V.K. Singhal, J. - (1.) THE Income-tax Appellate Tribunal has referred the following two questions of law arising out of its order dated July 21, 1982, in respect of the assessment year 1976-77 under Section 256(1) of the Income-tax Act, 1961 : "(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in deleting the penalty of Rs. 7,339 levied under Section 271(1)(a) of the Income-tax Act, 1961 ? (2) Whether the decision of the Income-tax Appellate Tribunal is perverse in deleting the penalty of Rs. 7,339 levied under Section 271(1)(a) inasmuch as they have relied on their decision in quantum appeal not served so far ?"
(2.) THE brief facts of the case are that the assessee was required to file a return of its income under Section 139(1) of the Income-tax Act on or before June 30, 1976. THE said return was filed on February 18, 1977, which was late by seven months. THE assessment of the assessee was completed on February 27, 1979, on a total income of Rs. 3,61,924 and the tax liability of Rs. 1,90,008 was created. THE Inspecting Assistant Commissioner of Income-tax issued a notice for default in the submission of the return under Section 271(1)(a) of the Income-tax Act. THE Inspecting Assistant Commissioner came to the conclusion that the assessee has received a sum of Rs. 47,428 as absence fee for its employees for the services rendered in India and included the tax liability as the income of Rs. 99,850 accrued to the assessee company in India. A penalty of Rs. 7,339 was levied on the tax amount of Rs. 52,421. This matter was challenged in appeal and the Commissioner of Income-tax (Appeals) came to the conclusion that every default does not attract penalty and for successfully levying penalty mens rea should be proved. Since no mala fide intention was found on the part of the assessee, the levy of the penalty for delay in submission of the return was set aside. The Income-tax Appellate Tribunal found that after giving effect to the order of the Appellate Tribunal in the quantum appeal, the tax worked out will be nil and no penalty was exigible. Learned counsel for the Revenue has submitted that the Commissioner of Income-tax (Appeals) was not justified in holding that there should have been mens rea before imposing the penalty and the Income-tax Appellate Tribunal was not justified in remitting the penalty when reference was made by the Tribunal under Section 256(1) on the quantum appeal. We have considered the matter. For the purpose of levy of penalty or to find out whether an offence under Section 271(1)(a) of the Income-tax Act has been committed or not mens rea is not required to be proved and it is not an essential ingredient. The only requirement is as to whether there was reasonable cause or not for which an explanation has to be submitted by the assessee. The matter with regard to the tax liability has already been decided by this court in favour of the Revenue. In the light of the circumstances of the case the order of the Income-tax Appellate Tribunal is set aside and the matter is sent back to the Tribunal for considering this aspect of the matter whether there was any reasonable cause for late furnishing of the return. Since no finding has been recorded by the Tribunal on this point, the said point has to be decided after hearing both parties and if the Tribunal comes to the conclusion on the basis of the explanation given by the assessee for late submission of the return that there was no reasonable cause, the Tribunal would be justified in upholding the order of penalty passed by the Inspecting Assistant Commissioner of Income-tax. Mens rea is not required to be proved for levying penalty under Section 271(1)(a) of the Income-tax Act and, therefore, the order passed by the Commissioner of Income-tax (Appeals) cannot be considered to be in accordance with law and since the Income-tax Appellate Tribunal has not gone into that point and has remitted the penalty on the ground that there is no tax liability hence no penalty could be levied, the matter has to be decided afresh in accordance with the directions given above.
(3.) CONSEQUENTLY, the reference is returned unanswered for decision afresh. No order as to costs.;