8. It is not necessary for answering the question and also for the adjudication of the four appeals before us to go into the facts in minute detail. Broadly stated, the material facts are : The respondents are assessees which are firms. They failed to file their returns for the years 1965-66 to 1969-70 within the time prescribed under the Income-tax Act, 1961 (hereinafter referred to as the Act). An explanation was tendered for this delay saying that the person who was in charge of the accounts of the firms was unable to look after the affairs of the firms for some time owing to some personal reasons. The Income-tax Officer was not inclined to accept this explanation and levied penalties for late submission of the returns. The respondents preferred revision petitions before the Commissioner of Income-tax. Before him, the reason for the delay was stated as family troubles. He rejected the revision petitions as he did not accept the explanation. Thereupon, writ petitions were filed in this court by the respondents. Obul Reddy J., as he then was, quashed the orders of the Commissioner, holding that the penalties could be imposed only when it was found that the assessee acted deliberately in defiance of the law, or was guilty of contumacious or dishonest conduct, or acted in conscious disregard of his obligations and not otherwise. The learned judge sent back the matters to the Commissioner for reconsidering them in the light of the observations he made and the observations of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa . The department preferred these writ appeals challenging the learned judge's order.
 9. The view expressed by Obul Reddy J., sitting single in these writ petitions, was later reiterated and approved by a Division Bench consisting of Obul Reddy C.J. and Punnayya J. in Additional Commissioner of Income-tax v. Narayanadas Ramkishan .


Addl. Commissioner Of Income-Tax ... vs Dargapandarinath Tuljayya & Co. on 10 December, 1975

10. It was after rendering of the above Bench decision, these four writ appeals came before Chinnappa Reddy and Jeevan Reddy JJ. The learned judges observed that it was extremely difficult to agree with the view taken by Obul Reddy J., sitting single, which was reiterated in Narayanadas Ramkishan's case .


11. While stating this, the learned judges gave their reasons for their disagreement. According to them, penalty could be imposed for the delayed filing of the return under Section 271(1)(a) of the Act, when the Income-tax Officer is satisfied that the assessee has "without reasonable cause" failed to file it within the prescribed time. While imposing such a penalty, what all the Income-tax Officer is to be satisfied about is that the delay occurred "without reasonable cause". The provision of law requires nothing more or nothing less. Parliament itself has thus provided an objective test to determine the mental state of the person proposed to be proceeded against. There is no reason for importing the doctrine of mens rea into a situation where the requisite mental state is already defined. There is no justification for qualifying the failure to file a return with the expressions, "contumacious", "dishonest", "in deliberate defiance of law", etc. Then the learned judges proceeded to give the reasons in detail for the conclusions they had reached. Since this view is in conflict with the decision of the earlier Division Bench in Narayanadas Ramkishan's case , they decided that the conflict should be resolved by a Full Bench. While commending the appeals and the view propounded by Chinnappa Reddy and Jeevan Reddy JJ., in their order referring the appeals to a Full Bench, Sri Polavarapu Rama Rao pressed his brief in the following manner : The doctrine of mens rea is a rule of construction. It is a sound rule to construe the statute in conformity with the common law in so far as it is possible. However, where the statute plainly intends to alter the course of the common law, the statutory provisions should prevail. Mens rea is an essential ingredient of an offence. However, the general presumption that mens rea is an essential ingredient of an offence can be displaced either by the words of the statute creating the offence or by the subject matter with


offence can be displaced either by the words of the statute creating the offence or by the subject matter with which it deals, in which case both must be considered. It may be that mens rea is a necessary ingredient in every traditional crime which is given statutory form. But it has very limited application, and in some cases, it has no application at all to offences created by modern, social, industrial, fiscal and economic legislation. The Indian Income-tax Act is one such modern fiscal legislation. As a piece of modern fiscal and economic legislation, the Act provides for deterrents in many shapes and forms for not acting in accordance with its provisions. It may rest content with collecting interest for delayed submission of returns. In some other cases, it goes a step further and provides for levy of penalty, and in still some other cases, it treats the delayed filing of the returns an offence making the offender liable to punishment. May be, that one of the three modes of deterrents laid down by the Act for preventing delayed filing of the returns is imposition of a penalty under Section 271(1)(a). Penal proceedings are quasi-criminal in their nature. But Section 271(1)(a) itself providing for imposition of penalty, clearly lays down the test and the basis for its imposition and that is the satisfaction of the Income-tax Officer that the delay has occurred "without reasonable cause". There is no warrant or justification for inducting into this provision the concept of mens rea, when the provision itself is abundantly clear, laying down the objective tests for imposition of penalty. On the other hand, the third mode of preventive action is provided under Section 276C. Section 276C considers delayed filing of a return as an offence, which is punishable with rigorous imprisonment for a term which may extend to one year or with a fine, when the assessee has wilfully failed to furnish in due time the return of his income. In such cases alone the concept of mens rea could be


due time the return of his income. In such cases alone the concept of mens rea could be introduced, and it will have to be established by the revenue that the assessee's conduct in filing the return after due date was wilful; in other words, he deliberately acted in defiance of law or was guilty of contumacious or dishonest conduct or acted in conscious disregard of his obligations. But that is not required in a case under which action is taken under Section 271(1)(a) and penalty is imposed. In order to do so, it would meet the requirement of law if the Income-tax Officer or the Appellate Assistant Commissioner is satisfied that the assessee has "without reasonable cause" failed to furnish the return of his income within the time allowed. So, the learned counsel for the revenue argued that the existence of mens rea, i. e., contumacious conduct is not a necessary ingredient for a proceeding under Section 271(1)(a). Only the satisfaction of the concerned officer that the delay has occurred "without reasonable cause" is sufficient.


12. On the other hand, Sri Dasaratharama Reddy, for the assessees-respondents maintained that Section 271 occurs in Chapter XXI which has the title "Penalties imposable". Penalty is a penal imposition. That means the proceeding is in the nature of a criminal proceeding. Mens rea is always a necessary ingredient of a criminal proceeding. That apart, the section itself is sufficiently indicative of the intention of Parliament that mens rea has been made a necessary part of a proceeding under Section 271. He relies on the Explanation to Sub-clause (iii) of Section 271(1), which requires a person whose return of his total income is less than eighty per cent. of the total income as assessed under Section 143 or 144 or 147 to prove that his failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. In the absence of such proof emanating from him, the Explanation deems him to have concealed the particulars of his income or to have furnished inaccurate particulars of his income. The Explanation thus introduces into Section 271 the need to prove existence or absence of fraud or any gross or wilful neglect. If the returned total income is less than 80 per cent. of the total income as finally assessed, it would be for the assessee to prove absence of fraud or gross or wilful neglect. From this, it must logically follow that if the returned income is not less than 80 per cent. of the finally assessed income, the burden would lie on the revenue to show that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income on account of fraud or gross or wilful neglect. Such being the position in regard to the cases arising under Clause (c) of Section 271(1) there is no reason whatever to exclude the ideas of fraud or gross or wilful neglect from the other two clauses of the


whatever to exclude the ideas of fraud or gross or wilful neglect from the other two clauses of the self-same section, namely, (a) and (b). In the submission of the learned counsel, this idea must be extended even to delayed filing of the returns. He further relied on Sub-section (4A) of Section 271, which he claimed as another indication of the existence of mens rea in the entirety of Section 271. It was argued that under Sub-section (4A), the Commissioner may reduce or waive the amount of minimum penalty imposable on a person for delayed filing of the return "without reasonable cause", if it is seen that the assessee has, prior to the issue of the notice to him under Sub-section (1) of Section 139, voluntarily and in good faith made full disclosure of his income. The use of the phrases "voluntarily" and "in good faith" clearly points to the proof of existence of the mental attitude on the part of the assessee which smacks of mens rea, before he is visited with penalty by the appropriate authority. Thus, either going by the general principles that apply to penalty proceedings or going by the language of the statute, so, learned counsel submitted, it is sufficiently clear that mens rea is an ingredient of a penalty proceeding under Section 271(1)(a). Therefore, without showing that the assessee acted deliberately in defiance of law or was guilty of contumacious or dishonest conduct or acted in conscious disregard of his obligations while filing the return after time, the appropriate taxing authority cannot impose penalty under Section 271.


13. Let us first notice Section 271, excluding the irrelevant portions thereof, as a first step in the process of finding out whether mens rea has been made an ingredient for imposing penalty for filing returns after due dates. It occurs in Chapter XXI under the caption "Penalties imposable". The heading given to Section 271 is "Failure to furnish returns, comply with notices, concealment of income, etc." The heading itself classifies the subject with which it deals into (1) failure to furnish returns, (2) failure to comply with notices, and (3) concealment of income. Since incidental matters are also included in the section, the word "etc." is added at the end.
 14. Then Section 271 says:
 "271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person-
 (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under Sub-section (1) of Section 139 or by notice given under Sub-section (2) of Section 139 or Section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by Sub-section (1) of Section 139 or by such notice, as the case may be, or


(b) has without reasonable cause failed to comply with a notice under Sub-section (1) of Section 142 or Sub-section (2) of Section 143, or


(c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,--
 (i) in the cases referred to in Clause (a), in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent. of the assessed tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the assessed tax.
 Explanation.--In this clause "assessed tax" means tax as reduced by the sum, if any, deducted at source under Chapter XVII-B or paid in advance under Chapter XVII-C ;
 (ii) in the cases referred to in Clause (b), in addition to any tax payable by him, a sum which shall not be less than ten per cent. but which shall not exceed fifty per cent. of the amount of the tax, if any, which would have been avoided if the income returned by such person had been accepted as the correct income ;
 (iii) in the cases referred to in Clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished.


