Penalty proceedings delay is not fatal by itself; responsibility for delay and its impact must be found before cancellation.

Where no limitation period is prescribed for penalty proceedings, delay is not automatically fatal to the levy of penalty, but it remains a material factor affecting the propriety of the order. The fact-finding authority must determine who was responsible for the delay and then assess whether that delay had any bearing on the validity of the penalty. Because the Tribunal cancelled the penalty without recording findings on responsibility for delay or its consequences, the cancellation could not stand and the matter was decided in favour of the Revenue.

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Issues: Whether the Appellate Tribunal was justified in cancelling the levy of penalty under section 28(1)(c) without recording findings on the cause of the delay in completing the penalty proceedings and its effect on the penalty order.

Analysis: Delay in penalty proceedings, where no period of limitation is prescribed, is not by itself fatal to the levy of penalty, but it is a material circumstance bearing on the propriety of the order. The final court of fact is required to examine the rival contentions, determine whether the assessee or the department was responsible for the delay, and then assess whether the delay had any bearing on the validity or propriety of the penalty. Since the Tribunal did not record any finding on responsibility for the delay or on its effect, it omitted a necessary factual inquiry.

Conclusion: The Tribunal was not justified in cancelling the penalty without recording the relevant findings on delay and its consequences; the answer was against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered by holding that cancellation of the penalty could not stand in the absence of findings on responsibility for delay and its impact on the penalty order.

Ratio Decidendi: Where no limitation period is prescribed for penalty proceedings, inordinate delay is only a relevant factor affecting the propriety of the penalty order, and the fact-finding authority must determine responsibility for the delay and its effect before cancelling or upholding the penalty.

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