JUDGMENT

PATHAK, CJI. :— These appeals, by certificate granted by the High Court of Kerala, are directed against the judgment of that High Court answering the following question of law referred to it in an Income-tax Reference in favour of the Revenue and against the assessee:

"Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in cancelling the penalties levied under S. 271(l)(a) of the Income-tax Act, 1961, for the assessment years 1965-66 and 1966-67 ?"

2. The assessee is a registered firm trading in hill produce. The assessee did not file its income-tax return under the Income-tax Act, 1961 for the assessment year 1965-66 within the statutory period, that is to say by 30th June, 1965, and instead applied for time to file the return. Time was granted up to 31st August, 1966. Yet no return was filed. It was only after notice under S. 139(2) of the Act was served on the assessee on 22nd September, 1967 that it filed a return on the next day. Similarly for the assessment year 1966-67 no return was filed up to 30th June 1966. No application for extension of time was made either. When notice under S. 139(2) was served on the assessee on 21st June, 1966 it filed a return on 23rd September, 1967. In the circumstances, the Income-tax Officer initiated penalty proceedings against the assessee under S. 271(l)(a) of the Act for the two assessment years. A sum of Rs. 14,784/- was levied as penalty for the assessment year 1965-66 and a sum of Rs. 11,447/- was imposed as penalty for the assessment year 1966-67. The explanation of the assessee that he was under the bona fide belief that he had no assessable income and had, therefore, not filed the returns earlier was not accepted by the Income-tax Officer. In appeal before the Appellate Assistant Commissioner of Income-tax, the assessee did not press the ground that there was no deliberate omission on his part to file the returns and that therefore S. 271(l)(a) of the Act was not attracted. In second appeal before the Income-tax Appellate Tribunal permission was granted to the assessee to raise the ground. The Appellate Tribunal allowed the appeals holding that the Income-tax Officer had failed to bring on record any material to show that the explanation of the assessee tendered before him in regard to the delay should not be accepted, and that as the element of mens rea was required to be proved and had not been proved the penalties were liable to be cancelled.

3. At the instance of the Revenue the Appellate Tribunal referred the question set forth earlier to the High Court of Kerala. It may be mentioned that another question was also referred, which related to the Appellate Tribunal entertaining the additional ground of appeal, but the appeals before us are not concerned with that question. The question with which we are concerned was referred to a Full Bench of the High-Court, and the High Court has taken the view that mens rea need not be established before penalty is imposed under S. 271(l)(a) of the Act, and that, therefore, the Appellate Tribunal was not justified in cancelling the penalties levied for the two assessment years.

4. Learned counsel for the assessee has addressed an exhaustive argument before us on the question whether a penalty imposed under S. 271(l)(a) of the Act involves the element of mens rea and in support of his submission that it does he has placed before us several cases decided by this Court and the High Courts in order to demonstrate that the proceedings by way of penalty under S. 271(l)(a) of the Act are quasi criminal in nature and that therefore the element of mens rea is a mandatory requirement before a penalty can be imposed under S. 271(l)(a). We are relieved of the necessity of referring to all those decisions. Indeed, many of them were considered by the High Court and are referred to in the judgment under appeal. It is sufficient for us to refer to S. 271(l)(a), which provides that a penalty may be imposed if