Explanation,--Where the total income returned by any person is less than eighty per cent. of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under Section 143 or Section 144 or Section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of Clause (c) of this sub-section......
 (4A) Notwithstanding anything contained in Clause (i) or Clause (iii) of Sub-section (1), the Commissioner may, in his discretion-
 (i) reduce or waive the amount of minimum penalty imposable on a person under Clause (i) of Sub-section (1) for failure, without reasonable cause, to furnish the return of total income which such person was required to furnish under Sub-section (1) of Section 139, or


(ii) reduce or waive the amount of minimum penalty imposable on a person under Clause (iii) of Sub-section (1), if he is satisfied that such person-
 (a) in the case referred to in Clause (i) of this sub-section has, prior to the issue of notice to him under Sub-section (2) of Section 139, voluntarily and in good faith, made full disclosure of his income ; and in the case referred to in Clause (ii) of this sub-section has, prior to the detection by the Income-tax Officer of the concealment of particulars of income in respect of which the penalty is imposable or of the inaccuracy of particulars furnished in respect of such income, voluntarily and in good faith, made full and true disclosure of such particulars ;
 (b) has co-operated in any enquiry relating to the assessment of such income; and

 (c) has either paid or made satisfactory arrangements for payment of any tax or interest payable in consequence of an order passed under this Act in respect of the relevant assessment year :
 Provided that-
 (i) if in a case the minimum penalty imposable under Clause (i) of Sub-section (1) for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the aggregate of the minimum penalty imposable under the said clause for those years, exceeds a sum of fifty thousand rupees, or


(ii) if in a case falling under Clause (c) of Sub-section (i), the amount of income in respect of which penalty is imposable for the relevant assessment year, or, where such disclosure relates to more than one assessment year, the aggregate amount of such income for those years, exceeds a sum of five hundred thousand rupees, no order reducing or waiving the penalty shall be made by the Commissioner unless the previous approval of the Board has been obtained.
 (4B) An order under Sub-section (4A) shall be final and shall not be called in question before any court of law or any other authority."
 Clause (iii) of Sub-section (1) and Explanation to Sub-section (1) of Section 271 were amended by way of substitution and insertion by the Amendment Act, 1973.
 15. In these writ appeals, we are called upon to deal only with the nature of penalty that is imposable on the assessee for filing his returns after due dates and we are not concerned with either failure to comply with notices or with concealment of income which are also matters dealt with by Section 271. Therefore, we shall confine our consideration of the matter only to the failure to furnish returns within the time allowed. We do not propose to deal with other matters included in the section, as failure to comply with notices and concealment of income, excepting to the extent that they will be necessary to arrive at the actual intent and content of Clause (a) of Section 271(1) read with Sub-clause (i), on a comparative appraisal of the different provisions of the section.


16. Does Section 271(1)(a) take in its amplitude the requirement that the appropriate taxation authority should be satisfied before imposing penalties on an assessee for his filing returns late not only that he had reasonable cause but also that he acted deliberately in defiance of law or was guilty of contumacious or dishonest conduct or acted in conscious disregard of his obligation ? In other words, is it necessary for the appropriate authority to arrive at the conclusion that the conduct of the assessee in filing the delayed return has been vitiated by mens rea. What all Clause (a) expressly requires is that the officer or the Appellate Assistant Commissioner has to be satisfied that the assessee has, without reasonable cause, failed to furnish the return within the time allowed. Mens rea is evil intention or knowledge of the wrongfulness of the act that a person commits. That is, the person has a guilty mind in committing the act. It is only when such mental attitude is present in an act, the person who commits it is said to have acted deliberately in defiance of law or was guilty of contumacious or dishonest conduct or acted in conscious disregard of his obligation.


17. Mens rea is an essential ingredient of an offence. However, it is a rule of construction. If there is a conflict between the common law and the statute law, it has always been held that it is a sound rule to construe a statute in conformity with the common law. But it cannot be postulated that a statute cannot alter the course of the common law. Parliament in exercise of its constitutional powers makes statutes and in exercise of that power it can affirm, alter or take away the common law altogether. Therefore, if it is plain from the statute that it intends to alter the course of the common law, then the plain meaning should be accepted. The existence of mens rea as an essential ingredient of an offence has to be made out by the construction of the statute. This is what Wright J. said in Sherras v. De Rutzen [1895] 1 QB 918, 921 on the subject ;
 "There is a presumption that mens rea, an evil intention, or a knowledge of the wrongfulness of the act, is an essential ingredient in every offence ; but that presumption is liable to be displaced either by the words of the statute creating the offence or by the subject-matter with which it deals, and both must be considered."


Absolute liability for an offence in order to presume mens rea should be established. In order to find out whether means rea, i.e., a guilty mind is an ingredient or not, reference has to be made to the language of the enactment, the object and subject-matter of the statute and the nature and character of the act sought to be punished. It should also be borne in mind, while considering the question of mens rea, that even in cases where there is an absolute prohibition, absolute liability is not to be presumed but has to be clearly established. Adopting the view of Wright J. in Sherras v. De Rutzen [1895] 1 QB 918 and the view expressed in Brend v. Wood 110 JP 317; [1946] 62 TLR 462, Lord Du Parcq observed in Srinivas Mall v. Emperor ILR 26 Pat 460; AIR 1947 PC 135.
 "It is... ...of the utmost importance for the protection of the liberty of the subject that a court should always bear in mind that, unless the statute, either cleaily or by necessary implication rules out mens rea as a constituent part of a crime a defendant should not be found guilty of an offence against the criminal law unless he has got a guilty mind."
 It Hariprasada Rao (Ravula) v. State this rule regarding presumption of mens rea and construction of the statute was approved by the Supreme Court, and it was once again reiterated by the majority view in State of Maharashtra v. M.H. George .


18. Subba Rao J. (as he then was) expressed the view in Nathulal v. State of Madhya Pradesh that the rule of construction was adopted in England and accepted in India to construe a statutory provision which creates an offence, in conformity with the common law rather than against it. At the same time, the learned judge pointed out an exception, and that is where the statute expressly or by necessary implication excludes mens rea. In the light of these authoritative opinions expressed in the judicial pronouncements of the Supreme Court, it can be unhesitatingly concluded that mens rea or criminal intent is a necessary ingredient in a criminal offence. A presumption exists that criminal intent is not excluded unless the statute excludes it either expressly or by necessary implication.


19. Then it has to be considered what precisely is the nature of penalty proceeding. Is it possible to say that simply because the word "penalty" is used in a statute, it has classified that proceeding as a proceeding of a criminal nature ? When a statute provides for imposition of penalty, it will have to be found out from the scheme of the Act and the particular provision under which penalty is imposable, whether imposition of penalty is provided as a punishment for an offence. Simply because something more than the usual payment of tax that is payable by an individual is imposed on him, could it be said that a punishment is inflicted on him for an offence he has committed ? Once again, it will have to be kept in mind that as human values have been changing and changing at a fast pace, a spate of social legislation has been taken up by all countries, particularly developing countries like India. Taxation statutes have two purposes. They are intended not only to collect revenues for the State, but also for bringing about social justice and to enable the State to implement social welfare schemes undertaken by it. Consequently, several taxation statutes, if not all, have taken great care in making provisions for collection of taxes imposed, as speedily as possible. If there is a delay on the part of the taxpayer to pay his taxes, taxation statutes have provided for not only remedial and coercive proceedings, but also punishments treating certain tax delinquencies as offences. These several measures should not be confused with each other. The position has been explained thus in Corpus Juris Secundum, Volume 85, at page 580 :
 "A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws."
 In the same page, it proceeds to state :


In the same page, it proceeds to state :
 "In some jurisdictions it is held that the penalty becomes, by operation of the statute imposing it, a part and parcel of the taxes due, and in other jurisdictions penalties are a type of tax. In still other jurisdictions, however, it is held that the penalty is not a part of the tax, and that will not be regarded as a legal incident to a tax. It is merely a method of enforcing payment of the tax."
 It was held by the Supreme Court of the United States dealing with the nature of penalties in Guy T. Helvering v. Charles E. Mitchell (303 US 391) ;
 "Where civil procedure is prescribed for the enforcement of remedial sanction, the accepted rules and constitutional guarantees governing the trial of criminal prosecutions do not apply."
 Once again, the Supreme Court of the United States, dealing with penalties imposed for evasion or avoidance of payment of income-tax, observed in Murray R. Spies v. United States (317 US 492 at 495):


"The penalties imposed by Congress to enforce the tax laws embrace both civil and criminal sanctions. The former consist of additions to the tax upon determinations of fact made by an administrative agency and with no burden on the Government to prove its case beyond a reasonable doubt. The latter consist of penal offences enforced by the criminal process in the familiar manner. Invocation of one does not exclude resort to the other... The failure in a duty to make a timely return, unless it is shown that such failure is due to reasonable cause and not due to wilful neglect, is punishable 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 a misdemeanour, with regard to existence of a tax liability."
 The Supreme Court, while considering the nature of penalty levied under Section 28(1)(c) of the Income-tax Act, observed in C. A. Abraham v. Income-tax Officer that penalty is only an additional tax. Mathew J,, sitting single in Kerala High Court, in P. Ummali Umma v. Inspecting Assistant Commissioner of Income-tax [1967] 64 ITR 669 (Ker), after referring to the two decisions of the Supreme Court of the United States, observed at pages 675 and 676:


"No conviction for any offence is involved in the imposition of a penalty. Article 20(1) of the Constitution will have application only when a person is subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. This would indicate that commission of an offence and a conviction thereof are necessary in order that the provisions of the article may be attracted... A penalty, therefore, would come within the purview of Article 20(1) only if the earlier part of the clause is attracted, i.e., there must have been a conviction for an offence. Unless there is a conviction, no question of the latter part of the article applying will arise... The imposition of penalty on the basis of an act or omission by an assessee is not because the act or omission constitutes an offence, but because that act or omission would constitute an attempt at evasion. Therefore, penalty is exacted not because an act or omission is an offence but because it is an attempt at evasion of tax on the part of the assessee. Article 20(1) of the Constitution can have no application to a case where a penalty is imposed not as punishment for an offence but for some other collateral purpose."


