ADDITIONAL COMMISSIONER OF INCOME TAX Vs. NARAYANADAS RAMKISHAN

JUDGEMENT

(1.) THIS petition is filed under Section 256(2) of the Income-tax Act, 1961, by the Additional Commissioner of Income-tax seeking direction to the Income-tax Appellate Tribunal to state a case and refer for the opinion of this court, the questions formulated in the petition. The questions formulated for reference are the following:

(2.) THE facts necessary for determination of the questions sought to be referred to this court may be stated: THE assessee, M/s. Narayanadas Ramkishan, is an unregistered firm. For the assessment year 1966-67, it had to file the return of its income under Section 139(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), on or before 30th June, 1966; but it filed the return only on 16th March, 1970, showing an income of Rs. 12,664. THE Income-tax Officer, for the late filing of the return, issued a notice to the assessee to show cause why penalty should not be levied. On the ground that the assessee had not given any reasons, which prevented it from filing the return in time, the Income-tax Officer came to the conclusion that it had no reasonable cause for not filing the return in time and, in that view, levied a penalty of Rs. 724, under Section 271(1)(a) of the Act. THE Appellate Assistant Commissioner, on appeal, confirmed the order of the Income-tax Officer, with the result that the assessee' went up in further appeal to the Income-tax Appellate Tribunal, THE Income-tax Appellate Tribunal, on the facts presented before it, came to the conclusion that under the orders issued by the Central Board of Direct Taxes under Section 119(2)(a) of the Act, no proceedings for imposition of penalty could be initiated under Section 271, if the assessee had, prior to the issue of notice under Section 139(2), furnished a return of its income before January 1,1973, and if the total income as declared by the assessee in the return and the total income as assessed did not exceed Rs. 15,000 and that since the assessee's case fell within the exemption given, Section 271(1)(a) is not attracted. THE Tribunal also expressed the view that, although the order of the Central Board of Direct Taxes came Into force on September 1, 1971, there was no reason why the benefit of that order should not be extended to a person who had filed the return prior to 1971. It also held that "we do not find material let in by the revenue to show that the assessee wilfully defaulted, more specially, when it is seen that the return was filed voluntarily without issue of notice under Section 139(2)." THE Tribunal, in that view, set aside the orders of the authorities below imposing penalty upon the assessee. As the Tribunal refused to make a reference at the instance of the Commissioner, the Commissioner has filed this petition.

(3.) SO, what has to be considered is whether it is necessary that the revenue should establish mens rea or guilty mind of the assessee before it can invoke the penal provisions and levy penalty on the assessee. Mens rea means a guilty mind, a guilty or wrongful purpose; a criminal intent. It presupposes guilty knowledge and wilfulness. The contention of Mr. Rama Rao is that a reading of Section 271(1)(a) would show that the provision does not speak of the existence of mens rea in an assessee and that the failure of an assessee to comply with the requirements of Section 139(1) would automatically invite the penal provision. We may, therefore, notice Section 271(1)(a), which reads :