Penalty cannot be imposed in every case merely because it is lawful to do so

Aagam Shares & Commodities Pvt. Ltd. vs DCIT (ITAT Ahmedabad)

It is also well settled that penalty under s. 271(1)(c) of the Act will not be imposed in every case merely because it is lawful to do so. The penalty will not ordinarily to be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of contumacious conduct or dishonest act. The explanation offered towards bonafide issue of share capital thus cannot be outrightly rejected when tested on the touchstone of penalty proceedings

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