The Income Tax cannot impose additional tax under Sec 143 (1-A) - unless there is a finding that the assessee has attempted to evade tax; SC.

Supreme Court of India

Justice Ashok Bhushan & Justice Mohan M.Shantanagoudar

The SC {RAJASTHAN STATE ELECTRICITY BOARD JAIPUR v. THE DY. COMMISSIONER OF INCOME TAX(ASSESSMENT) & ANR.} holds it is true that while interpreting a Tax Legislature the consequences and hardship are not looked into but the purpose and object by which taxing statutes have been enacted cannot be lost sight. It was held that while considering the very same provision i.e. Section 143(1-A), its object and purpose and while upholding the provision held that the burden of proving that the assessee has attempted to evade tax is on the Revenue which may be discharged by the Revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has, in fact, attempted to evade tax lawfully payable by it. It was held that, 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. It was held that one cannot mechanically apply the provisions of Section 143(1-A) in the facts of the present case and in view of the categorical pronouncements, 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. Therefore, in view of the above, it was held that mechanical application of Section 143(1-A) in the facts of the present case was uncalled for.

In the present case, the appeal filed by the Revenue has been allowed by the HC upholding the demand of additional tax under Section 143(1-A) of the Income Tax Act, 1961. The SC set aside the HC judgment and disallowed the invocation of Sec 143(1-A) in view of aforesaid.