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2023 (6) TMI 430 - AT - Income TaxPenalty levied u/s 270A - misreporting of income - AO has levied the higher penalty of 200% of tax payable of mis-reporting income - scope of word ‘may’ direct the assessee to pay penalty - According to assessee imposition of penalty is at the discretion of AO, since sub-section (1) of section 270A of the Act, refers to the word 'may' and not shall - HELD THAT:- From reading of the reasons given by the AO to levy penalty for misreporting it is discerned that he has failed to spell out as to how the assessee’s case/additions falls within the ken of instances given in clause (a) to (f) of sub-section (9) of section 270A of the Act. Since AO failed to bring the addition/disallowance he made in quantum assessment, under the ken of (a) to (f) of the sub-section(9) of section 270A of the Act, the penalty levied for misreporting @ 200% cannot be sustained because it is trite law that penalty provisions have to be strictly interpreted. Therefore we find that the levy of penalty by the AO u/s 270A of the Act suffers from the vice of non-application of mind as well as violates principles of natural justice. Penalty levied on addition of sustained quantum addition cannot survive. Decided in favour of assessee.
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