Sambasiva Rao, Actg. C.J.
1. These are the petitions under Section 256(2) of the Income-tax Act, 1961, arising out of the order of the Income-tax Appellate Tribunal, Hyderabad, dated 13th December, 1972, in I.T.A. No. 826/Hyd/1970-71 and 507, 508 and 509/Hyd/1972-73. They refer to the assessment years 1963-64, 1966-67, 1967-68 and 1968-69, respectively. There were delays in filing the returns for all these years. In the first year there was delay of 4 years 8 months, in the second 3 years 11 months, in the third 2 years 9 months and in the fourth one year 11 months. The assessee tried to explain the delay for the first year by saying that the matter had escaped his memory and that his income was share income from a firm and it took time to get the share particulars. He, however, made no attempt at all to give any explanation for the last three years. The Income-tax Officer imposed penalty under Section 271(1)(a) for all the four years for filing the returns very late in addition to charging interest on the amounts of tax due on the returns. The assessee carried the matters in appeals to the Appellate Assistant Commissioner. From a reading of the appellate order of that officer, it is seen that no other point but the question that both interest and penalty could not be imposed when there was delay was urged. This was negatived by the Appellate Assistant Commissioner and consequently there is an appeal before the Tribunal. The Tribunal held that there appears to be sufficient cause for the filing of the delayed returns.
2. The Tribunal referred to the attempted explanation for the delay sought to be given by the assessee before it that his income was mainly from the share income from a firm and he required time for ' getting the share particulars and so he was not able to file the returns in time. Then it pointed out that the departmental authorities had not shown that there was anything intrinsically wrong in the explanation furnished by the assessee. We are afraid that the Tribunal is not justified in making this criticism. This explanation was not put forward either before the Income-tax Officer nor was any attempt made before the Appellate Assistant Commissioner to give any explanation. This explanation in respect of the last three years was obviously put forward for the first time before the Tribunal. Therefore, there was no question of the departmental authorities finding anything intrinsically wrong in the explanation or accepting it. So, to this extent the criticism of the Tribunal is not justified.
3. The second ground on which the penalty was set aside by the Tribunal was, before penalty was levied, mens rea has to be established and that no contumacious conduct on the part of the assessee has been shown justifying the levy of penalty. In support of the view taken by the Tribunal Sri Ramachandra Rao, learned counsel for the assessee, relies upon a Bench decision of this court in Additional Commissioner of Income-tax v. Narayanadas Ramkishan : 100ITR18(AP) in which Obul Reddi, Chief Justice, construed the decision of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa : 83ITR26(SC) in a particular manner. As against this Sri P. Rama Rao, standing counsel for the revenue, relied on a Bench decision of this court in M. Venkatarayudu v. Union of India : 99ITR448(AP) and a Full Bench decision of the Kerala High Court in Commissioner of Income-tax v. Gujarat Travancore Agency (ITR 85 and 86 in O.P. No. 4614 of 1971, dated 10th September, 1974) : 103ITR149(Ker) which took the view that mens rea need not be established. So this question will have to be considered afresh by the Tribunal.
4. The Tribunal also took the view that from the fact that interest was charged by the Income-tax Officer for the period of failure of filing the returns, it should be taken that the officer had actually granted extension of time up to the dates the returns were filed. Sri Rama Rao says that this view is wrong in view of the decision of a Bench of this court in T. Venkata Krishnaiah & Co. v. Commissioner of Income-tax : 93ITR297(AP) . So this aspect also should be reconsidered by the Tribunal.
5. For the foregoing reasons, we think that the four following points should be framed and the Income-tax Appellate Tribunal should, after stating a case, refer these questions to this court. They are as follows:
'1. Whether mens rea or contumacious conduct need be established by the department before penalty is imposed under Section 271(1)(a) of the Income-tax Act, 1961, and if it is so necessary, whether on the facts and in the circumstances of the case, there was any basis or material before the Appellate Tribunal to hold that no contumacious conduct on the part of the assessee was shown for levying penalty under Section 271(1)(a) of the Income-tax Act ?
2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that by levy of interest under Section 139 of the Income-tax Act, 1961, the Income-tax Officer must be deemed to have granted time up to the date of filing the return of income ?
3. Whether, on the facts and in the circumstances of the case, theAppellate Tribunal was correct in holding that even if the return wasfiled under Section 139(4) no penalty was leviable
4. Whether, on the facts and an the circumstances of the case, the Appellate Tribunal was justified in cancelling the penalty levied under Section 271(1)(a)?
6. We, therefore, direct the Appellate Tribunal to state a case and refer the above questions to the High Court under Section 256(2) of the Income-tax Act.