RAJASTHAN STATE ELECTRICITY BOARD versus THE DY. COMMISSIONER OF INCOME TAX (ASSESSMENT) & ANR. on 19 March 2020

RAJASTHAN STATE ELECTRICITY BOARD JAIPUR

v.

THE DY. COMMISSIONER OFINCOME TAX (ASSESSMENT) & ANR.

(Civil Appeal No. 8590 of 2010)

MARCH 19, 2020

[ASHOK BHUSHAN ANDMOHAN M. SHANTANAGOUDAR, JJ.]

Income Tax Act, 1961:

ss. 32(2) and 143 (I-A) – Additional tax – Levy of – Propriety– Assessee claiming 100% depreciation – As per amended s. 32(2)since the depreciation was restricted only upto 75%, AssessingOfficer restricted the depreciation to 75% – Additional tax u/s.143(I-A) imposed – Assessee’s application for rectification ofdemand was rejected – Revision Petition against the demand ofadditional tax was also dismissed – In Writ Petition filed by theassessee, levy of additional tax was quashed by Single Judge ofHigh court – In special appeal, Division Bench upheld the levy –Appeal to Supreme Court – Held: Object of s. 143(I-A) wasprevention of evasion of tax and can be invoked only when foundthat lesser amount stated in the return is a result of an attempt toevade tax lawfully by the assessee – Depreciation was restrictedto 75% after amendment of the Act by Taxation Laws (Amendment)Act, 1991 – The return in the present case was filed by the assesseeprior to the date when the Amendment Act of 1991 came intooperation – 100% depreciation was claimed by the assessee dueto bonafide mistake – Burden of proving assessee’s attempt to evadetax, is on the Revenue – In the present case Revenue failed todischarge such burden – Therefore, in the facts of the present case,provisions of s. 143 (I-A) are not applicable and hence demandof additional tax set aside.

Interpretation of Statutes:

Interpretation of Taxing Statute – Held: While interpreting ataxing statute, the purpose and object for which the statute havebeen enacted cannot be lost sight.

A

B

C

DEFG

H

[2020] 4 S.C.R.

AAllowing the appeal, the Court

HELD: 1. Sub-section (1-A) of s. 143 of Income TaxAct, 1961 was amended by the Finance Act, 1993 with effectfrom 1-4-1989, which was the date upon which sub-section (1-A) had been introduced into the Act. The amendments broughtBby Finance Act, 1993 with retrospective effect i.e. from01.04.1989 are fully attracted with regard to assessment inquestion i.e. for assessment year 1991-92. The substituted sub-section (1-A) makes it clear that where the loss declared by anassessee had been reduced by reason of adjustments madeunder sub-section(1)(a), the provisions of sub-section (1-A)Cwould apply. [Paras 12 & 13] [1002-E; 1003-E-F]

2. Object of Section 143(1-A) was the prevention ofevasion of tax. The memorandum explaining the provisions ofthe Finance Bill was also to persuade to the assessee to fileIncome Tax Return carefully to avoid mistakes. Section 143(1-DA) can only be invoked where it is found on facts that the lesseramount stated in the return filed by the assessee is a result ofan attempt to evade tax lawfully by the assessee. [Paras 16 &19] [1005-D; 1007-B]

Commissioner of Income Tax, Gauhati v. Sati OilEUdyog Limited and Another (2015) 7 SCC 304 : [2015]2 SCR 1099 ; K.P. Varghese v. ITO, (1981) 4 SCC173 : [1982] 1 SCR 629 – relied on.

3. By Taxation Laws (Amendment) Act, 1991 in Section32 third proviso was inserted. Prior to insertion of the aboveFproviso the depreciation was not restricted to 75% of the amountcalculated at the percentage on the written down value of suchassets. The return was filed by the assessee on 31.12.1991, priorto which date the Taxation Laws (Amendment) Act, 1991 hadcome into operation. It was due to bonafide mistake andGoversight that the assessee claimed 100% depreciation insteadof 75%. The 100% depreciation of Rs. 333,77,70,317/- wasclaimed on written down value of assets, 25% depreciation was,thus, disallowed restricting it to 75% and after reducing25% of the depreciation loss remained to the extent ofRs. (-)3,43,94,90,393/-. Even as per reduction of 25%H

depreciation, the return of loss income of the assesseeremained. In claiming 100% depreciation the assessee claimsthat there was no intention to evade tax and the said claimwas only a bonafide mistake. [Paras 14 & 15] [1003-G-H; 1004-B-D]

