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2020 (11) TMI 640 - AT - Income TaxPenalty u/s 271(1)(c) - concealment of interest income on income tax refund - HELD THAT:- Penalty is not uniform and its imposition depends upon exercising of discretion by the taxing authorities and is imposed as part of the machinery for assessment of tax liability. The word mentioned in the statute “may direct that such person shall pay by way of penalty” u/s 271 definitely leave certain amount of discretion in imposing penalty which need to be imposed when there is a minor breach of law and when having regard to the facts, end of justice requires that the assessee should not be penalized. Similarly, the word “without reasonable cause” are also indicative of some kind of discretion in the authority imposing the penalty to find out whether there was a reasonable cause or not. If such authority is satisfied that there was a reasonable cause, it may impose any penalty but inadvertent mistake cannot call for penalty in the absence of any material to show there is gross negligency or want of bona fides on the part of the assessee. In the instant case, we find no such gross negligency on the part of the assessee and thus in our considered opinion the penalty should be justified for an inadvertent mistake committed by the assessee. Hence, penalty order is found to be devoid of any merit and hereby quashed. Appeal filed by the assessee is allowed.
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