Case Law Details
Vikram Dhirani Vs DCIT (ITAT Delhi)
Introduction: In a recent case before the Income Tax Appellate Tribunal (ITAT) Delhi, the penalty under Section 271AAA of the Income Tax Act was canceled. The cancellation of the penalty was primarily due to the lack of a specific inquiry by the tax authorities, allowing the taxpayer to avail immunity from the penalty.
Background of the Case: The appellant, in this case, had filed an appeal against the order passed by the CIT(A) for the assessment year 2012-13. The main grievance of the appellant was regarding the penalty imposed under Section 271AAA of the Income Tax Act.
Section 271AAA: Section 271AAA of the Income Tax Act deals with penalties imposed on cases where the taxpayer fails to specify the manner in which undisclosed income was derived during a search or seizure operation.
Lack of Specific Inquiry: The crux of the appellant’s argument was that during the statement recording under Section 132(4) of the Act, there was no specific question or inquiry by the tax authorities to the appellant regarding the manner in which undisclosed income was derived. The appellant contended that as per the provisions of Section 271AAA(2) of the Act, it is necessary to ask the taxpayer to specify the manner in which the undisclosed income was derived to impose the penalty.
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