Landmark Cases on Penalty

Penalty under section 271(1)(c) cannot be levied if there is no evidence of furnishing inaccurate particulars of income, particularly concerning disallowances under section 14A. The Supreme Court dismissed the Revenue's SLP, upholding this principle.

A penalty cannot be levied if there was a reasonable cause for the failure to comply with a statutory obligation.

A penalty under section 271AA of the Income Tax Act, 1961, cannot be levied if no case is made out by the Assessing Officer. If the Commissioner (Appeals) has rightly deleted the penalty, no interference is required.

Furnishing inaccurate particulars of expenses in a tax return can attract a penalty under section 271(1)(c) of the Income Tax Act, especially when the explanation provided is not bonafide or substantiated.

Penalty under section 271(1)(c) for undisclosed income is not leviable if the assessee has explained the manner in which the income was derived during search proceedings, and no specific queries were raised by the department thereafter.

Penalty under section 271AA of the Income-tax Act cannot be levied if the Assessing Officer fails to make out a case for its imposition. In such circumstances, the deletion of penalty by the CIT(A) requires no interference.

The Assessing Officer must specify the limb of the charge when initiating penalty proceedings, and failure to do so invalidates the penalty order.

A notice issued under Section 274 of the Income Tax Act is invalid if it is not properly filled, with relevant columns indicated and irrelevant columns struck off, preventing the assessee from understanding the charges against them.

The court upholds the deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961, finding no illegality or fallacy in the Assessing Officer's order, particularly when the Assessing Officer could not bring anything new in support of the case.

Penalty under section 271(1)(c) is not leviable when an assessee voluntarily offers certain income as part of assessment due to difficulty in substantiating claims with vouchers, as this does not automatically imply concealment.

Penalty under section 271(1)(c) cannot be imposed if an assessee has disclosed the relevant basic facts of a transaction and wrongly claimed an exemption due to ignorance of law, as this does not constitute concealment or furnishing inaccurate particulars.

Penalty cannot be imposed if transactions are genuine and bona fide and there was no tax evasion, even if loans were taken in cash.

An assessee's agreement to an addition does not prove concealment, as such agreement may be for reasons such as avoiding litigation or commercial expediency. Voluntary surrender without corroborative material cannot sustain a penalty.

Concealment of income involves an attempt to hide income from tax authorities, and this is evident when income is not offered in returns filed prior to a search, especially when the source of unexplained income cannot be explained.

Penalty under section 271D is not leviable for transactions between individual family members to an HUF where cash transactions are found to be mere book entries and part of transactions on behalf of family members, as there is no contravention of section 269SS.

Penalty under section 271(1)(c) cannot be levied when additions to income are made on an estimated basis, especially after rejecting the assessee's books of account, and where no concealment of income is established.

The case is authority for the proposition that an assessee is liable to pay penalty under Section 271D of the Income Tax Act, 1961, when cash is deposited into the current account of an assessee-company by its director.

Penalty under Section 271D is justified if the assessee fails to show reasonable cause for non-compliance with Section 269SS, and Section 273B can be applied to cancel the penalty if reasonable cause is established.

When imposing a penalty under section 271(1)(c), the Assessing Officer must specify whether the penalty is for furnishing inaccurate particulars or concealment of income, not just initiate the penalty proceedings without a specific charge.

Penalty under section 271(1)(c) cannot be levied if the assessee claimed a benefit based on a difference of opinion on facts and not on account of concealment of income. Such a penalty is illegal and invalid.

Once a contravention of statutory obligations is established, a penalty must be imposed, and only the quantum of the penalty is discretionary. The intention of the violator is immaterial.

Penalty under Section 272A(2)(k) can be waived if reasonable cause is shown, as per Section 273B. This is based on the principle of non-levy of penalty when there are justifiable grounds, following earlier judicial pronouncements.

A penalty under section 271B of the Income Tax Act may not be levied if the assessee had a reasonable cause, such as a technical or venial breach that caused no prejudice to the revenue, for the delay in getting their accounts audited.

Penalty under Section 270A for under-reporting or mis-reporting of income cannot be sustained if additions are made under Section 56(2)(x) and the penalty notice fails to specify the limb under which proceedings are initiated.

A bona fide belief that an audit was not required under Section 44AB of the Income Tax Act, 1961, constitutes a reasonable cause for failure to comply with the provision, making the imposition of a penalty under Section 271B unjustifiable.

