Landmark Cases on Penalty

A penalty under section 271(1)(c) cannot be sustained if the Assessing Officer is unsure whether the charge is for concealment of income or furnishing of inaccurate particulars, and this ambiguity is not clearly communicated to the assessee in the notice.

Penalty under Section 271(1)(c) cannot be imposed if the assessee has not furnished inaccurate particulars of income, especially when amounts are received through banking channels and the identity of the donor is established. The assessment and penalty proceedings are separate, and an addition to income during assessment does not automatically warrant a penalty.

The genuine nature of a transaction does not exempt an assessee from penalties under Section 271D if the requirements of Section 269SS are violated. Relief from such penalties is only possible if the assessee demonstrates a reasonable cause for accepting loans or deposits otherwise than by an account payee cheque or draft.

Penalty under section 271(1)(c) cannot be levied on additions made on an estimated basis.

Penalty under section 271D cannot be imposed if there is no finding that the loan transaction was not genuine or was a sham to cover unaccounted money.