Chinnappa Reddy and A. D. V. Reddy JJ. expressed, in their judgment in R.C. No. 64 of 1970 (Commissioner of Income-tax v. Maduri Rajes-war ), dated 24th of November, 1971, the viewthat the proceedings entailing penalty under the Income-tax Act are to be equated to prosecutions attracting punishment cannot be accepted, as no conviction for any offence is involved in the imposition of a penalty. They found that Article 20(1) of the Constitution was not applicable to the proceedings imposing penalty under the Income-tax Act. While coming to this conclusion, they followed the decision in Spies v. United States (317 US 492).
 The above considerations would demonstrate that imposition of penalty for tax delinquency cannot be equated to imposition of punishment for an offence.


20. Sri Dasaratharama Reddy, however, pointed out that penalty proceedings are quasi-criminal in nature and are not of civil character. He endeavoured to point out that taxation laws do not maintain such distinction between offences and penalties and generally they make penalties leviable for offences. An offence necessarily must have, as one of its essential ingredients, guilty mind or mens rea. He referred to Section 30 of the Andhra Pradesh General Sales Tax Act, 1957, which deals with "offences and penalties". That section provides for imposition of penalties, including imprisonment and fine, on conviction for tax delinquencies. Taxation laws, therefore, do not keep up any marked distinction between penalty and punishment for an offence, so the learned counsel submitted. Likewise, he invited our attention to Section 10 of the Central Sales Tax Act, 1956, which provides for imposition of penalties like simple imprisonment and fine for tax offences. Our attention was also invited to Section 9 of the Andhra Pradesh Cinemas (Regulation) Act, 1970, under which penalties are leviable for certain offences.
 21. Relying on these provisions, it was argued that at least in so far as taxation enactments are concerned, there is not much of a distinction between penalty for taxation delinquency and punishment for taxation offence. It is in this view, Sri Dasaratharama Reddy submitted, the observations of Shah, Actg. C.J., in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 at page 29 (SC) should be understood. There the learned Acting Chief Justice was considering, as one of the questions, whether imposition of penalties for failure to get registered as a dealer was justified under the Orissa Sales Tax Act of 1947. The learned Chief Justice observed at page 29:


"Under the Act penalty may be imposed for failure to register as a dealer : Section 9('l), read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation."
 Resting on these observations of the Supreme Court, the argument was advanced that imposition of penalty is the result of a quasi-criminal proceeding and such being the nature, it shall not be imposed unless the assessee either acted deliberately in defiance of law, or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of his obligation.


Indeed, this is the observation which is the fountain source from which the concept of mens rea or guilty mind being an ingredient of a penalty proceeding under the Income-tax Act sprang up. These observations have set the ball rolling and injected into penalty proceedings the idea of mens rea or guilty conduct.


22. In the light of what we have said above, we will now proceed to consider whether this argument of Sri Dasaratharami Reddy is tenable. As we have pointed out, we are limiting the consideration only to cases which fall under Section 271(1)(a) of the Income-tax Act, i.e., cases of levy of penalty for late filing of income-tax returns. We will consider the question on the assumption that imposition of penalty is in the nature of a quasi-criminal proceeding. Even so, is it necessary or does it inevitably follow that guilty mind should be an ingredient that should be established before imposing penalty for filing income-tax return late ? We have already recorded our conclusion that mens rea, though an essential ingredient of an offence, is a rule of construction. The presumption that evil intention or mens rea is an essential ingredient in every offence is liable to be displaced by the words of the statute creating the offence. A statutory provision which creates an offence will have to be considered in conformity with the common law presumption that guilty mind is an ingredient of an offence. However, where the statute which provides for penalty or quasi-judicial proceeding, as it may be, expressly or by necessary implication, lays down its own objective tests for levying penalty and excludes mens rea, then the statute should prevail. We may go even a step further. Even supposing that mens rea is treated by the statute as a necessary ingredient of a penalty proceeding, then it will have to be examined, whether the relevant statutory provision or provisions provide for any objective criteria for adjudicating upon the liability of an individual for the imposition of penalty. In other words, it is the statutory provision which deals with imposition of penalty, in the light of the general scheme of the Act, that should be looked into to find out whether guilty mind is necessary for imposition of penalty. If that is not done, and if penalty proceeding is conducted on general common law principles alone,


If that is not done, and if penalty proceeding is conducted on general common law principles alone, it would result in ignoring and even contravening the provisions of the statute itself, under which penalty is imposed.


23. We will now examine how the Income-tax Act, 1961, had dealt with late filing of the returns. Practically all taxing statutes lay down their own procedure and machinery for enforcing implementation of their provisions. It must be remembered that all these taxation laws are intended to fetch revenue for the State to enable it to run its administration and to implement welfare programmes. There shall be neither evasion of tax, nor delay in the procedure relating to assessment and collection of taxes. In order to see that payment of tax is not evaded, that there is no delay in assessment or in the collection of tax imposed, every taxation statute lays down a clear cut procedure. While doing so, the statute may treat minor delinquencies lightly, some other delinquencies which are not simple in nature slightly harshly and delinquencies of grave nature very severely. The Indian Income-tax Act adopts the same policy. If the Act is analysed, it could be seen that it has dealt with returns of income and the delays relating thereto in three different ways. Section 139 which occurs in Chapter XIV relating to "Procedure for assessment" deals with "Return of income". Sub-section (1) prescribes the time before which returns should be filed. Further sub-sections also lay down the manner in which extension of time for filing returns may be sought "and granted. Subsection (8) makes the assessee liable to pay simple interest at twelve per cent. per annum on the amount of the tax payable on the total income as determined on regular assessment, if there was delay in filing the return. This is one way of enforcing compliance with the requirements of the law for filing the returns in time. Even here, the proviso to Sub-section (8) confers power on the Income-tax Officer to reduce or waive the interest payable by any assessee, in such cases and under such circumstances as may be prescribed. Then Chapter XXI deals with "Penalties imposable". Unlike the Sales


as may be prescribed. Then Chapter XXI deals with "Penalties imposable". Unlike the Sales Tax Act of Andhra Pradesh, the Indian Income-tax Act deals with "penalties imposable" separately and in a different chapter. Section 271(1)(a) which we have already extracted, makes penalty imposable if the Income-tax Officer or the Appellate Assistant Commissioner is satisfied, in the course of any proceeding under the Act, that any person has without reasonable cause failed to furnish the return of total income which he was required to furnish under Section 139(1) or in response to a notice given under Section 139(2). When the Income-tax Officer or the Appellate Assistant Commissioner is satisfied that a person has, without reasonable cause, failed to furnish returns in time, he may direct that such person shall pay by way of penalty, as provided in Sub-clause (i), in addition to the amount of the tax, a sum equal to two per cent. of the assessed tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the assessed tax.


