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aThe Supreme Court observed that the Section 143(1-A) of the Income Tax Act can only be invoked when the lesser amount stated in the return filed by the assessee is a consequence of an attempt to evade tax lawfully payable by the assessee.
The contention taken in this appeal was that the 20% additional tax sought to be imposed under Section 143(1-A) is in the nature of plenty and can be levied only when the assessee had intentionally sought to file an incorrect return. It was submitted that such additional tax could only become payable in case where assessee was assessed to an income for the purpose of tax and could not apply where there was no income or there was loss. In this case, according to the assessee, the 100% depreciation was claimed by the assessee in return due to a bonafide mistake.a
The bench noted, that in Commissioner of Income Tax, Guhati vs. Sati Oil Udyog Limited and another, the Supreme Court had considered the provisions of Section 143(1-A), its object and validity. The constitutional validity of Section 143(1-A) was upheld subject to holding that Section 143(1-A) can only be invoked where it is discovered 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 assessee.
Considering the facts and records of the present case, Supreme Court stated that there needs to be a mechanical application of Section 143(1-A). While interpreting a Tax Legislature the results and problems are not looked into but the purpose and object by which taxing statutes have been enacted cannot be lost sight. This court while considering the provision in question stated that 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 the 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. In this case, the claim of 100% depreciation by the assessee, 25% of which was disallowed was with the intent to evade tax. One 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 V. Sati Oil Udyog Limited and another, 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. Thus in this present case, mechanical application of the section is not possible.
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