Under Income-tax Act penalties are imposed either by the departmental authorities in certain cases or are imposed by the court for certain Income-tax offences.
The power to impose a penalty is given to Assessing Officer and the Commissioner. The right to impose penalty by I.T.O. does not come to an end when an appeal in filed against the assessment made by him although in certain cases he has to obtain the prior approval of the Deputy Commissioner. The above-mentioned income-tax authorities are empowered to impose penalties for default in the course of proceedings going on before them. Penalties are imposable on the assessee by the D.C. (A) in an appeal filed by the uthoriz against the order of Assessing The Assessing Officer cannot impose a penalty on the concealed income detected by D.C. (A) in the course of appeal against the assessment completed by the Assessing Officer
Penalty refers to monetary punishment for violation of law
It is also possible that the Commissioner (A) may allow an appeal of the assessee against the orders of penalty of Assessing Officer, and may himself impose a fresh penalty
The Income-tax Act, 1961 prescribes various types of penalties in the even of defaults under the Act. These are :