No 271AAB Penalty for Book-Based Disallowances Without Search Incriminating Material

Trifecta Projects Pvt. Ltd. Vs DCIT (ITAT Bangalore)

The Bangalore Bench of the ITAT held that penalty under Section 271AAB is leviable only in respect of “undisclosed income” unearthed during the course of search and not for routine or technical disallowances made during assessment. In the present case, additions arose from disallowance of cash payments under Section 40A(3) and reclassification of revenue expenditure as capital under Section 37(1), both of which were fully recorded in the regular books of account. No incriminating material was found during the search to justif

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