9911796707
TMI Blog1991 (7) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... ---------------------------------------------------- Asst. Return Extension Extension Return Delay for Amount of year due applied granted by filed which penalty up to ITO up to on penalty levied levied -------------------------------------------------------------------------------------------------------------------------------------------------- 1979-8031-7-197931-12-197930-8-197918-2-198229 months Rs. 47,750 1980-81 31-7-1980 31-12-1980 30-10-1980 19-2-1983 28 months Rs. 1,28,920 1981-8231-7-198131-3-198231-10-198129-3-198428 months Rs. 42,286 1982-83 31-7-1982 --- --- Not filed 31 months Rs.47,194 up to asst. delay order dated counted8-3-1985up to date of asst. order -------------------------------------------------------------------------------------------------------------------------------------------------- 3. Penalty proceedings for late submission of the returns were initiated during the course of assessment proceedings. The assessee's main plea before the Assessing Officer was that there was labour trouble in the mill of M/s. Anand Synthetics Pvt. Ltd., which resulted in strikes, lay off and ultimately closure of the factory on24-1-1983. It was also submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... His grievance was that that explanation had been rejected by the Departmental authorities without assigning any reasons. According to the learned counsel what was material in penalty matters was to see whether there was a deliberate defiance of law by the assessee and whether the conduct of the assessee was contumacious. It was submitted by him that penalty was not automatic, but was a matter of judicial discretion and that a mere rejection of explanation was not enough. Reliance in this regard was placed on the following cases : (i) Hindustan Steel Ltd. v. State ofOrissa[1972] 83 ITR 26 (SC) ; (ii) All India Sewing Machine Co. v. CIT [1974] 96 ITR 206 (Mys.) ; (iii) CIT v. C. Shantilal Co. [1983] 141 ITR 476 (Guj.). 6. For assessment years 1980, 1981-82 and 1982-83 it was submitted in the alternative that if the return for assessment year 1979-80 could not be filed in time then the returns for assessment years 1980-81, 1981-82 and 1982-83 had necessarily to be delayed and there was clearly a reasonable cause for not filing the return of income for those years in time. It was vehemently argued that the Departmental authorities had not property appreciated the difficulty e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Gujarat Travancore Agency [1976] 103 ITR 149 (Ker.) (FB) ; (ii) Addl. CIT v. Dargapandarinath Tuljiyya Co. [1977] 107 ITR 850 (AP) (FB) ; (iii) CIT v. Patram Dass Raja Ram Beri [1981] 132 ITR 671 (Punj. Har.) (FB) ; (iv) Addl. CIT v. Mohammed Sons [1985] 154 ITR 220 (Raj.). 8. We have carefully considered the rival submissions as also the facts on record. It is trite to say that each case has to be decided on its own facts. There is no doubt that for assessment years 1979-80 to 1981-82 the returns were filed very late. The extension applications filed by the assessee were not accepted wholly and extension was granted only up to a particular period. For assessment year 1982-83 no return of income was filed till the completion of assessment and so the delay was computed at 31 months. In a situation like this where there is an inordinate delay in the matter of submission of returns of income by the assessee, the onus is on the assessee to prove that there was a reasonable cause which occasioned such a delay. It is the case of an old assessee which knows its obligation to file the returns. The filing of extension applications is a proof positive of its awareness of obl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are also not impressed by the argument of the learned counsel that at least for assessment years 1980-81, 1981-82 and 1982-83 there was a reasonable cause inasmuch as the return for the assessment year 1979-80 had not been filed in time. If such an argument were accepted, it would be putting a premium on the inefficiency and indifference of the assessees. We, therefore, do not accept the proposition canvassed before us in this regard. 10. The slight initial burden, if any, placed on the Revenue in such penalty matters stands discharged in this case, when it can be pointed out that it was the case of an old assessee and the assessee was aware of its obligation to file the return. Thereafter the burden shifts to the assessee who has to show a reasonable cause because the facts are within his special knowledge. Moreover, the explanation filed by the assessee has to be an acceptable explanation and has to be based on evidence. The mere explanation of the assessee not supported by evidence cannot have the effect of shifting the burden on to the Department nor can the Department be called upon to produce material to show that the assessee had, without reasonable cause failed to furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n essence pertains to the realm of criminal law would normally not be attracted to the imposition of penalties under taxing statutes which in essence are coercive civil sanctions and remedies for the speedy collection of revenue. This decision distinguished the Supreme Court decision in Hindustan Steel Ltd.'s case and relying on the Supreme Court case in Ajit Mills Ltd. held that the doctrine of mens rea was not attracted to penalty proceedings under section 271(1)(a). According to the High Court the only requirement under that section was the presence or absence of reasonable cause for the tax delinquency. The requirement of deliberate defiance of law or contumacious conduct or dishonest intention or acting in conscious disregard of statutory obligation, in the view of the High Court, was unwarranted under section 271(1)(a). 17. Full Bench of Andhra Pradesh High Court in Dargapandarinath Tuljiyya Co.'s case held that the distinction maintained between section 271(1)(a) and section 276C of the Act brings out the intention of Parliament in providing for two different machineries of different magnitude, where different considerations prevail. The High Court further held that a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection, the terms in which the penalty falls to be measured are significant. Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. There is nothing in section 271(1)(a) which requires that mens rea must be proved before penalty can be levied under that provision." 20. In view of the position explained above the contention of the learned counsel for the assessee that the Department must show that the assessee had acted contumaciously or in defiance of law, is not correct. We have already held that the onus of explaining the reasonable cause by the assessee has not been discharged in this case. The penalties, therefore, levied by the Assessing Officer and confirmed by the first appellate authority have got to be sustained, We hold accordingly. The teamed counsel for the assessee has not been able to make out a case for reduction of penalties as even according to him the total income as assessed by the ..... 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