24. It is important to note the difference between the imposition of interest under Section 139(1) and the imposition of penalty under Section 271(1)(a). If there is delay in filing the return, interest is chargeable under Section 139(1) and in appropriate cases the Income-tax Officer is given power to remit the whole or part of it. Section 27l(1)(a) goes a step further and deals with somewhat graver situations. A penalty as provided in Clause (i) may be imposed only when the Income-tax Officer or the Appellate Assistant Commissioner is satisfied that the delay has occurred without reasonable cause. Every cause cannot explain away the delay in filing the return. If a cause, which is reasonable, in other words, a cause which appeals to or satisfies any reasonable mind, does not exist, then alone penalty can be imposed. The quantum of penalty is heavier than the interest that is collectable under Section 139(8). But, as Sub-clause (i) to Sub-section (1) of Section 271 now stands, it may be anything between two per cent. of the assessed tax for every month during which the default continued, and fifty per cent. of the aggregate thereof. It is very much noteworthy that for failure to comply with a notice under Section 142(1) or 143(2) without reasonable cause, Section 271(1)(b) read with Sub-clause (ii) provides for the higher rate of penalty starting from ten per cent. of the tax. When it comes to concealment of particulars of income or furnishing of inaccurate particulars of income, the penalty under Section 27l(1)(c) is still more severe. We are pointing out this to highlight the distinction kept by the statute between various degrees of seriousness of failures and concealments. It is also significant to note that Clause (i) says that what is imposed thereunder is "in


is also significant to note that Clause (i) says that what is imposed thereunder is "in addition" to the amount of the tax." Section 274, occurring in the same Chapter XXI, says :


"No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard."
 Therefore, before penalty is imposed a reasonable opportunity should be given to the assessee to make a representation. If he then succeeds in satisfying the appropriate assessing authority that he was prevented by reasonable cause from filing the return in time, no penalty may be imposed on him. It is manifest that the statute has intended that a safeguard by a reasonable opportunity should be afforded to the assessee before any penalty is imposed. That is the second mode postulated by the Act for enforcing compliance with its provisions.
 25. The third mode is contained in Chapter XXII which bears the caption "Offences and prosecutions". It makes several contraventions, offences, like failure to make payments or deliver returns or statements, or to allow inspection (as made in Section 276), failure to comply with the provisions of Section 178(1) and (3) (as made in Section 276A) and also failure to deduct and pay tax (as shown in Section 276B), failure to furnish returns of income (made punishable under Section 276C). Section 276C reads as follows :
 "If a person wilfully fails to furnish in due time the return of income which he is required to furnish under Sub-section (1) of Section 139 or by notice given under Sub-section (2) of Section 139 or Section 148, he shall be punishable with rigorous imprisonment for a term which may extend to one year or with fine equal to a sum calculated at a rate which shall not be less than four rupees or more than ten rupees for every day during which the default continues, or with both."


We are not here concerned with the proviso to the section. It can be immediately noticed that this section treats only wilful failures to furnish returns in due time as punishable offences. This is clearly and patently distinct from failure to furnish returns in time "without reasonable cause". Certainly, the expression "without reasonable cause" and the expression "wilful failure" cannot be equated. It is important to note that the word "wilful" was introduced with effect from April 1, 1971, by Act 42 of 1970. Until then, the words which appeared were "without reasonable cause". For the change, the reason, as could be seen from Taxation, Volume 30, at page 101, is that the Joint Select Committee felt that "in accordance with the accepted canons of criminal jurisprudence failure to furnish returns or produce documents, etc., should be made punishable only when such failure is wilful". It is thus manifest that the word "wilful" has been deliberately introduced to incorporate into the provision and to clearly specify the idea of mens rea. That is absent in Section 27l(1)(a). Thus, it is seen that the Act postulates three modes of enforcement of the statutory requirement of filing the income-tax return in time, (1) by levying interest, (2) by imposing penalty if the delay has been occasioned without reasonable cause, and (3) by punishing the assessee treating failure to file the returns as an offence if it was proved that it was caused by wilful failure. These are the three varying degrees of non-filing of returns within time and the statute clearly keeps up the distinction between the three modes. While it rests content by imposing only penalty on reaching satisfaction as to the absence of reasonable cause, it insists upon the presence of wilful failure to furnish returns in due time to make it an offence punishable with imprisonment or fine. There is another equally significant distinction between the word


to make it an offence punishable with imprisonment or fine. There is another equally significant distinction between the word "penalty" as contemplated by Section 271(1)(a) and the punishment posited by Section 276C. The penalty leviable under Section 271(1)(a) is a payment "in addition to the tax" and is calculated in relation to the amount of the assessed tax. It means that the penalty imposed under that provision is in that way related to tax. What is imposed under Section 276C is altogether different in nature. It is a punishment wholly unrelated to the tax amount. The offender can be visited with rigorous imprisonment for a term which may extend to one year or with fine equal to a sum calculated at a rate which shall not be less than four rupees or more than ten rupees for every day during which the default continues, or with both. The fine that is imposable has to be reckoned on the basis of the duration of the default and not on the basis of the tax. All this clearly demonstrates the difference which the statute maintains between the penalty imposable under Section 271(1)(a) and the punishment that is leviable under Section 276C. While for imposing a penalty, absence of reasonable cause has to be shown, for imposing punishment under Section 276C, wilful failure has to be demonstrated. "Wilful failure" certainly brings in the element of guilty mind, while absence of "reasonable cause" does not. Thus, the statute has kept up the dichotomy between a penalty proceeding and a prosecution proceeding for failure to furnish returns in due time. This is clear enunciation by the statute itself of the three different modes of enforcing its provisions. It contains clear indication of the growing gravity of the three situations dealt with, not only through the severity of the additional amounts or the punishments that are imposable, but also through the language employed in Section 139(1), Section


punishments that are imposable, but also through the language employed in Section 139(1), Section 271(1)(a) and Section 276C. Thus, it is clear that the element of guilty mind is made an ingredient for an action under Section 276C and not for penalty proceeding under Section 271(1)(a).


26. Sri Dasaratharania Reddy pointed out the difference in the language between rule 117A(v) of the Income-tax Rules, 1962, and Section 146 of the Income-tax Act on one side and Section 271(1)(a) on the other. In the first set of provisions, the phrase "sufficient cause" is used, while in Section 271(1)(a), the expression "reasonable cause" is used. Section 146 relates to "reopening of assessment at the instance of the assessee", and enables the assessee to seek cancellation of the assessment on the ground that he was prevented by "sufficient cause" from making the return required under Sub-section (2) of Section 139. His attempt was that the expression "sufficient cause" used in Section 146 is analogous to the same language used in Section 5 of the Limitation Act or Order 9, rule 9, or Order 9, rule 13, of the Civil Procedure Code and that it is different from the expression "reasonable cause" used in Section 271(1)(a). The cause being sufficient or otherwise does not indicate the guilty element but the expression "without reasonable cause" would suggest its presence. He amplified the argument by saying that by the words "without reasonable cause" it is meant that cause should not be unreasonable. In other words, if a cause is unreasonable, then it indicates a certain element of guilty mental attitude on the part of the assessee. It was, therefore, argued that the words "without reasonable cause" would bring in the element of guilty mind. For this, reliance was placed on the decision of the Madras High Court in V. Ramanathan v. Commissioner of Income-tax [1966] 62 ITR 293 (Mad). There, the Division Bench said :


"There is some difference in the language employed in Section 27 and Section 28 (of 1922 Act). While in the case under Section 27 the requirement is only a sufficient cause to enable the cancellation of the assessment, to justify the imposition of the penalty under Section 28 the absence of reasonable cause has to be established. Again, in an application under Section 27 of the Act, the onus is upon the assessee to establish sufficient cause, while under Section 28, before a penalty could be imposed, it is for the department to show that the assessee who failed to submit the return did so without reasonable cause."
 We are unable to agree with this. We do not think that there is any material difference between the expressions "sufficient cause" and "reasonable cause". What is sufficient cause is always a reasonable cause. As stated in Strand's Judicial Dictionary, "the word 'reasonable' has in law the prima facie meaning of reasonable in regard to those circumstances of which the actor, called on to act reasonably, knows or ought to know". If a cause is reasonable having regard to the circumstances in which it has occurred and with reference to the person who has conducted himself in the course of the act which is under examination and if that act or cause is found to be reasonable in the light of the circumstances by a reasonable mind, it is accepted as sufficient cause. We cannot, therefore, agree that there is any substantial difference between "reasonable cause" and "sufficient cause". We derive support for this view from a decision of the Division Bench of this court in Repaka Seetharamaswamy v. Commissioner of Income-tax [1961] 42 ITR 829 (AP). It cannot, therefore, be accepted that the occurrence of the words "without reasonable cause" in Section 271(1)(a) would indicate the requirement of a guilty mind.


27. At the same time, we must take notice of the use of the expression "without reasonable cause or excuse" in some of the offences for which prosecutions can be levied under the Act. As we have said, Chapter XXII relates to "offences and prosecutions". Sections 276, 276A and 276B make offences of failure to make payments or deliver returns or statements or allow inspection, failure to comply with the provisions of Sub-sections (1) and (3) of Section 178 and failure to deduct and pay tax "without reasonable cause or excuse", and they are punishable with either fine or imprisonment. These sections, using the above said expression, occur in the Chapter relating to "Offences and prosecutions" and expressly declare that, if these acts are done without reasonable cause or excuse, they would be punishable offences. It is noteworthy that immediately following these sections and occurring in the same Chapter, Section 276C, which deals with "failure to furnish returns of income" in due time, clearly declares that such failure becomes an offence when it is wilful. There cannot be a more eloquent testimony to the intention of Parliament to maintain the distinction between the offences covered by Sections 276, 276A and 276B on the one hand, and the one under Section 276C on the other. While, in the former, absence of reasonable cause and excuse has to be established, in the latter to make an offence of failure to file returns of income in due time wilful failure has to be proved.


28. Even so, Sri Dasaratharama Reddy urged that the very Section 271, when understood in a broad perspective of all its provisions, indicates that guilty mind has to be established even in regard to late filing of returns of income. In the first place, he relies on the Explanation to Clause (iii) to contend that the element of fraud, gross negligence or wilful neglect on the part of the assessee is clearly made an ingredient of an action to be taken under Section 271 for imposition of penalty. The said Explanation is in these terms :
 "Where the total income returned by any person is less than eighty per cent. of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under Section 143 or Section 144 or Section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of Clause (c) of this sub-section."


