Penalty delay challenge raised too late may be refused where it needs factual inquiry and fresh evidence.

A plea that penalty should not be imposed because of inordinate delay in passing the penalty order requires factual inquiry into the cause of delay, responsibility for it, and its effect on the order. Where that point is raised for the first time at the argument stage and the necessary material is not already on record, the Tribunal may properly refuse to entertain it. The matter is at least a mixed question of fact and law, and the Tribunal's discretion to decline a new factual-cum-legal ground must be exercised judicially. On the stated facts, the refusal to permit the additional ground was justified.

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Issues: Whether the Tribunal was right in refusing to permit the assessee to raise, for the first time at the stage of arguments, the ground that inordinate delay in passing the penalty order under section 28(1)(c) of the Income-tax Act, 1922, furnished a good ground for not levying penalty.

Analysis: The question depended on whether, on the facts, it was expedient to impose penalty despite the delay, which required relevant factual findings on the cause of delay, responsibility for it, and its effect on the penalty order. The issue was not raised before the Income-tax Officer or the Appellate Assistant Commissioner, and it was also not shown that all necessary material was already on record. On the contrary, further facts and evidence would have been needed. In these circumstances, the Tribunal's refusal to allow the new ground to be raised could not be said to be arbitrary, since the matter involved, at best, a mixed question of fact and law and the exercise of discretion had to be judicial.

Conclusion: The Tribunal was justified in refusing to entertain the additional ground, and the answer is against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered by upholding the Tribunal's discretion to decline a new factual-cum-legal plea raised for the first time at the stage of arguments.

Ratio Decidendi: A plea that penalty should not be imposed because of inordinate delay, where it requires factual inquiry into cause, responsibility, and effect of the delay, is a mixed question of fact and law that the Tribunal may refuse to entertain if raised for the first time without the necessary material on record.

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