Penalty where search has been initiated.
231. (1) A person shall be liable to a penalty in respect of the undisclosed tax bases for the specified financial year, if a search and seizure has been conducted under section 135 in his case.
(2) The person referred to in sub-section (1) shall be liable to a penalty—
(a) at the rate of ten per cent. of the undisclosed tax bases for the specified financial year, if such person—
(i) in a statement under sub-section (9) of section 135 in the course of the search, admits the undisclosed tax bases;
(ii) substantiates the manner in which the undisclosed tax bases was derived; and
(iii) pays the tax, together with interest, if any, in respect of the undisclosed tax bases.
(b) at the rate of twenty per cent. of the undisclosed tax bases for the specified financial year, if in a statement under sub-section (9) of section 135 in the course of the search, such person does not admit the undisclosed tax bases, but declares such tax bases in the return of tax bases for such financial year and pays the tax, together with interest, if any, in respect of such tax bases; or
(c) of the sum specified in sub-section (2) of section 230, if in a statement under sub-section (9) of section 135 in the course of the search, such person does not admit the undisclosed tax bases and also fails to declare such tax bases in the return of tax bases for such financial year.
(3) The penalty referred to in sub-section (1) shall be imposed, by an order in writing, by the Assessing Officer.
(4) In this section—
(a) "undisclosed tax bases" means—
(i) any tax bases 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 134, 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 the Commissioner before the date of the search; or
(ii) any tax bases 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.
