1977 (2) TMI 3 - HC - Income Tax

Summary

Issues involved: Application for extension of time for filing return, imposition of penalty u/s 271(1)(a), justification of penalty cancellation by Tribunal, interpretation of mens rea in penalty proceedings.

The High Court of Rajasthan considered an application under sub-s. (2) of s. 256 of the Income Tax Act, 1961, regarding the cancellation of a penalty imposed u/s 271(1)(a). The respondent-assessee, M/s. Rawat Singh and Sons, Jodhpur, filed their return of income for the assessment year 1965-66 after the due date, leading to penalty proceedings. The Income Tax Officer (ITO) imposed a penalty of Rs. 6,090 for the delay in submission of the return. However, the Appellate Assistant Commissioner (AAC) quashed the penalty, citing a reasonable cause for the delay in filing the return. The Tribunal upheld the AAC's decision, stating that there was no deliberate defiance of law or contumacious conduct by the assessee. The Central Board of Direct Taxes (CBDT) sought a reference to the Tribunal, which was rejected on the grounds that no question of law arose from the Tribunal's order. The High Court analyzed the conflicting opinions of various High Courts on the burden of proof in penalty proceedings u/s 271(1)(a) and referred to Supreme Court decisions emphasizing the quasi-criminal nature of penalty proceedings and the requirement to establish deliberate defiance of law or contumacious conduct. The High Court concluded that the Tribunal's decision was in line with Supreme Court precedents and dismissed the application for reference.

In conclusion, the High Court of Rajasthan upheld the Tribunal's decision to cancel the penalty imposed u/s 271(1)(a) on the assessee, emphasizing the need to establish deliberate defiance of law or contumacious conduct in penalty proceedings. The Court highlighted the quasi-criminal nature of penalty proceedings and the burden of proof on the department to demonstrate the absence of a reasonable cause for non-compliance. The judgment underscored the importance of adhering to Supreme Court precedents in interpreting penalty provisions under the Income Tax Act, 1961.