In the submission of the learned counsel, though fraud or gross or wilful neglect on the part of the assessee is made an element of the penalty proceedings under Clause (c) of Section 271(1), it should be understood that this ingredient of fraud, etc., runs through all the other clauses. When three eventualities, for which penalties could be levied under the section, are mentioned one after another and proof of fraud or gross or wilful neglect is made an essential ingredient of one of them, there is no reason, so maintained the learned counsel, to suppose that the said ingredient is confined or limited only to Clause (c). If the total income returned by the person is less than eighty per cent. of the total income as assessed finally, the Explanation places the burden of proof on him, in order to escape from penalty, of establishing that his failure to return the correct income does not arise out of gross or wilful neglect on his part. If he does not make any attempt to do so, a presumption is raised by the explanation that he has concealed the particulars of his income or furnished inaccurate particulars of such income. By parity of reasoning, the learned counsel argued, when the total income" returned is not less than eighty per cent. of the total income as finally assessed, then the burden would be on the department to prove that the failure to return the correct income was due to fraud or gross or wilful neglect on the part of the assessee. Likewise, Clauses (a) and (b), which deal with failure to furnish returns in due time and failure to comply with reasonable notices, should also be construed as placing the burden on the department to prove fraud or wilful neglect on the part of the assessee in committing the two acts mentioned in the two clauses. Our attention was invited to a decision of the Patna High Court in Commissioner of Income-tax v. Patna Timber Works [1977] 106 ITR 452 (Pat).


v. Patna Timber Works [1977] 106 ITR 452 (Pat). That is a case relating to penalty levied for concealment. It was found there that there was a difference of more than 20 per cent. in the income returned and the total income as assessed, and, therefore, Clause (c) came into operation by the rule of presumption. It was observed that by the rule of evidence engrafted in the Explanation, it is for the assessee to prove that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. This gives the key to the interpretation of the main provisions contained in Clause (c) after its amendment. If a case is not covered by the Explanation, then charge of furnishing inaccurate particulars of income can be founded by recording a finding that the assessee had furnished such particulars due to his fraud. That means the department has to show that such furnishing was a result of gross or wilful neglect on his part. Unless such ingredient is proved and found, penalty cannot be levied on the mere finding that there was a difference in the particulars given and the figure of the income assessed. This is the substance of the Patna decision.


Our attention was also invited to the decision of the High Court of Punjab and Haryana in Addl. Commissioner of Income-tax v. Karhail Singh V. Kaleran [1914] 94 ITR 505 (Punj). The learned judges explained the purposes of the Explanation as being to differentiate the two types of assessees-those who have reported correct income up to eighty per cent. of the assessed income and those who have not. In the case of the first type the onus lies on the department to prove fraud or gross or wilful neglect in not returning the correct income, and in the case of the second type the onus is on the assessee to establish that the failure to return the correct income was not on account of any fraud or gross or wilful neglect on his part. The learned judges referred to Anwar Ali's case and then observed that the principles enunciated by the Supreme Court in that case that Section 271 is penal in character is still applicable. In the same strain and to the same effect practically, are the decisions of the Kerala High Court in Commissioner of Income-tax v. Sankar-sons & Co. , that of the Allahabad High Court in Saeed Ahmed v. Inspecting Assistant Commissioner of Income-tax , that of the Gujarat High Court in Commissioner of Income-tax v. S.P. Bhatt , the one of Gauhati High Court in Rajputana Stores v. Inspecting Assistant Commissioner of Income-tax and the decision of the Orissa High Court in Commissioner of Income-tax v. K.C. Behera , which were brought to our notice by Sri Dasaratharama Reddy. All these decisions of the various High Courts examined the scope of the Explanation to Sub-clause (iii) and its impact on the main provision contained in Clause (c) of Section 271(1). It must be noted that none of them relates to the other clauses of Section


271(1). It must be noted that none of them relates to the other clauses of Section 271(1). The decisions pointed out that the object behind the enactment of the Explanation was to check more effectively the evasion of income-tax. Obviously, the main purpose of the Explanation is to place the burden of establishing want of fraud or gross or wilful neglect in the matter of income-tax return filed by the assessee on him, where the difference revealed between the returned income and assessed income is more than twenty per cent. But in case the difference is less than twenty per cent. then the assumption postulated by the Explanation would not arise, and it shall be for the department to establish that the assessee had concealed the particulars of his income or furnished inaccurate particulars of such income. This is the burden of all the aforesaid decisions.


29. In our opinion, these decisions throw light on the question of burden of proof in so far as Clause (c) and Sub-clause (iii) read with its Explanation are concerned. None of the decisions goes further and says that the element of fraud, or gross or wilful neglect is engrafted into Clauses (a) and (b) as well. These decisions do not, therefore, help Sri Dasaratharama Reddy in sustaining his contention that the principle of the Explanation to Sub-clause (iii) should be read into Clauses (a) and (b) of Section 271(1).
 30. In his endeavour to show that the existence or absence of reasonable cause is made an ingredient of Clauses (a) and (b), the learned counsel relied on the decision of the Gujarat High Court in Morvi Cotton Merchants' Industrial Corporation Ltd. v. State of Gujarat [1975] 36 STC 347 (Guj). A Division Bench of the Gujarat High Court was considering the scope of the phrase "without reasonable excuse", in Section 10(d) of the Central Sales Tax Act, 1956. The court held:
 "The expression... ...is a necessary ingredient of the offence mentioned therein and that ingredient has to be alleged and proved by the department and on which the authority imposing the penalty has to give a finding. It is only when that ingredient is pleaded and proved by the department, by way of presumptive proof, that the onus shifts on to the dealer to rebut that presumption."
 It was further held :
 "In the absence of a finding by the department about the absence of reasonable excuse, no penalty under Section 10(d) read with Section 10A can be imposed."


This decision is again of no avail to the learned counsel. It was Section 10A which provides for offences under Clause (b) or Clause (c) or Clause (d) of Section 10 of the Central Sales Tax Act. Thus, Section 10(d) is clearly incorporated in Section 10A. Further Section 10(d) itself makes using of the goods purchased for the purposes specified in Section 8(3)(b) without reasonable excuse, an offence punishable with imprisonment or fine or with both. Thus, it is more in the nature of Sections 276, 276A and 276B of the Income-tax Act, which treat certain things done without reasonable cause or excuse as offences. When the statute itself expressly treats them as offences, there cannot be any ambiguity about it. But Section 271 is only a provision under which penalties could be imposed in some eventualities. It is true, penalty, as the very name suggests, implies penal proceeding. It was so held in Hindustan Steel Ltd.'s case , and the character of a penal proceeding was also made clear by a Division Bench of this High Court in T. Venkata Krishnaiah & Co. v. Commissioner of Income-tax . The learned judges were dealing with the distinction between charging of interest and imposition of penalty and observed that interest was civil in nature while penalty was penal and so both could be levied.


31. Sri Dasaratharama Reddy further endeavoured to reinforce the above argument by referring to the circumstances that by the Finance Act of 1964, the word "deliberately" was deleted from Clause (c) which was there earlier before the words "furnished inaccurate particulars of such income". How he developed the argument is, when once the word "deliberately" was deleted, the very act of furnishing of inaccurate particulars of income is treated as a ground for imposition of penalty. When mere furnishing inaccurate particulars of income is treated as a case for imposing penalty, the learned counsel argued, there is no reason to suppose that failure to furnish returns of income before due date without reasonable cause is not placed on the same footing as the former act. If fraud or any gross or wilful neglect is made an ingredient of furnishing inaccurate particulars for which penalty can be imposed, in the submission of the learned counsel, the same ingredient should be applicable to failure to furnish the return in due time without reasonable cause.


32. Besides these submissions, the learned counsel also relied on Sub-section (4A) of Section 271. We have extracted the sub-section even at the threshold of our judgment. Under this provision, the Commissioner is given power, notwithstanding anything contained in Clause (i) or Clause (iii) of Sub-section (1), to reduce or waive the amount of minimum penalty in regard to cases referred to in Clause (i) of Section 271(1)(a), if he is satisfied that, prior to the issue of notice to him under Sub-section (2) of Section 139, the assessee had voluntarily and in good faith made disclosures of his income. The use of the words "voluntarily and in good faith" with reference to imposition of penalty under Sub-clause (i) was very much emphasized by the learned counsel. From this, an attempt was made to spell out that the failure to furnish the return of income in due time without reasonable cause would mean that the failure to file the return is vitiated by lack of good faith. According to the learned counsel, Sub-section (4A) imports into Clause (a) of Sub-section (1), the element of bad intention or presence or absence of good faith.


33. On a careful examination of the argument and the provision of Section 271, we are unable to uphold this understanding of Section 271 and the further contention that the element of fraud or gross or wilful neglect contained in the Explanation could be engrafted into Clause (a) also. The Explanation to Sub-clause (iii), in telling phrases, makes it clear that the principle in regard to proof for gross or wilful neglect is in regard to concealment of particulars of income or furnishing inaccurate particulars of income. What is more, the Explanation further declares that it is "for the purpose of Clause (c) of this sub-section" (i.e., Sub-section (1)). When the language of the Explanation is so express and explicit, there is no possibility for any doubt that its operation is limited only to cases which come under Clause (c). Otherwise, the application of fraud and gross or wilful neglect to cases of concealment of particulars of income and the words "for the purpose of Clause (c) of the sub-section" would be meaningless. If it was intended by the Explanation that its principle should govern all the three clauses of Sub-section (1), Parliament could have said so. Instead of saying it, it specifically restricted and limited its application only to cases falling under Clause (c). Therefore, there is no warrant whatever for extending the principle of the Explanation to Clause (a).


