JUDGMENT This is a reference made under section 14(1) of the Madhya Pradesh General Sales Tax Act, 1958 at the instance of the Revenue in reference case No. 1-1/S/70/94, which arises out of the order passed by the Tribunal on May 20, 1994 in appeal No. 104-3/87 to answer following question of law said to arise out of the appeal referred supra. Whether under the facts and circumstances of the case the Tribunal was justified in holding that the assessee has not filed the return with guilty mind and hence the penalty under section 43(1) of the Madhya Pradesh General Sales Tax Act (since repealed) cannot be imposed ? Heard. The only dispute in this reference is whether the Tribunal was justified in setting aside the penalty imposed by the assessing officer and affirmed by the Commissioner of appeals ? In the opinion of the Tribunal, which is contained in paragraph 7 of the appellate order dated May 20, 1994 (annexure C) it is clear that the Tribunal was pleased to set aside the penalty imposed by the assessing officer and affirmed by the Commissioner of Sales Tax (Appeal) on the ground that no categorical finding with regard to mens rea was recorded by the two authorities against the assessee before levying penalty under section 43(1) of the Act. On the other hand, the Tribunal recorded a categorical finding that the assessee of his own having filed a return and disclosed about his true turnover, which was also accepted by the assessing officer for determining his tax liability. There was no occasion for invoking the penalty provision against the assessee, it was also found as a fact that there was no mens rea noticed on the part of the assessee for the purpose of attracting rigor of penalty. In our opinion the power to impose penalty cannot be exercised automatically and without there being any case made out for that purpose. A case to that effect is required to be made out as required under the penalty section. A categorical finding is required to be recorded on facts by the assessing officer indicating any malice or any contumacious conduct on the part of the assessee in either concealing any material fact or any act indulged in avoiding payment of tax legally due. A categorical finding is required to be recorded on facts by the assessing officer indicating any malice or any contumacious conduct on the part of the assessee in either concealing any material fact or any act indulged in avoiding payment of tax legally due. Since in this case, the Tribunal has categorically recorded a finding of fact in favour of the assessee accepting his explanation offered by him for deleting the penalty, we are of the considered opinion that the question referred to this Court has to be answered in favour of the assessee and against the State (Revenue). Accordingly and in view of the aforesaid discussion we answer the question referred to this court against the Revenue and in favour of the assessee. No costs.