Penalty – additions accepted does not necessarily attract penalty

Gist of decision: It is a settled principle that the power of levying penalty or not is discretionary and not mandatory. The law requires that whenever the AO is to exercise his discretion then it is the AO alone who is to exercise that discretion and the appellate authority cannot exercise that discretion on the part of the AO. The appellate authority when called upon to do so can only decide whether the discretion so exercised by the AO which has been upheld by the CIT(A) can be sustained under law or not. In order to decide whether discretion has been exercised by the AO or not this examina...