34. Further, though all the three varieties of cases mentioned in Sub-section (1) in Clauses (a), (b) and (c) are grouped together, the section treats each one of them separately and distinctly. While the words "without reasonable cause" occur in Clauses (a) and (b), they do not appear in Clause (c). Furthermore, all the three categories of delinquencies are separately dealt with. Had the intention been to impose a similar penalty for all those delinquencies, there was no need for Parliament to provide three varying degrees of penalties. Sub-clause (i) which refers to delinquencies mentioned in Clause (a) provides for the least burdensome penalties; Sub-clause (ii) which refers to those in Clause (b) imposes a little heavier penalties, while Sub-clause (iii) which refers to cases in Clause (c) provides highest penalties. Obviously and patently, Parliament intended to treat the concealment of the particulars of income and furnishing inaccurate particulars of income as grave matters and that was manifestly why heaviest of the three penalties was imposable in such cases, and the burden of proof where the returned total income is less than eighty per cent. of the assessed income, is also placed on the assessee himself to show that the concealment, etc., did not arise from any fraud or any gross or wilful neglect.
 35. Equally important is the circumstance that Sub-clause (i) has its own Explanation giving the meaning of "assessed tax" used therein. Obviously, that Explanation applies only to cases which come under Clause (a). It cannot be postulated that its application can be extended to other clauses. By parity of reasoning and also for the reasons which we have stated above, the Explanation to Sub-clause (iii) should be limited in its scope to cases which come under Clause (c) alone.


36. Coming to Sub-section (4A), it confers powers on the Commissioner to reduce or waive the amount of minimum penalty. Sub-clause (a) of Sub-section (4A) lays down the guidelines for the exercise of that power by the Commissioner. There is no duty cast on him to necessarily reduce or waive the amount of minimum penalty. The discretion is conferred on him and Clause (a) lays down the manner in which that discretion has to be exercised in so far as cases referred to in Clause (i) are concerned. In cases relating to failure to furnish the return of total income in due time, the Commissioner may reduce or waive the amount of penalty if he is satisfied that the assessee has voluntarily and in good faith made full disclosure of his income. The words "voluntarily and in good faith" apply to the full disclosure of the income prior to the notice under Section 139(2), and do not in any way refer to the furnishing of the return of income in due time. Indeed, the expression "without reasonable cause" is repeated and reiterated in Clause (i) of Sub-section (4A) while referring to failure to furnish the return of total income. Whatever the meaning that expression has, when used in Clause (a) of Sub-section (1), the same meaning should be attributed when it occurs in Clause (i) of Sub-section (4A). The reasonable understanding of Sub-section (4A) would be that the Commissioner should see in cases of failure to furnish the return of income without reasonable cause, before he reduces or waives the amount of minimum penalty, whether the assessee had acted voluntarily and in good faith and made full disclosure of his income prior to the issue of notice to him under Section 139(2). The presence or absence of good faith cannot be extended to the late filing of returns of income. Otherwise, the sub-section would have said so clearly. Apart from that, Sub-section


of income. Otherwise, the sub-section would have said so clearly. Apart from that, Sub-section (4A) deals only with reduction or waiver of the amount of minimum penalty imposable which can be granted by the Commissioner while Clause (a) refers to a situation which arises in the course of any proceedings under the Act dealt with by the Income-tax Officer or the Appellate Assistant Commissioner.


37. For these reasons, we are unable to agree with Sri Dasaratharama Reddi in his submission that Section 271 itself gives a definite clue to import the element of mens rea into Clause (a).


38. Now, having reached this conclusion, let us have a general conspectus of the provisions of the Act dealing with delay in filing the return. Section 139(8) provides for charging of interest for delay. Section 271(1)(a) read with Sub-clause (i) provides for imposition of penalty if the delay has occurred without reasonable cause. Section 276C considers failure to furnish the return of income in due time as an offence if the failure is wilful. Why does the statute keep this distinction ? In the first case the very occurrence of delay is sufficient to enable the officer to charge interest. In the second case, the requirement is that he should be satisfied that the assessee has failed to furnish the return in time without reasonable cause. In the third case, wilful failure has to be established. The statute has clearly kept up this difference between the three proceedings and has indicated the growing gravity of the failure on the part of the assessee in the three cases. If contumacious conduct, which must necessarily be wilful failure, is the requirement of Section 271(1)(a) also, then what is the difference between it and Section 276C ? On the other hand, to keep the distinction between imposition of penalty and imposition of punishment, the statute has used different languages and different words. The words "wilful default" or contumacious conduct are conspicuous by their absence in Section 271(1)(a) while "wilful failure" is expressly stated in Section 276C. By a comparative understanding of these three provisions relating to the delayed returns of income, it must necessarily follow that Section 271(1)(a) does not take in contumacious conduct, or to put it in other words, mens rea.


39. We derive support to this view from the decision of the Supreme Court in Indo-China Steam Navigation Co. Ltd. v. Jasjit Singh Dealing with the provisions of the Sea Customs Act, the court said that "section 52A read with Section 167(12A) makes it clear that the legislature intends, by necessary implication, the exclusion of mens rea in dealing with the contravention of Section 52A". That was on the ground that "in column (1), Section 167(12A) reproduces the material words of Section 52A and does not add the words ' knowingly or wilfully '."
 40. In State of Maharashtra v. M.H. George the majority held that:
 "Unless the statute, either clearly or by necessary implication rules out mens rea as a constituent part of a crime an accused should not be found guilty of an offence against the criminal law unless he has got a guilty mind. Absolute liability is not to be lightly presumed but has to be clearly established."
 The court can only interpret the law as it finds it. Parliament's mind has to be gathered from the provisions it has incorporated in a statute. When all the relevant provisions in the Income-tax Act relating to failure to file the return of income before due date are considered, it cannot be held that contumacious conduct is made an ingredient of a proceeding under Section 271(1)(a). We go even a step further. By making wilful failure to file a return an offence under Section 276C and by the very language in Section 271(1)(a), it can safely be concluded that mens rea is not an ingredient of a proceeding under Sub-clause (a) of Section 271(1).


41. So far, we have not gone into any of the decided cases directly dealing with this aspect of the matter. That is because the true meaning of a provision will have to be found out first by reading that provision in the context of the scheme of the Act and the other relevant provisions. It is the statute that must be primarily looked into for deciding the nature of the proceeding ; the judicial precedents unless they are binding, come only later, that too only as a supplemental or reinforcing factor. Having endeavoured to find out the true import of Section 271(1)(a) and the real character of the proceeding thereunder and the ingredients of the proceeding, we will proceed to have a brief review of the cases on the point.
 42. The catena of the case law relating to penalty started with the decision of the Supreme Court dated August 4, 1969, in Hindustan Steel Ltd.'s case . One of the questions posed and answered by the court in the case was, whether the imposition of penalty for failure to register as a dealer was justified, under the Orissa Sales Tax Act. Shah, Actg. C.J., made the following general observations at page 29 in regard to the penalty under Section 9(1) read with Section 25(1)(a) of the Act. It appears, there was another section which dealt with the imposition of penalty in that Act, but that was not referred to. The omission to refer to that particular provision is not of much consequence, in our view. The observations are as hereunder (page 29):


"Under the Act penalty may be imposed for failure to register as a dealer : Section 9(1), read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. 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. Even if a minimum penalty is prescribed, the authority competent to impose penalty will be justified in refusing to impose penalty when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer. Granting that they erred, no case for imposing penalty was made out".


It can be immediately seen that these observations are of a general nature. May be, certain penalties can be imposed only if the party either acted deliberately in defiance of law, or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. For imposition of penalties in some other cases, contumacious conduct may not be necessary. Simply because it is called penalty, contumacious conduct cannot be automatically imported into its proceeding. As we have time and again observed above, relying on the Supreme Court decisions, it depends upon the statutory provisions. It may be that under Section 9(1) read with Section 25(1)(a) of the Orissa Sales Tax Act, contumacious conduct was necessary before a penalty would be imposed. But Section 271(1)(a) of the Income-tax Act clearly says, as distinct from Section 276C, that what should be established is absence of reasonable cause. So, the observations made in the Hindustan Steel Ltd.'s case will have to be understood in the light of the provisions of the law and the facts with which the court was dealing and it would be untenable to give a universal application to the observations to all penalty cases.


