Income is Income and that has to taxed. But what about penalty ? Is it always livable for not complying with law or any other matter connected with law ?
The purpose behind levying penalty is to compel the taxpayer to adhere to the law and also make the taxpayer to comply with statutory obligations imposed by the law. It is deterrent against recurrence of default on the part of the assessee. It also helps in stopping the practices which the Legislature considers to be against the public interest.
6.1. PROCEDURE FOR IMPOSING PENALTY [ SECTION 274]
(1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard.
(2) No order imposing a penalty under this Chapter shall be made-
(a) by the Income-tax Officer, where the penalty exceeds Rs. 10,000.
(b) by the Assistant Commissioner, where the penalty exceeds Rs. 20,000,
except with the prior approval of the Deputy Commissioner.
(3) An income-tax authority on making an order under this Chapter imposing a penalty, unless he is himself the Assessing Officer, shall forthwith send a copy of such order to the Assessing Officer.