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Sec 271AAB will not only strengthen the penal provisions with respect to undisclosed income found, it will also motivate the taxpayer to declare the undisclosed income in return of income and pay tax plus interest before the specified date.The phase wise increase in penalty is the basic and special charateristic of this new penal provision, which is inspired by Clause 231 of the Direct Tax Code Bill 2010. It has been observed that there has been a de-facto confusion among taxpayers regarding leviebility of these two sections.One school of thought says that Sec 271AAB is a mere enhancement of the scope of Sec 271AAA, besides the others concluding it to be a substitute of Sec 271AAA.To address this concern, we provide you with a comprehensive tabular difference presentation. Sec 271AAA Vs. Sec 271AAB
| TIME OF DISCLOSURE OF UNDISCLOSED INCOME BY THE ASSESSEE | PENALTY U/S 271AAA | PENALTY U/S 271AAB |
| At any time during the course of Search | NIL | 10% of the un-disclosed income. |
| Between any time from the date of termination of search to date of Return Filing | 10% of the un-disclosed income. | 20% of the un-disclosed income. |
| At any time after the Return Filing Date | 20% of the undisclosed income. | Min 30% -Max 90% of the undisclosed income as per the discretion of Income-Tax Officer |
Let us be very clear that Sec 271AAA and Sec 271AAB are mutually exclusive. Both cannot be levied upon the assessee simultaneously. The sole purpose of Sec 271AAB is to fasten the loops of Sec 271AAA and to forbid the defaulter to escape by any means whatsoever without paying taxes on unexplained moneys. Sec 271AAA will be enforceable upto 30th June,2012. W.e.f. 1st July,2012, Sec 271AAB will take on the stage of punishing defaulters in its own capacity.