43. Next is the decision of the Supreme Court dated April 29. 1970, in Commissioner of Income-tax v. Anwar Ali . Though this is a case decided later than the Hindustan Steel Ltd.'s case , it was reported in the Income Tax Reports earlier. In this case, the principal question which arose in the proceedings under Section 28(1)(c) of the Indian Income-tax Act, 1922, which provision corresponds to the present Section 271(1)(c), was burden of proof in regard to concealment of income. The first point which fell for determination by the court was the nature of the penal provision. The court held that the observations in Abraham v. Income-tax Officer that the true nature of penalty was additional tax, that those observations were made in a different context and with a different purpose. Then the learned judges referred to Hindustan Steel Ltd.'s case , and then observed that it was a settled law by then in the sales tax law, that an order imposing penalty was the result of a quasi-criminal proceeding. So, the learned judges observed that proceedings under Section 28 were penal in character. Proceeding to consider the burden of proof, the learned judges held that under Section 28(1)(c) the department must establish that the assessee had concealed the particulars of his income.


44. As we have already pointed out, the fact that penalty proceedings are penal and quasi-criminal in nature would not necessarily make mens rea an essential ingredient of the proceeding. It will have to be decided on the basis of the relevant provision in the statute. The general observation made by Shah, Acting C.J., in Hindustan Steel Ltd.'s case led several High Courts to apply them to all penalty proceedings under Section 271(1)(a) also. They are Michael Fernandes v. Commissioner of Wealth-tax [1974] 95 ITR 532 (Mys), All India Sewing Machine Co. v. Commissioner of Income-tax [1974] 96 ITR 206 (Mys), Commissioner of Income-tax v. Alimohamad and Co. and Dawn & Co. v. Commissioner of Income-tax .


45. Obul Reddi C.J. and Punnayya J., in Additional Commissioner of Income-tax v. Narayanadas Ramkishan , had to consider a petition filed under Section 256(2) of the Income-tax Act. One of the questions posed was, whether the penal provisions of Section 271(1)(a) were not attracted to the facts, of the case. The Tribunal expressed the view that they did not find material let in by the revenue to show that the assessee wilfully defaulted, more especially, when it had been seen that the return was filed voluntarily without issue of notice under Section 139(2). Consequently, the Tribunal set aside the orders of the authorities below imposing penalty upon the assessee. After considering the case, in the course of the judgment, the learned Chief Justice referred to the majority view of the Supreme Court spoken by Subba Rao J., in Nathulal v. State of Madhya Pradesh , that mens rea is an essential ingredient of a criminal offence and only where it is absolutely clear that the implementation of the object of the statute would otherwise be defeated that mens rea may, by necessary implication, be excluded from a statute. Subba Rao J. also pointed out that the nature of mens rea implied in a statute creating an offence depends on the object of the Act and the provisions thereof. Then Obul Reddi C.J. observed [1975] 100 ITR 18, 25 (AP):


"We are not inclined to agree that Section 271(1) excludes mens rea by necessary implication. Once it is held by us that mens rea is an essential ingredient for imposing penalty it follows that the onus is upon the department to show the element of guilty mind in the assessee." Then reference was made to the observations of Shah, Acting C.J. in Hindustan Steel Ltd.'s case and then of Grover J. in Anwar Ali's case . The learned Chief Justice proceeded to refer to the decisions of the High Courts of Mysore, Karnataka, Orissa and Kerala and finally observed :
 "It is unnecessary to multiply decisions on this point. In view of what the Supreme Court has laid down in Hindustan Steel Ltd.'s case and in Anwar Ali's case , the statutory obligation is upon the department to show that the assessee had acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of its obligation."
 In the light of the opinion we have expressed, the observations in the Hindustan Steel Ltd.'s case and in Anwar Ali's case have no universal application to all penalty proceedings and certainly not to penalty proceedings under Section 271(1)(a). Therefore, we are unable to agree with the view expressed by Obul Reddi C.J and Punnayya J. in Narayanadas Ramkiskan's case .


46. We may incidentally refer to a decision of the Madras High Court in V. Ramanathan v. Commissioner of Income-tax [1966] 62 ITR 293 (Mad), where a Division Bench held that it is for the department to show that the assessee who failed to submit the return did so without reasonable cause. The view expressed here is only on the question of burden of proof. Further, it said that what the department has to show is that the assessee had failed to submit the return without reasonable cause. It did not say further that contumacious conduct also should be established by the department.
 47. We must also refer to a decision of Vaidya and Sriramulu JJ. in Mullapudi Venkatarayudu v. Union of India . It is also a case which arose under Section 271(1)(a). The learned judges held among other things:
 "As there is no exclusion of mens rea either expressly or by necessary implication in Section 271, it has to be determined whether there was any mens rea in the assessee acting against the provisions of the statute, that is, whether the non-compliance with the provisions of Section 139(1) was with a wrongful intention or culpable negligence. In order to determine whether there was culpable negligence it will have to be determined whether the assessee did his best as a reasonable man to avoid the non-compliance. Where the Income-tax Officer came to the conclusion that the mere fact that the petitioner was under the impression that as in earlier years he would be served with a notice to file the return was not sufficient to hold that he had taken reasonable care to comply with the provisions of the section."
 For the reasons we have stated above, the position as stated by the Division Bench in this case cannot be accepted.


48. Then came the Full Bench decision of the Kerala High Court in Commissioner of Income-tax v. Gujarat Travancore Agency [FB]. That is a case which directly arose under Section 271(1)(a). Gopalan Nambiyar J. spoke for the Bench. After comparing Section 18 of the Wealth-tax Act with Section 271(1)(a) of the Income-tax Act the Full Bench held that the provisions for the imposition of penalty under Section 271(1)(a) are independent of the provisions of prosecution and punishment under Section 276C, in the sense that the proceedings under the one will not bar action under the other. It was observed :
 "The mere use of the expression 'without reasonable cause' cannot import a mental element or 'mens rea'. There is no justification for reading into Section 271, the requirements of any mens rea expressly provided for in Section 276C".
 Nambiyar J. poined out that:
 "It will not be correct to regard the ingredients of the misconduct under the two provisions, i.e., Sections 271 and 276C as identical. The imposition of penalty under Section 271 on the basis of an act or omission by an assessee is not because the act or omission constitutes an offence, but because that act or omission would constitute an attempt at evasion. Hence, the penalty provisions under the Act are not provisions of a criminal nature which warrant the requirement of mens rea in the sense in which the same is required for an offence by the criminal law. Hence, mens rea need not be established before imposition of penalty under Section 271(1)(a)."


While coming to this conclusion, the Full Bench distinguished Hindustan Steel Ltd.'s case and overruled the earlier decisions of the Kerala High Court in Devassy v. Commissioner of Income-tax [1972] 84 ITR 502 (Ker) and Dawn & Co's case . The Full Bench also referred to the decision of the Punjab High Court in Addl. Commissioner of Income-tax v. Karnail Singh V. Kaleran [1974] 94 ITR 505 (Punj) and it was dissented from.
 49. The Full Bench of the Orissa High Court in Commissioner of Income-tax v. Gangaram Chapolia [FB] considered the nature of the penalty proceedings under Section 27I(1)(a). Considering the question when exactly an assessee can be visited with a penalty under Section 271(1)(a), the Full Bench opined that if the assessee does not furnish any explanation or furnishes a cause which is not accepted as reasonable, penalty is leviable for not furnishing the return within the time allowed. Then the learned judges compared Section 271(1)(a) and Section 276C and observed at page 619 :


"Wilful failure to file the return in due time is the gravamen of the offence under Section 271(1)(c) (obviously, a mistake for 276C). The burden of proof is on the revenue to establish beyond reasonable doubt that the failure to file the return in due time is wilful. There is a well-marked distinction between the meanings of the expressions 'without reasonable cause' and 'wilfully'. The word 'wilfully' in Chamber's Twentieth Century Dictionary carries the following meanings : 'governed only by one's will, obstinate ; done intentionally.' When a person acts wilfully he acts without reasonable cause, but the converse is not true. Not to carelessly or negligently file the return within the time allowed is an act without reasonable cause, but it may not be wilful. The word 'wilful' imports the concept of 'mens rea' while it is absent in the expression 'without reasonable cause'."
 Then the learned judges referred to the observations in the Hindustan Steel Ltd.'s case and distinguished it. Likewise, Anwar Ali's case was also referred to and it was observed that, apart from the conclusion that penalty proceedings are quasi-criminal in nature, Anwar Ali's case does not throw any lighten the point in issue in the case before the Full Bench.
50. Sri Dasaratharama Reddi criticised these two Full Bench decisions pointing out that they did not notice the difference in the language used in Section 139(8) and its proviso, Section 146 and Section 271(1)(a). We do not think that this criticism is valid. The omission to compare the language of the above provisions with Section 271(1)(a) is immaterial. What is important is the comparison between Section 271(1)(a) and Section 276C. That was clearly pointed out by both the Full Benches.


51. Then, in the order of reference to a Full Bench in this case, Chinnappa Reddi and Jeevan Reddi JJ. expressed a similar view. The view expressed by the Full Benches of Kerala and Orissa High Courts and that of the Division Bench in the order of reference are in accord with the view which we have taken. As we have already held, the view expressed in Narayana-das Ramkishans case is not correct.


