The general guidelines to be followed while imposing penalties are as under:
Substantial penalties shall not be imposed for minor breaches of tax regulations or procedural requirements.
No penalty in respect of any omission or mistake in documentation which is easily rectifiable and obviously made without fraudulent intent or gross negligence shall be greater than necessary to serve merely as a warning.
The penalty imposed shall depend on the facts and circumstances of the case and shall commensurate with the degree and severity of the breach.
(ICAI FAQ PUBLICATIONS 06-09-2017 General disciplines related to penalty, General Penalty and Waiver of penalty : FAQ NO. 9)