Section 143(1-A) of Income Tax Act.1961 can only be invoked where it is found on facts that the lesser amount stated in the return filed by the assessee is a result of an attempt to evade tax lawfully by the assesse.
[CASE BRIEF] RAJASTHAN STATE ELECTRICITY BOARD JAIPUR vs. THE DY. COMMISSIONER OF INCOME TAX(ASSESSMENT) & ANR.
Case name: RAJASTHAN STATE ELECTRICITY BOARD JAIPUR vs. THE DY. COMMISSIONER OF INCOME TAX(ASSESSMENT) & ANR.
case number: CIVIL APPEAL NO.8590 of 2010
Court: THE SUPREME COURT OF INDIA
Bench: ASHOK BHUSHAN, J.
Decided on: March 19, 2020.
Relevant acts/sections: Income Tax Act, 1961 [section 143(1)(a), 154, 264]
➢ BRIEF FACTS AND PROCEDURAL HISTORY:
1. The assessee is a Government Company. Due to a bonafide mistake the assessee claimed 100% depreciation of on written down value of assets instead of 75% depreciation.
2. An intimation under Section 143(1)(a) of the Income Tax Act, 1961 was issued by the Assessing Officer disallowing 25% of the depreciation, restricting the depreciation to 75%. Additional tax under Section 143(1-A) of the Income Tax Act, 1961 was demanded.2
3. The assessee filed an application under Section 154 of the Income Tax Act, 1961 praying for rectification of the demand. The assessee also filed a petition under Section 264 of the Income Tax Act, 1961 against the demand of additional tax.
4. The application filed under Section 154 of the Income Tax Act, 1961 was rejected by the Assessing Officer on 28.02.1992. The revision petition under Section 264 of the Income Tax Act, 1961 came to be dismissed by the Commissioner of Income Tax by order dated. He appealed.
5. Writ Petition No.2267 of 1992 was filed by the assessee in the High Court of Judicature for Rajasthan, Bench at Jaipur. Learned Single Judge vide judgment dated 19.01.1993 allowed the writ petition quashing the levy of additional tax under Section 143(1-A).
6. Appeal reached to The Supreme Court.
➢ ISSUE BEFORE THE COURT
1. whether the demand of additional tax under the provisions of Section 143(1-A) in the facts of the present case was justified or not?
➢ RATIO OF THE COURT
1. Shri Arijit Prasad, the learned counsel for appellant, submits that 20% additional tax sought to be imposed under Section 143(1-A) of 1961 Act is in the nature of penalty and can be levied only when the assessee had intentionally sought to file an incorrect return. it could not apply where there was no income or there was loss.
2. Learned counsel for the Revenue submits that provision of Section 143(1-A) demonstrates that it is not penal in nature. It is the device to check evasion of tax. Section 143(1-A) has been inserted in the Income Tax Act so that the assessee may not be able to evade tax by resorting to the method of showing loss first and then reducing the loss.
3. Learned counsel for the Revenue has rightly submitted that object of Section 143(1-A) was the prevention of evasion of tax.
4. The court observed that the amendments brought by Finance Act, 1993 with retrospective effect i.e. from 01.04.1989 are fully attracted with regard to assessment in question i.e. for assessment year 1991-92.
5. The court stated the return was filed by the assessee on 31.12.1991, prior to which date the Taxation Laws (Amendment) Act, 1991 had come into operation. It was due to bonafide mistake and oversight that the assessee claimed 100% depreciation instead of 75%.
6. In the present case, not even whisper, that claim of 100% depreciation by the assessee, 25% of which was disallowed was with intend to evade tax. We cannot mechanically apply the provisions of Section 143(1-A) in the facts of the present case and in view of the categorical pronouncement by this Court in Commissioner of Income Tax, Gauhati vs. Sati Oil Udyog Limited and another(2015) 7 SCC 304, where it is held that Section 143(1-A) can only be invoked when the lesser amount stated in the return filed by the assessee is a result of an attempt to evade tax lawfully payable by the assessee. In view of the above, the court held that mechanical application of Section 143(1-A) in the facts of the present case was uncalled for.
➢ DECISION OF THE COURT
1. The supreme Court allowed the appeal
2. And set aside the judgment of the Division Bench of the High Court as well as demand of additional tax dated 12.02.1992 as amended on 28.02.1992