TMI Blog2007 (7) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... [Order]. - Delay condoned. 2. Leave granted in Special Leave Petitions. 3. In this batch of Civil Appeals, the question which arises for determination is whether Section 11AC of the Central Excise Act, inserted by Finance Act, 1996 with the intention of imposing mandatory penalty on persons who evade payment of tax, should be read to contain mens rea as an essential requirement. 4. According to the Department, the said section should be read as penalty for statutory offences; that the executing authority had no discretion in the matter of penalty and that the adjudicating authority in such cases was duty bound to impose penalty equal to the duty so determined. On the other hand, it is the case of the assessee that mens rea was an essential requirement of the said section particularly when the section refers to intention in the matter of evading payment of duty. The assessee has also invited our attention, in this connection, to the provisions of Section 271(1)(c) of the Income Tax Act which according to the assessee is identically worded to Section 11AC of the Central Excise Act. The assessee has also placed reliance on a recent judgment of the Division Bench of this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11A, shall also be liable to pay a penalty equal to the duty so determined : Provided that where the duty determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, for the purposes of this section, the duty as reduced or increased, as the case may be, shall be taken into account." We also quote hereinbelow Section 271(1)(c) of the Income Tax Act : "271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- (a) (b) * * * * (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added or deducted in the year immediately preceding the first preceding year which is sufficient to cover such part of the utilised amount as is not so covered shall be treated to be the income of the assessee, particulars of which had been concealed or inaccurate particulars of which had been furnished for the year immediately preceding the first preceding year and so on, until the entire utilised amount is covered by the amounts so added or deducted in such earlier assessment years. Explanation 3. - Where any person fails, without reasonable cause, to furnish within the period specified in sub-section (1) of Section 153 a return of his income which he is required to furnish under Section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989, and until the expiry of the period aforesaid, no notice has been issued to him under clause (i) of sub-section (1) of Section 142 or section 148 and the Assessing Officer or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such person shall, for the purposes of clause (c) of this sub-section, be deemed to have concealed the particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief Commissioner or Commissioner before the said date; or (2) he, in the course of the search, makes a statement under sub-section (4) of Section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub-section (1) of Section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income. Explanation 6. - Where any adjustment is made in the income or loss declared in the return under the proviso to clause (a) of sub-section (1) of Section 143 and additional tax charged under that section, the provisions of this sub-section shall not apply in relation to the adjustment so made. Explanation 7. - Where in the case of an assessee who has entered into an international transaction defined in Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of strict liability on the assessee for concealment or for giving inaccurate particulars while filing returns. The judgment in Dilip N. Shroff's case has also not considered the provisions of Section 276C of the Income Tax Act. Therefore, in our view, the judgment in the case of Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai (supra) needs consideration by the larger Bench of this Court particularly when it has ramifications not only regarding provisions of the Income Tax Act but also with regard to the provisions of Sections 3A and 11AC of the Central Excise Act and Rule 96ZQ(5) of the Central Excise Rules. 8. For the aforestated reasons, we direct the Registry to place our order in this batch of Civil Appeals before the Hon'ble the Chief Justice of India for appropriate directions. 9. Before concluding, we may mention that in the present cases, the assessee had challenged the vires of Rule 96ZQ(5). By the impugned judgment, the Gujarat High Court has read down the said rule incorporating the mens rea requirement. It is made clear that if the Larger Bench takes a view to say that the penalty under the said clause is mandatory, then it would still be open to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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