LexADDL. COMMISSIONER OF INCOME TAX, GUJARAT versus I.M. PATEL AND CO.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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ADDL. COMMISSIONER OF INCOME TAX, GUJARAT
v.
J.M. PATEL AND CO.
APRIL 28, 1992
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[S. MOHAN AND G.N. RAY, JJ.J
. Income Tax Act, 1961 :
Section 271 (J){a)-Penalty for belated filing of retum-Assessee
C prevented by 'reasonable cause'-Burden of proof-Mens reo-Wliether re-
quired to be established.
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For the belated filing of Income-tax returns, for three consecutive
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assessment years, the respondent-assessee was imposed penalty under
section 271(1)(a) of the Income-tax Act, 1961. On appeal by the assessee,
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D the Appellate Assistant Commissioner confirmed the same. Revenue
preferred an appeal before the Tribunal. The Tribunal decided the ques-
tion in favour of the assessee and referred to the High Court the question
of law as to whether the Tribunal was justified in law in cancelling the
penalty levied on the assessee under section 271(1)(a) for the three assess-
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ment years. The Division Bench of the High Court referred the matter to
a Full Bench which decided the question of law that reasonable cause was
an ingredient of the.offence for which the penalty has been provided and
that the taxing authority has prim a f acie. to prove absence of reasonable
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cause, and returned the matte..S to the Division Bench for disposal in
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accordance with law. The Division Bench hP.ld that the assessee had shown
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reasonable cause for the delay and answered the question against the
Revenue .. Aggrieved by the said order the Revenue has preferred the
present appeals.
On behalf of the Revenue, it was contended that there has been a
G fundamental distinction between the levy of penalty under section
271(1)(a) as opposed to sectfon 271(1)(c) of the Act in that the former
related to obligation to file return in time while the latter dealt with
concealment. And in the former case no mens rea was involved.
The assessee contended that mens rea was relevant and there was not
H much difference between a case falling under section 271(1)(a) or Section
914
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ADDL. COMMISSIONER v. PATEL & CO.
915
271(1)(c).
Allowing the appeal, ~his Court,
HELD : 1.1. In most cases of criminal liability the intention of the
Legislature is that the penalty should serve as a deterrent. The creation
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of an offence by statue proceeds on the assumption that society suffers B
injury by the act or omission of the defaulter and that a deterrent sentence
must be imposed to discourage the repetition of the offence. In t&e case
of a proceeding under section 271(1)(a), however, it seems that the inten-
tion of the Legislature is to emphasise the fact of loss of revenue and to
provide a remedy for such loss, although no doubt an element of coercion
is present in the _penalty. In this connection, the terms in which the penalty C
falls to be measured are significant. Unless there is something in the
language of the statute indicating the need to establish the element of
mens rea, it is generally sufficient to prove that a default in complying
with the statute has occurred. [920 A-C]
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1.2. There is nothing in section 271(l)(a) which requires that mens
rea must be proved before pena!ty can be levied under that provision.
[920-D]
Gujarat Travancore Agency v. Commissioner of Income Tax, Kera/a,
177 ITR 455 SC; Commissioner of Income Tax v. Kalyan Dass Rastogi, i93 E
ITR 713, relied on and applied ..
Morvi Cotton Merchants Industrial Corpn. Ltd. v. State of Gujarat, 36
STC 347; Commissioner of Income Tax v. Gujarat Travancore Agency, 103
ITR 149; Addi. Commissioner of Income Tax, Gujarat v. J.M. Patel and Co.,
107 ITR 214, referred to.
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CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2626-28
of 1979.
On Appeal by Certificate from the Judgment and Order dated
13.12.1976 of the Gujarat High Court in Income-tax Reference No. 24 of G
1973.
J. Ramamurthy, Ranbir Chandra and A. Subhashini (NP) for the
Appellant.
Sunil Dogra and P.H. Parekh for the Respondent.
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SUPREME COURT REPORTS
[1992]12 S.C.R.
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The Judgment of the Court was delivered by
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S. MOHAN, J. All the three appeals can be dealt with under the
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common judgment since the assessment years are different while the
assessee- the respondent is one and the same. The three assessment years
in question are 1964-65, 1965-66 and 1966-67.
For the year 1964-65, the assessee returned an income Rs. 48,000
while he was assessed on an income of· Rs. 58,557 imposing a penalty of
Rs. 9,690. For the year 1965-66, the assessExcerpt shown. Read the full judgment & AI analysis in Lexace.