The AO levied a penalty of Rs. 76,42,611/-under S. 271AAA of the Income-tax Act, 1961 at 10 per cent after computation of an undisclosed income of Rs. 7,64,26,117 /-. The penalty order did not provide for any specific finding in respect of any specific seized material or undisclosed income detected as in the course of search. The CIT(A) deleted such the penalty on the grounds that the Assessing Officer had not examined the matter properly under S. 271AAA and assessed the income mechanically either on an estimated basis or on account of the assesse’s inability to produce audited accounts for certain entities. The CIT (A) had specifically noted in the quantum proceedings that the principles of natural justice were not followed. On appeal, it was held that that the burden of proof in the penalty proceedings is independent and greater than in the assessment proceedings and the assessment proceedings and penalty proceedings are different.  While levying the penalty, the AO had nowhere mentioned specifically any undisclosed income within the meaning of undisclosed income given under S. 271AAA. The penalty order was devoid of any specific finding in respect of any specific seized material or undisclosed income detected as a result of search. It was incumbent upon the Assessing Officer to first establish that there was undisclosed income within the meaning of  S.  271AAA before any penalty under the section could be levied. (AY. 2012-13)