case where a search has been initiated under section 132 (1) of the Act on or after 1st day of July, 2012, the penalty, if any, should be levied under section 271 AAB and not under section 271 (1)(c) of the Act as the case falls under specified previous year.
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Handle my notice → Ask a CA on WhatsAppNo, not for the specified previous year. The Jharkhand High Court held that s.271AAB opens with a non obstante clause and excludes s.271(1)(c) where the undisclosed income relates to the specified previous year. Where the search was on 3 September 2014 the penalty, if any, had to be levied under s.271AAB, and because the assessee had admitted nothing in a s.132(4) statement and paid no tax on admitted income, the case fell under clause (c) of s.271AAB(1). The penalty actually levied under s.271(1)(c) could not stand. The Court also held it immaterial that no incriminating document had been found, because the statute keys the choice of section to the date of the search. This was decided by the High Court (Aparesh Kumar Singh J and Deepak Roshan J) and bears on section 271AAB, section 271AAB(1)(c), section 271(1)(c), section 132, section 132(1), section 132(4), section 153A, section 143(2), section 142(1), section 274, section 260A of the Income Tax Act 1961. It is reported as Tax Appeal No. 16 of 2021 (High Court of Jharkhand at Ranchi). This is a jurisdictional answer, not a merits answer. If the search is on or after 1 July 2012 and the year is a specified previous year, a penalty imposed under s.271(1)(c) is imposed under the wrong section and falls, whatever the merits of the addition. It is worth checking the section quoted in the penalty notice and order before arguing anything else. If it applies to you, the first step is this: Fix the date the search was initiated under s.132(1). On or after 1 July 2012 puts you inside s.271AAB; before that date, and on or after 1 June 2007, s.271AAA applies instead.
A search and seizure operation under s.132 was carried out on 3 September 2014 at the business and residential premises of the Jagdamba group, of which the respondent company was a member. No incriminating material was found in the respondent's case. Notice under s.153A was issued on 25/26 February 2015 and the respondent filed a return on 7 March 2016 showing a loss of Rs. 2,40,73,444. After notice under s.143(2) on 10/11 August 2016 and a notice under s.142(1) on 15 November 2016 seeking the audited financial statements uploaded on 30 November 2014, the respondent filed a further return manually on 18 November 2016 showing a loss of Rs. 92,68,340, and then on 21 November 2016 a further return showing income of Rs. 19,73,110, after being confronted with audited accounts showing a profit of Rs. 18,95,065. Penalty proceedings were initiated for concealment and inaccurate particulars to the tune of Rs. 2,60,46,553 and notice under s.274 read with s.271 was issued on 27 December 2016. By order dated 29 June 2017 the Assessing Officer imposed penalty of Rs. 1,69,01,620 under s.271(1)(c). The CIT (Appeals) allowed the assessee's appeal on 11 October 2018 on the ground that penalty could only have been imposed under s.271AAB, and the Tribunal dismissed the Revenue's appeal on 5 January 2021. The High Court admitted the appeal on 3 August 2022. The matter was decided on 2023-02-21 by the High Court (Aparesh Kumar Singh J and Deepak Roshan J). On those facts the High Court held as follows. Both questions of law were decided against the Revenue and the appeal was dismissed as devoid of merit. Where a search under s.132(1) is initiated on or after 1 July 2012, penalty for the specified previous year must be levied under s.271AAB and not under s.271(1)(c), s.271AAB carrying a non obstante clause that excludes s.271(1)(c) for that income. On the facts the assessee had not admitted any income in a s.132(4) statement and had paid no tax on admitted income, so clauses (a) and (b) of s.271AAB(1) were not attracted and the case fell squarely under clause (c). Whether or not incriminating material was found was immaterial to the choice of section.
The Court read s.271AAB as a whole and held that on a plain reading, where a search under s.132(1) is initiated on or after 1 July 2012, penalty is leviable on the undisclosed income at the rate and on the conditions specified in s.271AAB(1) for the specified previous year, the section itself defining 'undisclosed income' and 'specified previous year' and opening with a non obstante clause that excludes s.271(1)(c) where the undisclosed income pertains to the specified previous year. Applying that to the facts, the search was after 1 July 2012, the due date for the AY 2014-15 return had not expired on the date of search and the return was furnished on 30 November 2014, the respondent had admitted no income in a s.132(4) statement and had paid no tax on admitted income; the case therefore fell under clause (c) of s.271AAB(1), and by force of sub-section (2) no penalty under s.271(1)(c) could be imposed in respect of that undisclosed income. The Court found the CIT (Appeals) had deliberated the point in detail in accordance with law and that the Tribunal had rightly sustained him, and rejected the Revenue's argument that the absence of incriminating material altered the position. In the words reproduced by the source cited on this page: "At the cost of repetition, a case where a search has been initiated under section 132 (1) of the Act on or after 1st day of July, 2012, the penalty, if any, should be levied under section 271 AAB and not under section 271 (1)(c) of the Act as the case falls under specified previous year."
