Mens rea is required for tax penalty; delay in paying admitted tax without deliberate default could not justify penalty.

Penalty under section 16(9) of the Bihar Finance Act, 1981 is a quasi-judicial consequence and is ordinarily attracted only where the default reflects dishonesty, wilful defiance, or conscious disregard of the statutory duty. On the facts recorded, there was no material to show mens rea or deliberate default in delaying payment of admitted tax, and the conduct could not be treated as wilful evasion. The penalty was therefore not sustainable and was set aside in favour of the assessee.

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Issues: Whether penalty under section 16(9) of the Bihar Finance Act, 1981 was sustainable when payment of admitted tax was delayed and the delay was alleged to be without any deliberate default.

Analysis: Penalty provisions of this nature are quasi-judicial and involve the exercise of judicial discretion. They are ordinarily attracted only where the defaulting party acts dishonestly, intentionally, in defiance of law, or in conscious disregard of the statutory obligation. On the facts recorded, the Court found no ingredient of mens rea and no material showing that the delay in payment was deliberate. The circumstances did not justify treating the conduct as wilful evasion of tax.

Conclusion: The penalty was not sustainable and was liable to be set aside in favour of the assessee.

Final Conclusion: The writ application succeeded and the order imposing penalty was annulled.

Ratio Decidendi: Penalty for tax default is not warranted in the absence of mens rea or deliberate, contumacious conduct showing conscious disregard of the statutory obligation.

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