Judgment :- R. JAYASIMHA BABU, J. The Assessing Officer has discretion under section 271(1)(c) of the Income-tax Act, 1961, whether or not to initiate penalty proceedings. The word used in the section is "may". The Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa, has laid down that the penalty will not be imposed merely because it is lawful to do so where a discretion is given to the authority. In this case, admittedly, in relation to the assessment year 1960-61, the Commissioner had directed that the penalty proceedings which had been initiated earlier be dropped and, in obedience to that order, the penalty proceedings had also been dropped by the Inspecting Assistant Commissioner. That was on March 29, 1972. Long thereafter, fresh penalty proceedings were said to be initiated on February 18, 1978. After the dropping of the penalty proceedings by the Inspecting Assistant Commissioner, on the basis of the satisfaction which the Commissioner had reached that the disclosure made by the assessee was voluntary and the penalty proceedings were not to be continued. It was not open to the Revenue to start fresh penalty proceedings on February 18, 1978, for the very same assessment year. The discretion exercised by the Assessing Officer was a discretion which had been property exercised. The order dropping the proceedings having been allowed to become final it was not open to the other officers who dealt with the files subsequently to initiate penalty proceedings for the very same assessment year. The first question ((1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that where the Inspecting Assistant Commissioner had already dropped the penalty proceedings initiated in the first reassessment proceedings, the Inspecting Assistant Commissioner on another occasion cannot hold, on the same set of facts that there was concealment and that penalty is imposable under section 271(1)(c) of the Income-tax Act, 1961 ?(2) Whether, on the facts and circumstances of the case, where in respect of the assessment year 1960-61, the original assessment was completed on March 24, 1961, and reassessment completed on March 28, 1970, and second reassessment completed on March 29, 1965, the penalty proceedings is to be initiated and penalty imposed under the provisions of the Income-tax Act, 1961, as provided in section 297(g) of the said Act ? (3) If the answer to the question No. 2 is in the affirmative, whether the law applicable to the proceedings in the law at the time of initiation of penalty ? (4) Whether in view of the provisions of Taxation Laws (Amendment) Act, 1975, the Inspecting Assistant Commissioner was competent on February 18, 1978, to levy penalty and whether the amount of penalty levied is correct according to that law, if it applied to this case ?) referred to us is, therefore, answered in favour of the assessee and against the Revenue. Having regard to that answer it is not necessary to deal with the other questions, which are returned unanswered.