Penalty orders must consider filed objections; an order based on no explanation despite reply cannot stand.

A penalty order cannot be sustained where it records that no explanation was given, even though the assessee had already filed objections to the penalty notice. The assessee's reply disputed the basis for levy, denied mala fide intent and challenged the grounds for maximum penalty, so the authority was required to consider that response before concluding the proceedings. Because the penalty order proceeded on a mistaken factual assumption and failed to properly address the explanation already on record, it was set aside. The matter was remitted for fresh consideration after affording the assessee an opportunity of hearing and to file further objections.

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Issues: Whether the penalty order could be sustained when the assessee had already filed objections to the penalty notice and the authority recorded that no explanation was given regarding the penalty proposal.

Analysis: The assessee had filed a reply raising objections to the proposed penalty and asserting that there was no basis for levy of penalty, including the absence of mala fide intention and the lack of grounds for maximum penalty. In the face of that reply, the finding in the penalty order that no explanation had been submitted was inconsistent with the record. An order imposing penalty must consider the explanation already offered and cannot proceed on a mistaken assumption that there was no response.

Conclusion: The penalty order was unsustainable and was set aside in favour of the assessee, with liberty to file further objections and with a direction for fresh conclusion of the proceedings after hearing the assessee.

Final Conclusion: The impugned penalty proceedings could not stand as passed and required reconsideration after affording an opportunity of hearing.

Ratio Decidendi: A penalty order is liable to be set aside where it proceeds on an incorrect finding that no explanation was submitted, despite the assessee having filed objections, because such an order fails to properly consider the response and violates fair procedure.

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