Clause 225 - Penalty where search has been initiated - Direct Taxes Code Bill, 2009

Penalty where search has been initiated 225. (1)Every person shall, regardless of anything to the contrary contained in any other provision of this Code, be liable to a penalty in respect of the undisclosed tax base for the specified financial year, if a search and seizure operation has been conducted under section 139 in the case of the person. (2) The penalty referred to in sub-section (1) shall be a sum equal to ten per cent. of the undisclosed tax base for the specified financial year. (3) The provisions of sub-section (1) shall not apply, if the assessee,- (a) in the course of the search, in a statement under sub-section (9) of section 139, admits the undisclosed income and specifies the manner in which such tax base has been derived; (b) substantiates the manner in which the undisclosed tax base was derived; and (c) pays the tax, together with interest, if any, in respect of the undisclosed tax base. (4) The penalty referred to in sub-section (1) shall be imposed, by an order in writing, by the Assessing Officer. (5) For the purposes of this section,- (a) "undisclosed tax base" means- (i) any tax base of the specified financial year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other document or any transaction, found in the course of a search under section 139, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to the specified financial year; or (B) otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of the search; or (ii) any tax base of the specified financial year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified financial year which is found to be false and would not have been found to be so had the search not been conducted; (b) "specified financial year" means the financial year- (i) which has ended before the date of search, but the due date for filing the return of tax bases for such year has not expired before the date of search and the assessee has not furnished the return of tax bases for the financial year before the said date; or (ii) in which search was conducted.