It was decided by the High Court on 2023-02-21 and is reported as Tax Appeal No. 16 of 2021 (High Court of Jharkhand at Ranchi). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 271AAB, section 271AAB(1)(c), section 271(1)(c), section 132, section 132(1), section 132(4), section 153A, section 143(2), section 142(1), section 274, section 260A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. Both questions of law were decided against the Revenue and the appeal was dismissed as devoid of merit. Where a search under s.132(1) is initiated on or after 1 July 2012, penalty for the specified previous year must be levied under s.271AAB and not under s.271(1)(c), s.271AAB carrying a non obstante clause that excludes s.271(1)(c) for that income. On the facts the assessee had not admitted any income in a s.132(4) statement and had paid no tax on admitted income, so clauses (a) and (b) of s.271AAB(1) were not attracted and the case fell squarely under clause (c). Whether or not incriminating material was found was immaterial to the choice of section. It arises in Penalty and Search, Survey & Block Assessment matters, on section 271AAB, section 271AAB(1)(c), section 271(1)(c), section 132, section 132(1), section 132(4), section 153A, section 143(2), section 142(1), section 274, section 260A of the Income Tax Act 1961, and was decided by Aparesh Kumar Singh J and Deepak Roshan J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Work out whether the year in question is a 'specified previous year' as defined in s.271AAB - broadly the year of the search where the due date for the return had not expired and the return had not been furnished, or the preceding year. If it is, and the officer has levied under s.271(1)(c), take the point that s.271AAB's non obstante clause ousts s.271(1)(c) for that income. Do not assume the reverse follows automatically in your favour. The Court held that whether or not incriminating material was found is immaterial to which section applies, so this argument goes to the choice of section, not to whether any penalty is due.
Still good law. One citator hit, and it is a clean application. In Swati Tomar v DCIT, Central Circle 1, Jaipur (ITAT Jaipur, 30 June 2025) the Bench took the judgment up in its own reasoning - 'We get strength of this view from the decision of Hon'ble Jharkhand High Court in the case of PCIT Vs. Jai Maa Jagdamba Flour (P) Ltd. [150 taxmann.com 26 (Jharkhand)]' - reproduced it at length and allowed the assessee's appeal, holding that where the search was conducted after 1 July 2012 the penalty had to be levied under section 271AAB and a penalty levied under section 271(1)(c) could not stand. Nothing overruling or doubting it was found and no Supreme Court challenge appears in the citator. The point is a practical one for anyone defending a search penalty: section 271AAB is the exclusive charging provision for undisclosed income of the specified previous year, and the Assessing Officer cannot fall back on section 271(1)(c). No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order records that the amount on which penalty was levied was Rs. 2,60,46,553 and that the penalty imposed under s.271(1)(c) was Rs. 1,69,01,620. The order does not state the amount of penalty that would have been due under s.271AAB(1)(c), and none should be inferred. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Both questions of law were decided against the Revenue and the appeal was dismissed as devoid of merit. Where a search under s.132(1) is initiated on or after 1 July 2012, penalty for the specified previous year must be levied under s.271AAB and not under s.271(1)(c), s.271AAB carrying a non obstante clause that excludes s.271(1)(c) for that income. On the facts the assessee had not admitted any income in a s.132(4) statement and had paid no tax on admitted income, so clauses (a) and (b) of s.271AAB(1) were not attracted and the case fell squarely under clause (c). Whether or not incriminating material was found was immaterial to the choice of section.
TaxSphere, “PCIT v Jai Maa Jagdamba Flour Private Limited”, https://taxnotice.vittsphere.com/caselaw/case/pcit-v-jai-maa-jagdamba-flour-271aab-exclusive/ (validity last checked 2026-09-07)
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The 271AAB notice does not say which clause or what rate. Can the penalty survive?
The s.271AAB penalty notice came on the printed s.274 read with s.271 form. Does that by itself kill the penalty?
Search penalty under s.271AAB, but the notice used the ordinary s.271(1)(c) printed form. Is that valid?
The s.271AAB penalty order never says which limb of the definition of undisclosed income is satisfied. Can the penalty survive?
