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of <h1>Income-tax Officers Urged to Record Reasons for Not Initiating Penalty Proceedings u/s 271(1)(a) for Transparency.</h1> Income-tax Officers often choose not to initiate penalty proceedings under section 271(1)(a) of the Income-tax Act, 1961, based on their discretion and the specific circumstances of each case. However, they typically do not document their reasons for this decision. The Board has issued prior circulars outlining situations where initiating such proceedings is unnecessary. Courts have emphasized that discretion must be exercised reasonably and judiciously. Consequently, unless directed otherwise, officers should always record their reasons for not pursuing penalty proceedings. Proper exercise of discretion will not be challenged by Audit. This instruction should be communicated to all relevant officers.
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