Law:

Section:

Income tax----Penalty---Levy of---Principles---penalty proceedings are of quasi-criminal nature---Initial burden on revenue to prove deliberate defiance of law---Revenue failing to establish mens rea---Tribunal held was justified in setting aside penalty. An order imposing penalty for failure to carry out a statutory obligation is the result of quasi-criminal proceedings and penalty will not ordinarily be imposed unless the party obliged; either acted deliberately in defiance of law, or was guilty conduct contumacious are dishonest or acted in conscious disregard his obligation. Whether penalty should be imposed for failure to perform a statutory obligation is, a matter of discretion of the authority to be exercised judicially and on a consideration, of all the relevant circumstances Law imposes penalty on contumacious or fraudulent assessees and the above principle applies to the imposition of penalty. The revenue had failed to 18-A how that the assessee either deliberately acted indolence of law or that its conduct was contumacious or dishonest. In the circumstances the Tribunal could not be said to have made a wrong approach or misdirected itself, on a question of law and the application for reference was rejected. Hindustan Steel Ltd. v . State Of Orissa (1972) 83 ITR 26 Khemka and Co. (Agencies ) Pvt. Ltd. v. State of Maharastra (1975) 35 S T C 571:C.I.T. v. Anwar Ali (1970) 76 ITR 696 (SC) and C.I.T. v. Gokuldas Harivallabhdas (1958) 34 ITR 98 (Bom) fol. C.I.T. v. Gangaram Chapolia (1976) 103 I .T R 613 (Orissa) (F.B.); C.I.T. v. Gujarat Travancore Agency (.1976) 103 1 T 8 149 (Ker.) (F.B.); C.I.T. (Ad dl.) v. Patel (I.M.) & Co. (.1977) 107 TTA 214 (Guj.) (F.B.); Dawn & Co. v. CJ.T. (1973) 87 T.R.71 and Dutt. (V.L.) v. C.I.T. (1976) 10 L T. R. 634 (flail.) JUDGMENT M.L. JAIN, J.-- This is an application under subsection (2) of section 256 of the I.T. Act, 1961 (hereinafter, referred to as the Act), for requiring the Income-tax Appellate Tribunal, Jaipur Bench, to state a case and refer the following question of law alleged to. be arising out of its order dated July 23, 1974, namely: "Whether, on the facts and in the circumstances of the case the…

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