Law: Income Tax Act, 1961

Section: 271(1)(a)

Income-tax---Penalty---Nature of penalty proceedings---Burden of proof---Delay in filing return---Want of reasonable cause, whether an ingredient of the offence--¬Burden of proof of want of reasonable cause---When burden of proof shifts to Assessee---Necessity of mens rea---Indian Income Tax Act, 1961, S.271(1)(a).-¬CIT v. Gangaram Chapolia (1976) 103 ITR 613 (Orissa) dissented from]. The penalty, which can be imposed under section 271(1) of the Indian Income Tax Act, 1961, is to be imposed on contumacious or fraudulent assesses. It is a quasi-criminal proceeding and the section is penal in the sense that its consequences are intended to be an effective deterrent, which will put a stop to practices, which the legislature considers to be against the public interest. Whenever a statute defines an offence and provides a punishment for it, it is for the prosecution to prove all the ingredients of the offence. In penalty proceedings under section 271(1)(a) of the Act, the assessee upon whom the penalty is sought to be imposed is in the position of an accused in a criminal trial and, therefore, all the ingredients of the offence for, which the penalty can be imposed must be established by the revenue. It is from this aspect that one has to consider the question whether the words "failure without reasonable cause" in section 271(1)(a) constitute an ingredient of the offence or not. Looking to the wording of the section and on a plain reading of section 271(1)(a), it is obvious first that the failure to file the return may be with reasonable cause or without reasonable cause, but the offence for which the penalty is imposable is failure without reasonable cause to file the return within the time specified in the section and, therefore, it is for the revenue to establish as an ingredient that the failure in the particular case was without reasonable cause. Once the department has discharged that initial burden, it will be for the assessee to show that there was reasonable cause on his part in failing to furnish the return in time. On the principles underlying section 106 of the Evidence Act, since the facts which constitute a reasonable cause are specially within the…

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