Reasoned exercise of discretion under Section 273A requires a speaking order when full penalty waiver is denied.

Under Section 273A of the Income-tax Act, the Commissioner's discretion to grant waiver or reduce penalty must be exercised by a reasoned, speaking order. Where full waiver is declined, the authority must disclose the considerations applied and explain why a lesser relief was chosen; a silent or non-speaking order frustrates judicial scrutiny. The Bombay HC set aside the impugned order because it did not state the reasons for reducing the penalty instead of granting complete waiver, and remitted the matter for fresh disposal with reasons if full waiver was again denied.

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Issues: Whether the Commissioner's order reducing penalty under Section 273A of the Income-tax Act, 1961, without disclosing reasons for declining full waiver, could be sustained.

Analysis: The order impugned was silent on the considerations that led to reduction of penalty instead of complete waiver. In matters under Section 273A, the authority must apply its mind to all relevant facets and indicate the reasons for the course adopted, especially where full waiver is denied. A non-speaking order does not permit effective judicial scrutiny of the exercise of discretion.

Conclusion: The order was set aside and the matter was remitted to the Commissioner for fresh disposal by a speaking order setting out reasons, if the penalty was not to be wholly waived.

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