Agrawal, J. - (1.)IN these references, the INcome-tax Appellate Tribunal (hereinafter referred to as "the Tribunal"), has referred the following questions under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as "the Act").
"1. Whether, in the particular circumstances of the case, the assessee was liable to submit a fresh return of income in compliance with notice under Section 148 of the INcome-tax Act, 1961 ?

(2.)WHETHER the penalty provisions under section 271(1)(a) were attracted on the failure of the assessee to file a fresh return in compliance with notice under Section 147(1)/148 of the Income-tax Act, 1961 ?"
2. These references relate to the assessment years 1955-56, 1956-57, 1957-58 and 1958-59.

The facts, briefly stated, are that M/s. Tiwari Swaroop Lal Kanhaiya Lal (hereinafter referred to as "the assessee") was an HUF and was a partner in the firm, M/s. Tiwari Jhumarlal Swaroop Lal, through its karta, Shri Kanhaiya Lal Tiwari. M/s. Tiwari Jhumarlal Swaroop Lal had business at Jaipur, Bharatpur and Karauli. The assessee filed returns for the assessment years referred to above and on the basis of the said returns, assessments were completed. Subsequently, the Income-tax Department received information about concealment, of income by M/s. Tiwari Jhumarlal Swaroop Lal and raids were organised on the premises of the said firm and its partners. The aforesaid raids resulted in discovery of concealment of income to the tune of Rs. 41 lakhs by M/s. Tiwari Jhumarlal Swaroop Lal. Thereupon, proceedings under Sections 147 and 148 of the Act were commenced against the assessee and notices under Sections 147/148 were issued by the ITO on March 4, 1964, requiring the assessee to file revised returns of its income. The assessee did not file the revised returns but appeared before the ITO through its karta, Shri Kanhaiyalal Tiwari, and one Gulab Chand, The ITO reassessed the income of the assessee and also imposed penalty on the assessee under Section 271(1)(a) of the Act for failure on its part to file the returns. The appeals filed by the assessee against the orders of assessment as well as orders of penalty imposed under Section 271(1)(a) were dismissed by the AAC as well as the Tribunal. Thereupon, the assessee moved an application before the Tribunal for referring eight questions for the opinion of this court under Section 256(1) of the Act. The Tribunal, after considering the said questions, felt that questions Nos. 1, 2, 4, 6 and 8 could not be referred as they did not raise any question of law but after considering questions Nos. 3, 5 and 7 raised by the assessee in the said application, the Tribunal referred the questions above referred for the opinion of this court.

We have heard Shri S. K. Keshote, the learned counsel for the assessee, and Shri R. N. Surolia, for the Revenue.

Shri Keshote has submitted that in the particular circumstances of the case, the assessee was not liable to submit a fresh return of income in compliance with the notice issued under Section 148 of the Act inasmuch as the assessee had already filed its returns at the original assessment stage and the assessee had not accepted the Department's contention that there was concealment of income by it, the assessee was not required to submit a fresh return and that any such return, if filed, would only have been a repetition of the earlier return. Shri Keshote has also submitted that in order that the provisions of penalty under Section 271(1)(a) of the Act are attracted, it is necessary for the Department to establish that the assesses had failed to furnish the returns without reasonable cause and since it was not necessary for the assessee to file a fresh return in response to the notice issued under Section 148 of the Act, no penalty could be imposed on the assessee under Section 271(1)(a) of the Act. Shri Keshote has also submitted that the burden to establish that the assessee was liable to penalty under Section 271(1)(a) of the Act lay on the Department and that, on the facts and circumstances of the present case, it could not be said that the Department has been successful in establishing that the assessee had failed to furnish the return in response to the notice under Section 148 without reasonable cause. In support of his aforesaid submission, Shri Keshote has placed reliance on the decision of a Division Bench of the Gauhati High Court in Sewbalakram & Co. v. CIT [1984] 146 ITR 148.

Shri R. N. Surolia, the learned counsel for the Revenue, has on the other hand submitted that in view of the notice issued under Section 148 of the Act requiring the assessee to furnish a revised return, the assessee was liable to submit a fresh return of income. Shri R. N. Surolia has also submitted that the failure on the part of the assessee to submit the revised return in response to the notice issued under Section 148 of the Act rendered him liable to penalty under Section 271(1)(a) of the Act and that it was for the assessee to show that he had a reasonable cause for not filing the return. Shri Surolia also submitted that in the present case, the assessee had assigned two reasons for not filing the returns, viz., that the service of the notice on Gulab Chand was not a proper service on the assessee and that in view of the fact that the records and books of account of the assessee had been seized by the Department in May, 1963, it was not possible for the assessee to file a return. Shri Surolia has submitted that both the reasons given by the assessee for not filing the return have been rejected by the Tribunal and that, in the circumstances, it must be held that the assessee has failed to show that there was reasonable cause for its not filing the returns.

