COMMISSIONER OF INCOME TAX Vs. CHAUBEY AND CO

JUDGEMENT

(1.) This application under Section 256(2) of the Income-tax Act, 1961 (for short "the Act"), is filed at the instance of the Commissioner of Income-tax, Allahabad, Four questions have been proposed in this application. The sum and substance of these questions is whether the Income-tax Appellate Tribunal erred in confirming the order passed by the Appellate Assistant Commissioner of Income-tax by which he deleted the penalty under Section 271(1)(a) of the Act imposed on the assessee. The concurrent findings recorded by the appellate authorities are that it is not a fit case for imposition of penalty as the assessee had reasonable cause for not filing its return of income within the time specified under Section 139(1) of the Act. It is these findings which have been challenged by the Revenue in these proceedings.

(2.) We have heard Sri Bharatji AGRAWAL, senior standing counsel appearing for the Revenue, and Sri S.B.L. Srivastava, appearing for the assessee.

(3.) For the Revenue, it was contended that, in order to sustain a penalty under Section 271(1)(a), the element of mens rea was not required to be established by the Revenue and, therefore, the Tribunal erred in directing the deletion of the penalty imposed on the assessee. We were invited to a decision of the Supreme Court in Gujarat Travancore Agency v. CIT [1989] 177 ITR 455 and in particular to the following observations appearing in the judgment (at page 458) :