9911796707
|
Home
Issues Involved:
1. Whether the penalty under section 271(1)(a) of the Income-tax Act, 1961, should be computed after allowing credit for tax paid under section 23B of the Indian Income-tax Act, 1922. 2. Whether mens rea is a necessary consideration for imposing a penalty under section 271(1)(a) of the Income-tax Act, 1961. Detailed Analysis: 1. Computation of Penalty Under Section 271(1)(a): The Tribunal concluded that the penalty under section 271(1)(a) should be computed with reference to the tax that remained payable by the assessee after allowing credit for the tax paid under section 23B of the Indian Income-tax Act, 1922. The Tribunal cited the case of Indra & Co. v. Union of India, emphasizing that penalties under the Income-tax Act are compensatory in nature and should account for payments made by the partners on their share income. This approach was intended to reflect the actual tax liability remaining after such payments, suggesting no contumacious or deliberate disregard of statutory obligations by the assessee. 2. Mens Rea as a Consideration for Penalty: The Full Bench addressed the divergence of judicial opinion on whether mens rea (guilty mind) is a necessary element for imposing penalties under section 271(1)(a). The court examined the broader principle and statutory provisions, concluding that mens rea is not required for penalty proceedings under this section. The court emphasized that penalty under section 271(1)(a) is a civil sanction aimed at ensuring compliance with tax obligations, rather than a criminal punishment requiring proof of a guilty mind. The court highlighted the distinction between penalties under section 271(1)(a) and criminal prosecutions under section 276CC, which explicitly require wilful failure to file returns. The court referred to the legislative history and the broader scheme of the Income-tax Act, noting that penalties under section 271(1)(a) are designed to address non-compliance without necessarily proving deliberate defiance or dishonest intent. The court also reviewed relevant case law, including Hindustan Steel Ltd. v. State of Orissa and CIT v. Anwar Ali, concluding that these precedents did not mandate the application of mens rea to penalty proceedings under section 271(1)(a). Conclusion: The court held that the penalty under section 271(1)(a) should be computed after allowing credit for tax paid under section 23B of the Indian Income-tax Act, 1922. Additionally, the court determined that mens rea is not a necessary consideration for imposing penalties under section 271(1)(a), focusing instead on the absence of reasonable cause for the tax delinquency. The case was directed to be placed before the Division Bench for answering the relevant questions in accordance with these findings.
|
