TMI Blog2022 (5) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars of such income, then he may levy the penalty. The word used under section 271(1)(c) of the Act May gives an authority to levy or not to the penalty. Since the main purpose of introduction of the penalty sections is to check tax evasion, the provisions of sections 271(1)(b), 271(1)(c), 271 A, 271B, 271BB and 273 are discretionary and a discretion is vested in the authority, by the use of word 'may', to impose or not to impose penalty when there is no loss of revenue and there is only a venial breach of the provisions of law. When the returned income is accepted and neither there is found to be an evasion of tax, nor the revenue is put to any loss, the officer is empowered not to impose any penalty. The use of the word &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Year 2005-2006. 2. The assessee has raised the following grounds of appeal: 1. The Ld.CIT(A) erred on facts and in law in holding that the penalty was not barred by limitation. 2. The Ld.CIT(A) erred on facts in law in upholding the penalty levied u/s.271(1)(c) of the I.T Act of Rs.7,68,900/- The appellant craves permission to add, alter, amend or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 3. The assessee has challenged the validity of the penalty levied by the AO under the provisions of section 271(1)(c) of the Act on the reasoning that there was no satisfaction/ direction for initiating the penalty recorded by the AO before levying the penalty as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1 The AO in the assessment order has recorded to have issued penalty notice under section 274 read with section 271(1)(c) of the Act for concealment of income and furnished inaccurate particulars of income. 4.2 The AO finally levied the penalty with respect to two additions namely on account of deemed dividend and interest on the housing loan amounting to Rs. 21,71,160.00 and 1,13,176.00 respectively. The penalty was levied by order dated 26th of March 2012 for an amount of ₹ 7,68,900.00 being hundred percent of the amount of tax sought to be evaded. 4.3 On appeal, the learned CIT-A confirmed the order of the AO by sustaining the penalty imposed by him (the AO) under the provisions of section 271(1)(c) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the materials available on record. There is no dispute to the fact that there were four additions which were made by the AO during the assessment possible, as discussed above. Generally, the AO after each and every addition/disallowance initiates the penalty either for concealment of income or for furnishing inaccurate particulars of income. However, in the case on hand, on perusal of the assessment order we note that the AO after concluding the assessment order has just recorded the following: Issue penalty notice u/s. 274 r.w.s. 271(1)(c) of the I.T. Act for concealment of income and furnishing inaccurate particulars of income. 8.1 From the above finding of the AO, there is no clarity or indication that the penalty was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w is deliberate. When the returned income is accepted and neither there is found to be an evasion of tax, nor the revenue is put to any loss, the officer is empowered not to impose any penalty. The use of the word 'may' in these sections also makes the intention of the Legislature clear in this regard. At this juncture, it is also important to note that the penalty was finally levied by the AO in the penalty order for 2 additions namely deemed dividend and interest paid on the housing loan. Thus, there was no penalty finally levied qua the depreciation disallowance and vehicle insurance expense disallowance. 8.2 Furthermore, the provisions of section 271(1B) of the Act requires the AO to initiate the penalty proceedings in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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