(3.)IN order to answer the first question, it will be necessary to take note of the provisions of Section 148 of the Act which reads as under :
"148. (1) Before making the assessment, reassessment or recomputation under Section 147, the INcome-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under Sub-section (2) of Section 139 ; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section.

(2) The INcome-tax Officer shall, before issuing any notice under this section, record his reasons for doing so."

A perusal of the aforesaid provisions shows that they require the ITO, before making the assessment, reassessment or recomputation under Section 147, to serve on the assessee a notice containing all or any of the requirements which may be included in a notice under Sub-section (2) of Section 139 and the provisions of the Act, so far as may be, would apply to such notice as if the notice were a notice issued under Sub-section (2) of Section 139. Sub-section (2) of Section 139 lays down that in the case of any person who, in the ITO's opinion, is assessable under the Act, whether on his own total income or on the total income of any other person during the previous year, the ITO may, before the end of the relevant assessment year, issue a notice to him and serve the same upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. It would thus be seen that by a notice issued under Sub-section (2) of Section 139, a person may be required to furnish a return of his own income or the income of any other person mentioned in the prescribed form and setting forth such other particulars as may be prescribed. In view of Section 148, the ITO is required to issue a notice which may contain all or any of the requirements which may be included in a notice issued under sub- Section (2) of Section 139. This would mean that by a notice under Section 148, the ITO may require the assessee to furnish a return in respect of the previous year in relation to which he is seeking to make the assessment, reassessment or recomputation under Section 147 of the Act. By a notice under s, 148, the ITO may also ask the assessee to furnish such other particulars as he may desire in the said notice. On the facts of the present case, we are not required to consider as to whether the assessee is liable to furnish a revised return in every case in which a notice has been issued under Section 148 of the Act. From the order of the Tribunal dated August 31, 1971, which has been annexed as annexure to the statement of the case, we find that under the notices that were issued to the assessee under Section 148 of the Act, the assessee was required to file revised returns of its income. We are, therefore, only required to consider as to whether in a case where an assessee has been served with a notice under Section 148 of the Act requiring him to file a revised return of its income, the assessee is liable to submit fresh returns of his income in compliance with the said notice. In our opinion, the notice issued under Section 148 requiring the assessee to file a fresh return carries with it an obligation to file the fresh return in pursuance of the said notice. In case the assessee feels that it is not necessary to file a fresh return and that the earlier return filed by him under Section 139 of the Act should be treated as the return for the purpose of reassessment under Sections 147 and 148 of the Act, he may inform the ITO of his decision to treat his previous return as the return filed in response to the notice under Section 148 of the Act and, in that event, the earlier return will be treated as the fresh return submitted in response to the notice under Section 148 of the Act. It must, therefore, be held that in the particular circumstances of the present case, the assessee was liable to submit fresh returns of income in compliance with the notice under Section 148 of the Act.

We may now come to the second question which has been referred by the Tribunal, namely, whether the penalty provisions under Section 271(1)(a) were attracted for the failure of the assessee to file a fresh return in compliance with the notice under Section 147/148 of the Act. Section 271(1)(a) lays down that if the ITO or the AAC, in the course of any proceedings under the Act, is satisfied that any person 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, the ITO or the AAC may direct that such person shall pay by way of penalty the amounts specified in Clause (i) of the said sub-section. It would thus appear that the failure on the part of the assessee without reasonable cause to furnish the return of total income which he was required to furnish by a notice under Section 148 empowers the ITO or the AAC to impose penalty on the assessee. Shri Keshote has submitted that the aforesaid provisions contained in Section 271(1)(a) of the Act with regard to the imposition of penalty are in the nature of penal provisions and that it is necessary for the Department to first prove that the conditions necessary for imposition of penalty have been fulfilled and that the burden of proving the said condition lies on the Department. According to Shri Keshote, mens rea is a necessary element for imposition of penalty under Section 271(1)(a) of the Act and that it is necessary for the Department to first show that the assessee has failed to furnish the return which he was required to furnish without a reasonable cause. In support of this aforesaid submission, Shri Keshote has placed reliance on the decision of the Gauhati High Court in Sewbalakram & Co. v. CIT [1984] 146 ITR 148. In this regard, Shri Keshote has also submitted that, in the facts and circumstances of the present case, it cannot be said that the aforesaid burden had been discharged by the Department inasmuch as the Department did not produce any material to show that the assessee had failed to furnish the return in response to the notice under Section 148 without reasonable cause.