1. Chapter XXI of the Income Tax Act, 1961
(hereinafter referred to as ‘the Act’) enacts
provisions for the levy, imposition and collection
of penalty. Without such a sanction, there is a
danger of evasion of tax. Thus, provisions for
levy and collection of penalties for contravening
their requirement, has become an integral part
of such enactment and one of their purposes.
2. The provisions of section 271(1)(c) of the
Act states that penalty shall be levied in case
a person either “conceals the particulars of his
income” or “furnishes inaccurate particulars of
his income”. Satisfaction of the Tax Officer as
to whether the penalty is for concealment of
income or for furnishing inaccurate particulars
of income is an integral clog in the initiation
and levy of penalty. Non satisfaction or incorrect
satisfaction of the Tax Officer is challenged by
the Assessee as being contrary to the law and
the same has resulted into substantial litigation
over the years.
3. Though, a new penalty regime has come
into the force from Assessment Year 2017-18 and
a new section 270A for levy of penalty in cases
of underreporting of income and misreporting
of income has been introduced, there are still
innumerable cases of dispute under section
271(1)(c) of the Act are pending at various
judicial fora.

Posted on: November 2nd, 2020