The requirement to prove mens rea before imposing penalty under Sec. 271(1)(a) of the Income Tax Act, 1961.

( 1 ) THE Income Tax Appellate Tribunal, Bangalore Bench has stated a case for the opinion of this Court under S. 256 (1) of the Income Tax Act, 1961, hereinafter called 'the Act' and referred the following question of law" Whether, on the circumstatices of the case, levy of penalty under section ?71 (1) (a) is valid in law? "with the consent of the learned Counsel for the Assessee and the Department, we recast the question as follows :" Whether on the facts and in the circumstances of the case, the the levy of penalty under S. 271 (1) (s) is justified in law? "

( 2 ) THE Assessee is a registered firm and the relevant accounting period was the financial year ended on 31-3-1966. The return of income under S. 139 (2) became due on 7-10-1966. The Assessee did not file its itrc. 21 of 1971. return by the said date nor did it apply for extension of time until 17-12- 1966. The request for extension of time made on 17-12-1966 was not granted by the Income Tax Officer. The return was filed on 22-2-1967 a,nd thereafter the assessment was finalised on 28-2-1967 in the status of the registered firm. The firm's income tax amounted to Rs. 4,565 while the interest under Section 139 (1) proviso (iii) was Rs. 38.

( 3 ) THE Income Tax Officer issued a show cause notice as to why penalty shall not be levied under S. 271 (1) (a) of the Act for belated return. The Assessee submitted its explanation. Thereafter, the Income tax Officer madse an order on 30th June 1967 levying a penalty of rs. 2,960. Appeal preferred to the Appellate Assistant Commissioner by the Assessee against the said order was unsuccessful. Second appeal before the Income Tax Appellate Tribunal, Bangalore Bench in ITA. No. 3506 of 1968-69 was also unsuccessful except to the limited extent of reduction of penalty to Rs. 2,086.

( 4 ) BEFORE the Tribunal, a number of grounds were urged on behalf of the. Assessee, but before us, the learned Counsel for the Assessee restricted his arguments to only one point viz. , that the Assessing Authority as well as the Appellate Authorities have totally misdirected themselves on a question of law. Its learned Counsel, Sri K. Srinivasan, submitted that the burden is on the Department to show tha,t th;e delay in the sub-mission of the return was without reasonable cause and that the mere rejection of the explanation offered by the Assessee for the belated return was not sufficient to attract the penalty. We have been taken through the order of the Income Tax Officer as well as the orders of the two appellate Authorities.

( 5 ) SEC. 271 (1) (a) of the Act confers jurisdiction on the Income Tax officer or the Appellate Assistant Commissioner in the course of any proceedings under the Act to direct any Assessee to pay by way of penalty the sums calculated in the manner provided under the said sub-section. The condition precedent to be satisfied for the Income Tax Officer to levy penalty is that the assessee has without reasonable cause failed to furnish the return or has without reasonable cause failed to furnish it within the time allowed by law.

( 6 ) SEC. 271 (1) (a) is in pari materia with S. 18 (1) (a) of the Wealth tax Act, 1957. This Court had occasion to consider the scope of the power under Sec. 18 (1) (a) of the Wealth Tax in Writ Petition Nos. 3125 to 3129 of 1971 (1) decided on 12th July 1973. This is what this Court stated in the said decision :" It is clear from the perusal of the above provision that the Wealth tax Officer has to satisfy himself that the Assessee has without reasonable cause failed to furnish the return which he is required to furnish under the act. It means that the Department must decide that the Assessee had no reasonable cause for not filing the return within the time. "this Court relied on the decision of the Supreme Court in Hindustan, Steel ltd. v. State of Orissa, (1972) 83 ITR. 26 at 29. although the said case arose under the Orissa sales Tax Act. The Kerala High Court in Dawn and Co. v. Com