4. In the present case, even after dis-allowing 25% of thedepreciation, the assessee in the return remained in loss andthe 100% depreciation was claimed by the assessee in the returndue to a bonafide mistake. By Taxation Laws (Amendment) Act,1991, the depreciation in the case of Company was restrictedto 75% which due to oversight was missed by the assessee whilefiling the return. The Commissioner of Income Tax by decidingthe revision petition has also not made any observation to theeffact that 100% depreciation claimed by the assessee was withintend to evade payment of tax lawfully payable by the assessee,rather the Commissioner in his order dated 31.03.1992 hasobserved that whenever adjustment is made, additional tax hasto be charged @ 20% of the tax payable on such excess amount.[Para 21] [1007-D-E]

5. It is true that while interpreting a Tax Legislature theconsequences and hardship are not looked into but the purposeand object by which taxing statutes have been enacted cannotbe lost sight. The burden of proving that the assessee hasattempted to evade tax is on the Revenue which may bedischarged by the Revenue by establishing facts andcircumstances from which a reasonable inference can be drawnthat the assessee has, in fact, attempted to evade tax lawfullypayable by it. In the present case, not even whisper, that claimof 100% depreciation by the assessee, 25% of which wasdisallowed was with intend to evade tax. The Court cannotmechanically apply the provisions of Section 143(1-A) in the factsof the present case. [Para 22] [1007-F-H; 1008-A]

Case Law Reference

[2015] 2 SCR 1099[1982] 1 SCR 629

A

B

C

D

E

F

G

H

ACIVIL APPELLATE JURISDICTION : Civil Appeal No. 8590of 2010

From the Judgment and Order dated 13.11.2007 of the HighCourt of Judicature for Rajasthan at Jaipur Bench, Jaipur in D. B. CivilSpecial Appeal (Writ) No. 837/1993.B

Arijit Prasad, Sr. Adv., Rohit K. Singh, Mirza Kayesh Begg,Ms. Anshruta Maheshwari, Advs. for the Appellant.

Rupesh Kumar, Mrs. Gargi Khanna, Shreyash Bhardwaj,Mrs. Anil Katiyar, Advs. for the Respondents.

CThe Judgment of the Court was delivered by ASHOK BHUSHAN, J.

1. This appeal has been filed by the assessee challenging theDivision Bench judgment dated 13.11.2007 of the High Court ofJudicature for Rajasthan at Jaipur Bench, Jaipur by which D.B. CivilDSpecial Appeal (Writ) No.837 of 1993 filed by the Revenue hasbeen allowed upholding the demand of additional tax under Section143(1-A) of the Income Tax Act, 1961.

2. Brief facts necessary to be noted for deciding this appeal are:

The assessee is a Government Company as defined underESection 617 of the Companies Act, 1956. The assessee filed return on30.12.1991 for the assessment year 1991-92 showing a loss amountingto Rs. (-)427,39,32,972/-. Due to a bonafide mistake the assesseeclaimed 100% depreciation of Rs. 333,77,70,317/- on written down valueof assets instead of 75% depreciation. Under the unamended SectionF32(2) of the Income Tax Act, 1961 the assessee was entitled to claim100% depreciation. However, after the amendment the depreciationcould only be 75%. The assessee supported the returns with provisionalrevenue account, balance sheet as on 31.03.1991, details of gross fixedassets, computation chart and depreciation chart. No tax was payableon the said return by the assessee. No notice under Section 143(2) ofGthe Income Tax Act, 1961 was received by the assessee.

3. An intimation under Section 143(1)(a) of the Income Tax Act,1961 dated 12.02.1992 was issued by the Assessing Officer disallowing25% of the depreciation, restricting the depreciation to 75%. Additionaltax under Section 143(1-A) of the Income Tax Act, 1961 amounting toHRs.8,63,64,827/- was demanded. The assessee filed an application under

Section 154 of the Income Tax Act, 1961 dated 18.02.1992 praying forrectification of the demand. The assessee also filed a petition underSection 264 of the Income Tax Act, 1961 against the demand ofadditional tax. In the petition it was stated that even after allowing only75% of depreciation the income of the assessee remained to be in lossto Rs.3,43,94,90,393/-. The assessee prayed for quashing the demandof additional tax. The application filed under Section 154 of the IncomeTax Act, 1961 was rejected by the Assessing Officer on 28.02.1992.The revision petition under Section 264 of the Income Tax Act, 1961came to be dismissed by the Commissioner of Income Tax by orderdated 31.03.1992. The Commissioner of Income Tax rejected therevision petition by giving following reasoning:

“A plain reading of the provisions of Section 143(1-A) shows thatwhenever adjustment is made, additional tax has to be charged@ 20% of the tax payable on such ‘excess amount’. The ‘excessamount’ refers to the increase in the income and by implicationthe reduction in loss where even after the addition there isnegative income. The explanation to Section 143(1-A)(b) providesthat the tax payable on such excess means the tax that wouldhave been chargeable on the amount of adjustment to thetotal income. Where the adjustment exceeds the incomedetermined. Clearly, therefore, in this case the additional tax hadto be charged on the basis of the tax chargeable on the sum ofRs. 83,44,42,579/- added by the Assessing Officer.”