Penalty proceedings under section 271(1)(c) cannot be initiated unless the Assessing Officer records in the assessment order their satisfaction that the assessee has concealed income or furnished inaccurate particulars. A notice under section 274 is a mere formality once satisfaction is recorded.

Penalty under Section 271AA of the Income-tax Act, 1961, cannot be levied if the Assessing Officer has not brought any specific default regarding the maintenance of requisite documents on record.

Concealment of income and furnishing inaccurate particulars of income are distinct defaults and cannot be intermixed when imposing penalty under section 271(1)(c).

Penalty for concealment of income or furnishing inaccurate particulars can be levied even when the income is assessed on an estimate, rejecting the assessee's explanation. This is because claiming inflated expenditure constitutes concealment of income or furnishing inaccurate particulars.

Penalty for concealment of income and for furnishing inaccurate particulars of income are based on the same underlying conduct of an assessee, namely, concealing income by claiming inflated expenditure.

Penalty is not leviable merely because an assessee files a revised return and withdraws a claim for depreciation. Additions made during assessment proceedings do not automatically imply a penalty.

Fictions created by law, such as under sections 68, 69, 69A, 69B, and 69C, cannot by themselves be extended to penalty proceedings to raise a presumption of concealment or furnishing of inaccurate particulars of income. The assessment order findings are relevant evidence but not the sole foundation for guilt in penalty proceedings.

Reasonable cause for non-compliance with tax law must explain the entire period of delay and not just a part of it. A cause that only explains a portion of the delay or seeks to mitigate the gravity of non-compliance is not considered a good cause for exemption from penalty.

Penalty under section 271D for contravention of section 269SS is not imposable if the assessee proves a reasonable cause for the failure, as provided by section 273B.

Penalty under section 271(1)(c) cannot be levied merely because expenditure was huge or some vouchers were not available, without further evidence suggesting the claim was not bonafide or that inadmissible expenses were claimed. Non-submission of proper vouchers for expenditure does not automatically amount to concealment of income.

A penalty for concealing particulars or showing inaccurate particulars cannot be set aside merely because the Assessing Officer and the Commissioner (Appeals) used different terminology to describe the assessee's actions.

Penalty under Section 271(1)(c) is not attracted when income is added on an estimation basis and the addition has been substantially reduced by the Tribunal.

When the quantum of income is remanded to the Assessing Officer, the issue of penalty for undisclosed income should also be remanded to the Assessing Officer.

Transactions settled by journal entry, without actual cash movement, do not violate Section 269SS or Section 269T, and consequently, penalties under Section 271D or Section 271E are not leviable.

Initiation of penalty proceedings under section 271(1)(c) is invalid if the intention or satisfaction to initiate such proceedings is not evident from the assessment order.

Transactions involving a director depositing and withdrawing cash from a company's current account cannot be treated as loans or deposits, and consequently, no penalty under Section 271D is leviable.

Penalty under section 271(1)(c) cannot be levied with reference to income determined by invoking the deeming provisions of section 50C, as this does not constitute concealment of income or furnishing of inaccurate particulars.

Penalty under section 271(1)(c) cannot be levied when a substantial question of law is admitted by the High Court on an addition, indicating the issue was debatable and the assessee acted bona fide.

Penalty under section 271AAB of the Income-tax Act, 1961, cannot be levied if the income identified during a search is not considered "undisclosed income" as defined by the section.

An assessee cannot escape the levy of penalty under section 271(1)(c) simply by agreeing to the addition of undisclosed income after its detection and filing a return in response to a notice under section 148 offering such income.

Penalty under section 271AAB(1)(a) is leviable at 10% where an assessee admits undisclosed income in a statement under section 132(4), pays tax and interest, and such admission is explained. The penalty cannot be levied at the higher rate under clause (c) of section 271AAB(1).

The Assessing Officer (AO) must clearly specify whether a penalty under section 271(1)(c) is for concealment of income or for furnishing inaccurate particulars, and cannot shift the basis after issuing the notice. Failure to do so renders the penalty order invalid.

Penalty proceedings cannot be sustained if the foundation on which they were initiated fails, even if the addition is upheld on a different ground. Mere rejection of a claim does not automatically imply concealment of income.

Where a penalty notice issued under section 271(1)(c) of the Income Tax Act does not specify the exact charge under which the penalty proceedings were initiated, such notice is invalid, and the penalty imposed must be deleted.

A penalty order can be rendered bad in law if the initiation of penalty proceedings is based on insufficient grounds. The case is cited to support the argument that penalty under section 271(1)(c) is legally untenable if the assessment order and show cause notice do not sufficiently establish concealment of income.