TaxTMI 
TaxTMI 
2005 (6) TMI 27
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....The assessee, a registered partnership firm, was required to file the return of income on June 30, 1982, whereas the same was filed on May 31, 1983. The Income-tax Officer issued notice under section 274 read with section 271 of the Act requiring the respondent-assessee to show cause why penalty should not be imposed for late submission of the return. In the order levying the penalty it is stated that since there is no reply from the assessee, it is clear that there is no reason to offer by the assessee-firm. It is further stated that he was therefore satisfied that the assessee has without any reasonable cause failed to file the return in time and thereby, committed default and was liable to penalty. Accordingly, penalty of Rs. 14,730 was ....
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....ssessee on the merits and held that the explanation was not plausible in his opinion. He, therefore, confirmed the penalty for the period of default from October 1, 1982, till the date of filing of the return. The assessee carried the matter in appeal before the Tribunal. The Tribunal, while upholding the findings of the Commissioner of Income-tax (Appeals) on the merits of the matter, cancelled the penalty by its order dated October 12, 1990, holding that the plea of the assessee to the effect that the penalty order was bad in law as the same was passed without application of mind, merited acceptance. It is against this order that the Revenue has come up in reference. Mrs. M.M. Bhatt, learned standing counsel for the applicant-Revenu....
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....bunal's order was required to be upheld in the light of the principles laid down in the following decisions: (a) CIT v. Textile and General Engineer Co. [2003] 259 ITR 735 (Guj); (b) CIT v. G.R. Rajendran [2003] 259 ITR 109 (Mad); and (c) Tin Box Co. v. CIT [2001] 249 ITR 216 (SC). Responding to the submissions on behalf of the appellant, he submitted that when the section empowered either the assessing authority or the appellate authority to record satisfaction, it had to be read in the context of the powers of enhancement available to the appellate authority. That once it was found that the explanation of the assessee had not been considered by the assessing authority while levying the penalty whether the said explanation was ....
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....at the appellate authority has proceeded on the footing that the explanation has been rejected by the Income-tax Officer, whereas in fact the same has not been considered at all. It has further been held that such substitution of satisfaction cannot be permitted considering the fact that, under the statute, the Income-tax Officer who has initiated the proceedings has to exercise discretion, whether to levy penalty or not. It has further been held by the Tribunal that, applying the analogy of the ratio of decision of this court in the case of CIT v. Gordhanbhai Jethabhai [1983] 142 ITR 84, if non-consideration of the extension application can lead to a legal inference that time sought for was granted, non-consideration of the explanation ....
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.... be satisfied whether any person has committed the stipulated default without reasonable cause. Such a satisfaction can be recorded only if proper and adequate opportunity is accorded to the assessee. Therefore, before the authority can exercise discretion vested in it, it is imperative for the authority to grant reasonable opportunity and this would take within its fold the right of being heard and the explanation tendered as to the existence of reasonable cause being taken into consideration before the order to levy penalty is made. The legal position in this regard is well settled and bears no repetition. The authority vested with discretion by a statutory provision is under a mandate to exercise such discretion in a judicial manner and ....