TMI Blog1974 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... Since payment was not made, a penalty of Rs. 2,000 was imposed by exhibit P-1 order. A similar demand notice for payment of Rs. 26,962 was served on the petitioner in O.P. No. 2887 of 1972 and since such payment was not made a penalty of Rs. 1,000 was imposed. These orders were confirmed in appeal by the Appellate Assistant Commissioner of Income-tax. The orders are exhibit P-2 in the two petitions. Revisions were filed before the Commissioner of Income-tax, Kerala, who by the orders marked as exhibit P-4 in both the cases dismissed the revisions. These orders are challenged by the petitioner in these petitions. Three contentions by way of challenge to the orders of imposition of penalty were urged before the Commissioner of Income-tax as seen from exhibit P-3 and these three contentions are urged before this court too. The assessment order relating to which the demand for payment of advance tax was made concerned the year 1970-71. Section 221(1) of the Income-tax Act, 1961, as it then stood read as follows: " 221. (1) When an assessee is in default or is deemed to be in default, in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no justification for imposing any penalty against the petitioners. None of these contentions found acceptance with the Commissioner of Income-tax. Section 221(1), no doubt, refers only to the default in payment of " tax ". " Tax " is a term defined in section 2(43) of the Act and it means: " 'Tax' in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date." Income-tax is chargeable under the Act by reason of the charging provision in section 4(1), which reads: "4. (1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year or previous years, as the case may be, of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The Income-tax Act contains provisions concerning the different modes by which tax is to be recovered from the assessees and that at different stages. Tax is recoverable by deduction at source and is recoverable also as advance payment prior to assessment. These are adjusted at the time of assessment. In the nature of the scheme of the Act and particularly in the light of the provisions in sections 207 to 219 it is not possible to characterise advance tax payable as anything other than tax. The same question had engaged the attention of the Gujarat High Court in Swastik Engineering Works v. Commissioner of Income-tax. There is a fairly elaborate discussion of this question in that case. After referring to the various provisions of the Income-tax Act and the scheme of the Act, Bhagwati C.J., speaking for the Bench, held : " Section 221, sub-section (1), being couched in wide language so as to cover default in payment of tax, whatever be the stage at which tax is payable by the assessee, there may be some words in the section which are applicable only in relation to tax payable at one stage and not applicable in relation to tax payable at another, but on such account we c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd made under section 210. Section 213 provides for intimation to the Income-tax Officer by persons who are in receipt of commission receivable periodically. Section 215(4) of the Act enables the Income-tax Officer to reduce or waive the interest payable by an assessee under section 215. Section 217 invests the Income-tax Officer with certain powers on making regular assessments. Section 222 enables the Income-tax Officer to forward a certificate for recovery of tax to the Tax Recovery Officer. Section 225 confers the power on the Income-tax Officer to grant time for payment of tax in spite of issue of certificate to the Tax Recovery Officer. Section 226 enables the Income-tax Officer to recover arrears of tax by any of the methods provided for in this section. The setting of section 221 is, therefore, indicative that the authority contemplated in section 221 could only be the Income-tax Officer. Section 246 of the Act deals with appealable orders. An order passed under section 221 is made appealable under section 246(o). Referring to various orders, the section says : "Any assessee aggrieved by any of the following orders of an Income-tax Officer, may appeal to the Appellate A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The last of the questions which I have to consider here concerns the plea that no absolute offence is created by section 221 and, therefore, the question whether penalty should be imposed must necessarily depend on the finding as to mens rea. In this context it may be profitable to refer to the observations of Shah, Actg. C.J., in Hindustan Steel Ltd v. State of Orissa. The matter arose out of proceedings for assessment to tax under the Orissa Sales Tax Act, 1947. Whether M/s. Hindustan Steel Ltd. could be considered as " dealer " within the meaning of the Act, whether the company sold buiding materials to the contractors and whether the imposition of penalty for failure to register as a dealer was justified were the questions which the Supreme Court had to consider in that case. Under the Orissa Sales Tax Act, 1947, penalty could be imposed for failure to register as a dealer. This was provided by section 9(1) read with section 25(1)(a) of the Act. The question that the learned judges had to consider was whether mere proof of default in seeking to register as a dealer would be sufficient to justify applying the penal provisions. Dealing with this, Shah, Actg. C.J., said: " B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the culprit. Such are statutes for the regulation of social or public welfare. The Drug Control Acts and Food Adulteration enactments may be cited as instances. Barring such exceptions, normally it cannot be said as a rule that the requirement of mens rea is not an element or ingredient of the offence. In State of Gujarat v. D. Pande, after referring to the following passage in Sherras v. De Rutzen it was held as follows: " There is a presumption that mens rea, an evil intension, or knowledge of the wrongfulness of the act, is an essential ingredient in every offence ; but that presumption is liable to be displaced either by the words of the statute creating the offence or by the subject-matter with which it deals, and both must be considered. " The learned judges proceeded to observe: "It is further observed therein that the principal classes of exceptions may perhaps be reduced to three. One is a class of acts which are not criminal in any real sense, but are acts which in the public interest are prohibited under a penalty. Another class comprehends some, and perhaps all, public nuisances. Lastly, there may be cases in which, although the proceeding is criminal in form, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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