TaxTMI 
TaxTMI 
1982 (1) TMI 13
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.... the assessee is one of the beneficiaries of a trust called " Purna Chandra Paul Trust " with 1/5th share. 90% of the assessee's wealth-tax was from the said trust and the remaining 10% was from some movable properties. The returns for those assessment years under reference were filed after a long delay and for this default the WTO imposed penalties under s. 18(1)(a) of the W.T. Act, 1957. Being aggrieved by the aforesaid Order of the WTO, the assessee went up in appeal before the AAC and the AAC agreed with the WTO and affirmed the imposition of penalties. Thereafter the assessee filed appeals before the Income-tax Appellate Tribunal. The Tribunal noted the facts in great detail. It appears, as we have mentioned hereinbefore, four years were involved, the first valuation date was 31st of March, 1966 and the returns in respect of the first assessment year was due, to be filed on 30th of June, 1966 and the other valuation dates were 31st of March for the subsequent years and the returns were to be filed on the 30th of June, of the subsequent years. It appears that the wealth-tax returns were filed for the first two years, viz., 1966-67 and 1967-68, on 9th of August, 1971, and for t....
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....as placed on the authority of the Supreme Court decision in the case of Hindustan Steel [1972] 83 ITR 26; [1970] 25 STC 211, to which we shall presently refer. It was conceded before the Tribunal on behalf of the assessee that there was inordinate delay in filing the returns of the wealth tax for these years but it was emphasised that the delay was for sufficient cause. It was stated that for the assessment years 1964-65 and 1965-66, the assessee had himself filed the wealth-tax returns voluntarily although there was delay in the filing of these returns also but, taking into account the assessees circumstances, no penalty had been levied for that default. For these assessment years the assessee had thought it fit to have the property valued by an approved valuer so that the correct value could be incorporated in the various wealth-tax returns. Delay had been caused in the process of valuation of properties partly because it was a matter of common problem of the five beneficiaries of the trust, out of which one of them was all along in the U.K. at the relevant time, and also because the various properties were situated at different places. The valuation report was received by the as....
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.... the various properties of the trust, i.e., till the end of December, 1970, the assessee was prevented by reasonable cause from filing the wealth-tax returns within proper time but for the period from 1st January, 1971, the Tribunal found that there was no reasonable cause for the delay in filing the return. After coming to this finding of fact the Tribunal was of the view that in view of proceedings of penalty u/s. 18(1)(a) inasmuch as the assessee had proved that there was reasonable cause for non-filing of the returns up to December, 1970, but thereafter, there was no further explanation for the delay, the Revenue was justified in imposing the penalty. On the aspect of the law applicable, the Tribunal was in agreement with the learned counsel for the assessee that the law applicable was the law that was in force on the date on which the default was committed. But the Tribunal was of the view that this law should not continue to govern the quantum of the penalty throughout. According to the Tribunal, non-filing of the return is a continuous default commencing from the date on which the return became due and ended with the date on which the return was actually filed. In the prese....
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.... failure, subject to a maximum in the aggregate, of 50 per cent. of such tax. Under the Wealth-tax Act, every individual and Hindu undivided family having a net wealth liable to wealth-tax is required to furnish return of net wealth voluntarily, before June 30 of the assessment year. Where a notice calling for the return is issued, the return is to be furnished within the time specified in the notice. How I ever, if a person is not in a position to furnish the return voluntarily by the due date or by the date specified in the notice calling for the return, it is open to him to obtain an extension of time by applying to the Wealth-tax Officer. If the return is furnished within the extended time, no penalty is imposable for not furnishing the return by the original date. Further, in a case where extension of time for furnishing the return has not been obtained but a return making full disclosure of the net wealth is furnished voluntarily before the issue of notice and the taxpayer extends his co-operation to the Department in the assessment proceedings and in paying the wealth-tax, the penalty imposable can be reduced or waived depending on the circumstances of the case. " On thi....
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....ed in Paragraph A of Part I Of the Schedule Or Part 11 of the Schedule, the wealth-tax chargeable is nil. " As we have mentioned before, the section has undergone changes subsequently and before the amendment the penalty imposed was on the amount of wealth-tax, if any, payable by him, a sum, for every month during which the default continued, equal to one-half per cent. of the tax payable by the assessee. The question in this case is when the assessee committed this default and whether there was any continuing default. Section 14 imposes the liability to file the return before the 30th day of June of the corresponding assessment year. In the present case with which we are concerned for the first year 1966-67 the return was due to be filed on the 30th of June, 1966, which was actually filed on 9th August, 1971. For the second year 1967-68, the return was due to be filed on the 30th June, 1967, and was actually filed on 9th August, 1971. For the third year 1968-69, the return was due to be filed on the 30th June, 1968, and was in fact filed on 9th February, 1973 and for the fourth year 1969-70, the return was due to be filed on 30th June, 1969, and was actually filed on 9th February....
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....ed certain amount of wealth-tax. The Supreme Court set out the relevant provisions of s. 18 prior to 1965, which enjoined the imposition of penalty not exceeding, in addition to the amount of wealth-tax payable by him, one and a half times the amount of tax and also the position between 1st April, 1965, and 31st March, 1969, was that the penalty imposable was not exceeding certain sum in addition to the amount of wealth-tax payable by him equal to two per cent. for every month for which the default continued and the position after 1st April, 1969, to 31st March, 1971 was different with which we are not concerned. After analysing s. 14, the Supreme Court, thereafter, was of the view that the default, in that case the offence, was committed on the failure to file the return by the time enjoined by s. 14 by 30th June of each year and the expression used " for the period for which the default continued " was only an indicator or a multiplier of the quantum of penalty that could be imposed in this regard. In view of that categorical expression on the law, we are bound to hold that the Tribunal was not right in holding in the manner as it did. It might, however, be pointed out respectful....
