TMI Blog1971 (8) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to the assessment year 1963-64. The Income-tax Officer served a notice on the assessee under section 139(2) of the Income-tax Act, 1961, on June 28, 1963, requiring him to file a return of his total income for the assessment year 1963-64. The assessee should have filed the return in pursuance to the notice on July 28, 1963, but he filed the return only on December 2, 1963. The assessment was completed on February 27, 1964. The Income-tax Officer issued a notice to the assessee under section 271(1)(a) to show cause why a penalty should not be imposed for failure to furnish the return of total income within 30 days from the date of service of notice under section 139(2) of the Income-tax Act, 1961. The assessee filed his explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime and such plea cannot be countenanced." Section 271(1)(a) of the Income-tax Act, 1961, reads : " 271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner, in the course of any proceedings under this Act, is satisfied that any person- (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under sub-section (1) of section 139 or by notice given under sub-section (2) of section 139 or section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-section (1) of section 139 or by such notice, as the case may be, or..... he may direct that such person shall pay by way of penalty,- (i) in the cases re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in considering the nature of the proceedings under section 28 of the Indian Income-tax Act, 1922, which corresponds to section 171 of the Income-tax Act, 1961, observed: "The first point which falls for determination is whether the imposition of penalty is in the nature of a penal provision. The determination of the question of burden of proof will depend largely on the penalty proceedings being penal in nature or being merely meant for imposition of an additional tax, the liability to pay such tax having been designated as penalty under section 28... It is true that penalty proceedings under section 28 are included in the expression 'assessment ' and the true nature of penalty has been held to be additional tax. But, one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stan Steel Ltd. v. State of Orissa had to consider the scope of section 25(1)(a) of the Orissa Sales Tax Act, 1947, which provides for imposition of penalty for failure to register as a dealer under section 9(1) of the Act. Their Lordships of the Supreme Court observed : " But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Explanation and that is an indication to show that the very omission to file the return will give rise to a presumption of conscious violation of section 139(2) by the assessee. It was also pointed out that if the burden is cast on the department to prove want of reasonable cause for failure of the assessee to furnish the return of total income, in effect it will be placing an onus on the department which it will be impossible for them to discharge. According to counsel for the department, a reasonable interpretation of the provision will be to hold that the duty is on the assessee to explain his default and convince the department that it was occasioned by reasonable cause. It is not necessary for us to examine the merits of these co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return only according to section 139(1) in spite of the notice under section 139(2) it will not constitute sufficient cause to take the assessee out of section 271(1) is also not correct. It only means that the assessee was not ignorant of law but misunderstood the provision. Such a bona fide impression will prove absence of mens rea or a deliberate disobedience of the provisions of law, which is necessary for the imposition of penalty. There are no circumstances pointed out by the Tribunal apart from the finding we referred to, to justify the imposition of penalty. We, therefore, hold that the levy of penalty under section 271(1)(a) is not justified in law. We answer the question referred in the negative, that is in favour of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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