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TMI Blog1985 (11) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings. The assessing authority overruled this contention as well being of the view that the provisions of section 275, as amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, were applicable and only six months having elapsed since the order was passed by the Tribunal in the appeal filed by the Revenue, the penalty order was being passed within the prescribed period. Having failed before the Appellate Assistant Commissioner as well as the Tribunal, the assessee got the following three questions referred to this court under section 256(1) of the Act : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that section 275 was procedural in nature and in further holding that the amended provisions of section 275 had been rightly invoked and thus the penalty proceedings were not time-barred ? 2. Whether the Tribunal rightly held that the Income-tax Act as it stands amended on the 1st day of April of any financial year would apply to the assessment of that year but not to the penalty proceedings of that year ? 3. Whether the Tribunal was right in law in holding that no onus lies on the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, the assessee upon whom the penalty is sought to be imposed is in the position of an accused in a criminal trial and, therefore, all the ingredients of the offence for which the penalty can be imposed must be established by the Revenue. It is from this aspect that one has to consider the question whether the words 'failure without reasonable cause' in section 271(1)(a) constitutes an ingredient of the offence or not. Looking to the wording of the section and on a plain reading of section 271(1)(a), it is obvious first that the failure to file the return may be with reasonable cause or without reasonable cause, but the offence for which the penalty is imposable is failure without reasonable cause to file the return within the time specified in the section and, therefore, it is for the Revenue to establish as an ingredient that the failure in the particular case was without reasonable cause. Once the Department has discharged that initial burden, it will be for the assessee to show that there was reasonable cause on his part in failing to furnish the return in time. On the principles underlying section 106 of the Evidence Act, since the facts which constitute a reasonable c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctrine of mens rea which in 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. In C. A. Abraham v. ITO [1960] 41 ITR 425 (SC), their Lordships of the Supreme Court viewed penalty as a liability to pay additional tax and construed penalty proceedings as part of the machinery for the assessment of tax liability. Any universal or blanket theory that mens rea or a guilty mind is a necessary pre-requisite before any penalty can be levied in a taxing statute has now been authoritatively and conclusively negatived by the seven-judge Bench of the Supreme Court in R. S. Joshi v. Ajit Mills Ltd. [1977] 40 STC 497. A perusal of the provisions of the Income-tax Act, 1961, shows that the Act first prescribes the duty of filing returns within the prescribed time and then postulates three distinct sanctions for the enforcement of that statutory obligation. These are, by levying interest under section 139, by imposing penalty, if the delay has been occasioned without reasonable cause under section 271(1)(a), and by convicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly and distinctly provided for in clauses (a), (b) and (c) of sub-section (1) of section 271 of the Act. Thus, even though the three varieties of cases mentioned above are grouped together, the section treats each one of them separately and distinctly. The language used for the relevant clauses is diverse and whilst the words 'without reasonable cause' occur in clauses (a) and (b), they are conspicuous by their absence in clause (c). Furthermore, the three categories of delinquency in these clauses are separately dealt with. Sub-clause (i) which refers to the tax delinquency mentioned in clause (a), provides for the least burdensome penalties. Sub-clause (ii), which refers to those in clause (b), imposes a little heavier penalties whilst sub-clause (iii), which refers to cases in clause (c), provides the highest penalties. Had the intention been to treat all these delinquencies equally, there was obviously no need for Parliament to prescribe these three varying decrees of penalties. It, therefore, follows that identical considerations cannot and do not apply to clauses (a), (b) and (c) of section 271(1) of the Act. Hence, in the light of the broad scheme of the Income-tax Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r postponed till the assessing authority comes to the finding that the failure was without any reasonable cause. It does not mean that it is for the Revenue to show that the failure was without a reasonable cause. On the contrary, it only means that the failure on the part of the assessee to furnish the return within the prescribed period would not entail the imposition of penalty if he is able to show that there was sufficient cause for not doing so. In other words, although the assessee becomes liable to the imposition of the penalty for not filing the return within the prescribed time, he can ward off the same if he is able to show a good cause for not doing so. The burden of proof, therefore, to show that the assessee had a reasonable cause for not filing the return within the prescribed time would be on him and on the furnishing of that case, it would be for the assessing authority to form an opinion whether there was a good cause or the failure was without a reasonable cause. Accordingly, question No. 3 is also answered in the affirmative, that is, in favour of the Revenue and against the assessee. No costs. G. C. MITAL J.-I agree. - - TaxTMI - TMITax - Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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