52. If mens rea is not an ingredient of the proceeding under Section 271(1)(a), the further question would remain on whom the burden of proof lies in regard to showing the absence of reasonable cause. In our opinion, reading Section 271(1)(a) and Section 274 together, the position would be made clear. Penalty under Section 271(1)(a) can be imposed only when the Income-tax Officer or the Appellate Assistant Commissioner is satisfied in the course of any proceedings under the Income-tax Act, that any person has without reasonable cause failed to furnish the return of total income which he was required to furnish in accordance with law. In other words, unless the concerned officer is satisfied that the delay has occurred without reasonable cause, no penalty can be imposed. In the first place, he will have to be satisfied that there is no reasonable cause and then only he can impose penalty. The responsibility of reaching that satisfaction is thus cast on the appropriate authority. Section 274 requires that before imposing a penalty, the assessee should be heard or should have been given a reasonable opportunity of being heard. Therefore, the position that emerges from the reading of Section 271(1)(a) and Section 274 together is: When an assessee files the return after the due date, the Income-tax Officer gives him an opportunity to explain the delay. If after considering the explanation of the assessee the Income-tax Officer is satisfied that there is no reasonable cause for the delay, he levies the penalty. The burden is upon the Income-tax Officer to be satisfied that there is no reasonable cause. Even if the assessee, when given an opportunity, does not avail himself of that opportunity it is for the Income-tax Officer to go through the records and satisfy himself that there was no reasonable cause. It is the responsibility of the officer concerned to examine the reason advanced and find out whether it is reasonable in the circumstances of the case. If he is satisfied


reason advanced and find out whether it is reasonable in the circumstances of the case. If he is satisfied that it is reasonable cause then he cannot impose a penalty. He can impose penalty only if he is satisfied that the delay has occurred without reasonable cause. Though the preliminary responsibility is that of the assessee to advance some cause, it is the task of the Income-tax Officer or the Appellate Assistant Commissioner to satisfy himself whether the cause advanced is reasonable or not. To put it in other words, no penalty can be levied unless the satisfaction of the concerned officer is indicated that the delay was not due to any reasonable cause. If, for instance, the assessee does not give any cause at all, either by himself or when given an opportunity under Section 274, then it is the task of the Income-tax Officer or the Appellate Assistant Commissioner to satisfy himself whether the circumstances which emerge from the record indicate any reasonable cause or not. When no reason at all has been advanced by the assessee, the task of the officer concerned in reaching that satisfaction becomes very very light. In such cases, generally speaking, unless something concrete emerges from the record itself, the concerned officer may reach the satisfaction that the delay occurred without reasonable cause. When some reason has been advanced, it is his duty to examine it and find out whether it is reasonable or not in the circumstances of the case and the situation of the assessee. Even in regard to the task of reaching his satisfaction, the assessee cannot escape the primary responsibility of advancing a cause and if he does not do it, he runs the risk of the officer coming to the conclusion that there was no reasonable cause for the delay. Take for instance, the case in John v. Humphreys [1955] 1 All ER 793 (QB) where a person was prosecuted for driving without licence. Certainly, the burden was on the prosecution to prove that the accused was driving without licence. They could only be expected to prove that


the prosecution to prove that the accused was driving without licence. They could only be expected to prove that when the accused was detected he was asked for his licence, he did not show it, he was given an opportunity to produce it, but he did not produce it. It would be unreasonable to put further burden on the prosecution to prove that the driver had at no time secured any licence or if he had secured one that had expired. Whether he had a subsisting licence or not is a matter which is within the special knowledge of the accused and it is for him to show that. Likewise, in these matters of reaching satisfaction as to the existence or absence of reasonable cause, the matters which are within the special knowledge of the assessee should be disclosed by him. If he fails to disclose them, then what all the Income-tax Officer, or the Appellate Assistant Commissioner can do and is expected to do, to reach the satisfaction that is required under Section 271(1), is to examine the entire record relating to the proceeding and to find out whether the delay has been occasioned on account of any reasonable cause or without reasonable cause. This, in our view, is the scope of the burden or satisfaction that rests with the Income-tax Officer or the Appellate Assistant Commissioner.


53. It 'may also be emphasised that, having regard to the penal consequences, the expression "reasonable cause" has to be liberally construed in favour of the assessee. Construing Section 5 of the Limitation Act there is a long line of cases beginning with Krishna v. Chathappan [1889] ILR 13 Mad 269, which was approved by the Supreme Court in Ramlal v. Rewa Coalfields , that the word "sufficient cause" should receive a liberal construction so as to advance substantial justice. This is particularly true with regard to a case where non-submission of return in time results in penal consequences.


54. Having expressed our opinions as to the nature of the proceeding under Section 271(1)(a) and the scope of the burden in reaching the satisfaction, we will now proceed to examine the merits of the case. The assessees, which are firms, failed to file their returns for the years 1965-66 to 1969-70 within the time prescribed under the Indian Income-tax Act. In the first place, the explanation given before the Income-tax Officer was that the person who was in charge of the accounts of the firms was unable to look after the affairs of the firms for some time on account of his personal grievance. In the revision petition before the Commissioner, the reason for the delay was stated as family troubles. The family troubles obviously must be taken to be those of the members of the firms. They did not care to state what the family troubles were, when they occurred, how long they persisted and when they ended. It is not as if they did not have opportunity to do so. They had ample opportunity when they preferred revision petitions before the Income-tax Commissioner. A mere vague and bald statement that "family troubles" prevented the filing of the returns in time did not naturally appeal to the Commissioner as a reasonable cause. So, he did not accept the explanation and rejected the revision petitions. Since we have held that the view taken by Obul Reddi J. (as he then was) while quashing the orders of the Commissioner and remitting the matters back to him that the penalties could be imposed only when the assessee either acted deliberately in defiance of law, or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation and not otherwise, is not warranted by Section 271(1)(a), the question remains, whether the decision of the Commissioner in holding that the explanation given by the assessees for filing the returns after due time, is right or not. We have already pointed out that


for filing the returns after due time, is right or not. We have already pointed out that though the burden is on the Commissioner to reach the satisfaction as to the existence or absence of reasonable cause for the delayed filing of returns, the assessee must place before the appropriate authority, matters which are within his exclusive knowledge. Here, the assessees rested content with merely saying that they were prevented by family troubles. The nature and duration of the troubles which stood in the way of filing of the returns in time were within the peculiar special knowledge of the assessees and were not disclosed. Neither the Income-tax Officer nor the Commissioner is expected to make a separate enquiry by himself as to what those family troubles were and how long they lasted and whether they really prevented the assessees from filing the returns in time, when obviously no further material was available from the record to show cause for the delayed filing of the returns. In these circumstances, we are satisfied that the Commissioner was right in refusing to accept these bald and unexplained family troubles as the reasonable cause for the delayed filing of the returns.


55. We, therefore, uphold the decisions of the Commissioner in rejecting the revision petitions of the assessees, set aside the order of Obul Reddy J. (as he then was) quashing the order of the Commissioner of Income-tax and allow these writ appeals. It is, however, open to the assessees to approach the Commissioner under Section 271(1)(4A) for appropriate relief. We would also like to make it clear that what we have decided is only in respect of the proceedings under Section 271(1)(a) and not in regard to Section 271(1)(c).
 56. In view of the unsettled law on the subject so far, we direct the parties to bear their own costs throughout.
Lakshmaiah, J.


I agree with the conclusion of my learned brother that these writ appeals should be allowed, but having regard to the general importance of the question raised which we are informed by the learned counsel appearing in this case, was not raised anywhere in this form, I propose to give my own reasons:
 The question formulated by my learned brother for being answered is:
 "Is there an occasion to introduce 'the doctrine of mens rea into Section 271(1)(a) read with Sub-clause (i) of that section of the Income-tax Act, 1961?"
 Section 271(1)(a)(i), in so far as it is material, reads thus:
 "271. Failure to furnish returns, comply with notices, concealment of income, etc.--(1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person-
 (a) has without reasonable cause failed to furnish the returns of total income which he was required to furnish under Sub-section (1) of Section 139 or.........
 he may direct that such person shall pay by way of penalty,--
 (i) in the cases referred to in Clause (a), in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent. of the tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the tax."
 Facts:
 For failure to furnish within the stipulated time the return of total income which the respondent-assessee was required under Section 139(1), the Income-tax Officer in exercise of the powers conferred upon him by Sub-section (1) of Section 271 of the Act imposed penalty.


A Division Bench of this court consisting of the honourable the Chief Justice and Punnayya J. in Additional Commissioner of Income-tax v.Nara-yanadas Ramkishan was of the view that penalties under Section 271(1)(a) could only be imposed, if it was found that the assessee acted deliberately in defiance of the law or was guilty of contumacious or dishonest conduct or acted in conscious disregard of his obligations and not otherwise.
 57. Another Division Bench of this court, consisting of Chinnappa Reddi and Jeevan Reddi JJ., found it difficult to agree with that view of Section 271. According to that Bench [1977] 107 ITR 850, 854 (AP):
  "Parliament has prescribed an  objective test to determine the mental state of the person proposed to be proceeded against.    There is no reason for importing the doctrine of mens rea into a situation where the requisite mental state is already denned.........Nor is there any reason for qualifying
the failure to furnish a return with expressions like 'contumacious', 'dishonest', 'in deliberate defiance of law, etc.' To do so, is to rewrite Section 271(1)(a)."


It is for the purpose of solving that conflict this Full Bench is constituted. The problem presented for solution is essentially one of interpretation or construction of statutes necessitating thus a consideration of-

 (I) the nature, subject matter, object and policy of the Income-tax Act, 1961, and

 (II) the common law tradition of judicial approach towards modern legislation.