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....the press note issued by the Ministry of Finance, Govt. of India, on 19th May, 1951, and 17th July, 1951, dealing with the concessional scheme for payment of arrears and voluntary disclosure of income had no legal force. The circulars issued by the Board under s. 13 of the W.T. Act, which the W.T. authorities are bound to follow, in our opinion, stand on a different footing. In that view of the matter, the decision in the case of Navnit Lal C. Javeri v. K. K. Sen, AAC [1965] 56 ITR 198 (SC), will have no relevance to the facts and circumstances of this case. Our attention was also drawn to certain observations in the case of William Jacks & Co. Ltd. v. State of Orissa [1970] 25 STC 19, where the Supreme Court only mentioned a certain press note but the Supreme Court did not have any occasion to consider as there was no question before the Supreme Court whether the press note would either be binding or not relevant before the judicial authorities acting either under the Sales Tax Act or under the I.T. Act or the W.T. Act. The Supreme Court, in our opinion, only in the narration of facts referred to the press note. Next question that requires consideration is whether mens rea, as su....
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....976] 103 ITR 613, where the Full Bench of the Orissa High Court at p. 618 of the report observed as follows : " Language of the section is plain that mere failure to file the return in time would not entail imposition of penalty. The concerned taxing authorities must be satisfied that failure to furnish the return in time is without reasonable cause. The cause why the assessee did not furnish the return in time lies within his special knowledge. The burden of proof of that fact is on him. He should, therefore, indicate the cause with full particulars in his explanation for the satisfaction of the Revenue. He would also be in a position to substantiate the cause by independent evidence or from the materials available in the records of the Department. The duty of the assessee does not end by merely showing any cause. The cause shown must be such that it would be acceptable as reasonable. Though penalty proceedings are quasi-criminal in nature, the language of the clause gives a clear indication that the assessee is to prove the existence of reasonable cause by preponderance of probabilities as in a civil case and not beyond reasonable doubt. If the cause shown may reasonably be true....
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....icket of the case law-and it is indeed a deep one-it becomes apt and indeed necessary to examine the issue on larger principle and with regard to both the scheme and the particular language of the statutory provisions. Now the maxim actus non facit ream nisi mens sit rea is rooted in the antiquity of English legal history. However, for our purposes, it is unnecessary to delve into its remote origins and it suffices to mention that the requirement of a guilty state of mind at least for the more serious crimes had come to be developed even by the time of Coke which indeed is as far back as the modern lawyer need go. In his institutes, Coke categorically states the law as follows : '...if one shoot at any wild fowl upon a tree, and the arrow killeth any reasonable creature afar off, without any evil intent in him, this is per infortunium.' It would thus appear that even from the time of Coke onwards, it was well settled that the doctrine of mens rea epitomised the twin premise of English criminal jurisprudence that in order to constitute a crime, there must be an actus rea accompanied by the requisite mens rea. To put it in simple language, a completed offence requires both physica....
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....eroded and several laws in India and abroad, especially regarding economic crimes and departmental penalties, have created severe punishments even where the offences have been defined to exclude mens rea. Therefore, the contention that section 37(1) fastens heavy liability regardless of fault has no force depriving the forfeiture of the character of penalty. ' It would thus be plain that the doctrine of mens rea, in essence, has application to the law of crimes and in its later day development is a rule of construction of criminal statutes. Even in the realm of criminal offences mens rea may be excluded either expressly or impliedly by legislative mandate. Classic examples of such exclusions are sometimes in crimes of strict or absolute liability and as has been noticed above by Krishna Iyer J. in offences of economic or anti-social nature. Having seen that mens rea is, in essence, a doctrine pertaining to the criminal law, it becomes vital to determine the precise nature of the penalty proceedings in a taxing statute. Can they be termed as necessarily criminal proceedings or are they civil obligations of a coercive and remedial nature ? Is it possible to infer simply from the wo....
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....shable by an addition to the tax of 5 to 25 per cent. thereof depending on the duration of the default... The offence may be more grievous than a case for civil penalty. Hence, the wilful failure to make a return, keep records, or supply information when required, is made misdemeanour, with regard to existence of a tax liability'. " Reference was also made by the Punjab and Haryana High Court to the observations of the Supreme Court and other cases. In view of the requirements of the language used in the section, in our opinion, what is required to be enquired is the absence of sufficient cause in order to escape the liability of imposition of penalty and whether there has been any delay fixed by the statute, that must be found out from all the available records or from an examination of the explanation offered by the assessee. If no explanation is offered and if from the records it does not appear there is any explanation for the failure to file the returns beyond the time, then the penalty is imposable. To that extent an examination of the mental element, if it may be so called, is not beyond the section. Normally, presumption of onus is on the party which has the knowledge of t....
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.... There the Supreme Court was concerned with s. 2(g) of the Orissa Sales Tax Act which imposed a penalty for failure to register as dealer and held that a person who contended that he was not a dealer because his sales did not come within a particular amount when it is required to be registered, would not automatically attract penalty but criminal intention has to be proved. The Supreme Court clarified that penalty could not be imposed merely because it was required to do so; there was no statutory obligation to do so. It was a matter of discretion and it should be exercised properly in this case ; penalty could not be imposed because there is a failure to file the returns but can only be imposed on failure to file the returns without sufficient cause within the stipulated period. In the facts and circumstances of the case we do not find anything to interfere with the conclusion arrived at by the Tribunal. Before we conclude we must further note that our attention was drawn to decision given by this court in the case of Smt. Ichhabai Panchal v. CWT [1982] 137 ITR 232, where it was held that if a party had filed an application under s. 18(2A) he could not contend thereafter that ther....