4. Aggrieved by the order of the Commissioner of Income Taxchallenging the demand of additional tax which was reduced to amountof Rs.7,67,68,717/- Writ Petition No.2267 of 1992 was filed by theassessee in the High Court of Judicature for Rajasthan, Bench at Jaipur.Learned Single Judge vide judgment dated 19.01.1993 allowed the writpetition quashing the levy of additional tax under Section 143(1-A). TheRevenue aggrieved by the judgment of the learned Single Judge filed aSpecial Appeal which has been allowed by the Division Bench of theHigh Court vide its judgment dated 13.11.2007 upholding the demandof additional tax. The assessee aggrieved by the judgment of the DivisionBench has come up in this appeal.

5. We have heard Shri Arijit Prasad, learned senior counselappearing for the appellant and Shri Rupesh Kumar, learned counselfor the respondents.

AB

C

D

E

F

G

H

A6. Shri Arijit Prasad referring to Circular No.549 dated30.10.1989 of Central Board of Direct Taxes submits that 20%additional tax sought to be imposed under Section 143(1-A) of 1961Act is in the nature of penalty and can be levied only when the assesseehad intentionally sought to file an incorrect return. It is submitted thatsuch additional tax could only become payable in case where assesseeBwas assessed to an income for the purpose of tax and could not applywhere there was no income or there was loss. The intent of theLegislature in enacting provision of Section 143(1-A) was to ensurethat the assessee also declares his loss in the return correctly and wherethe assessee deliberately or intentionally filed false returns, he was liableCto pay additional Income Tax. It is submitted that unabsorbed lossesand unabsorbed depreciation were to be carried forward to future yearsto be set off against profits and it did not in any manner affect businessloss. He submits that business loss suffered by the assessee had notreduced because of the bonafide mistake committed by the appellant

in calculating the depreciation. The assessee was in loss and continuedDto be in loss. Reduction in depreciation from 100% to 75% did notamount to reduction in loss and additional tax under Section 143(1-A)of the Income Tax Act, 1961 was only to prevent evasion of tax. Hesubmits that when additional tax had clear and specific imprint ofpenalty, the Revenue could not be heard to say that the levy of additionalEtax is automatic under Section 143(1-A) of the Act. If additional taxcould be levied in such circumstances, it would be punishing the assesseefor no fault of his and that too without giving him a hearing.

7. Learned counsel for the Revenue submits that provision ofSection 143(1-A) demonstrates that it is not penal in nature. It is theFdevice to check evasion of tax. It is submitted that challenge to viresof Section 143(1-A) has been repelled by different High Courts andthis Court. Section 143(1-A) has been inserted in the Income Tax Actso that the assessee may not be able to evade tax by resorting to themethod of showing loss first and then reducing the loss. Learnedcounsel submits that the Division Bench of the High Court has rightlyGallowed the appeal of the Revenue upholding the demand of additionaltax.

8. We have considered the submissions of the learned counselfor the parties and perused the records.H9. Only question to be answered in this appeal is as to 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.

10. Before we enter into the rival submissions of the learnedcounsel for the parties, it is relevant to have a look on the statutoryscheme under Section 143 and 143(1-A). Section 143(1)(a) reads thus:

“143. (1)(a) Where a return has been made under Section 139,or in response to a notice under sub-section (1) of Section 142,—

(i) if any tax or interest is found due on the basis of suchreturn, after adjustment of any tax deducted at source,any advance tax paid and any amount paid otherwiseby way of tax or interest, then, without prejudice to theprovisions of sub-section (2), an intimation shall be sentto the assessee specifying the sum so payable, and suchintimation shall be deemed to be a notice of demandissued under Section 156 and all the provisions of thisAct shall apply accordingly; and

(ii) if any refund is due on the basis of such return, it shallbe granted to the assessee:

Provided that in computing the tax or interest payableby, or refundable to, the assessee, the followingadjustments shall be made in the income or loss declaredin the return, namely—

(i) any arithmetical errors in the return, accounts ordocuments accompanying it shall be rectified;

(ii) any loss carried forward, deduction, allowance orrelief, which, on the basis of the informationavailable in such return, accounts or documents, isprima facie admissible but which is not claimed inthe return, shall be allowed;

(iii) any loss carried forward, deduction, allowance orrelief claimed in the return, which, on the basis ofthe information available in such return, accounts ordocuments, is prima facie inadmissible, shall bedisallowed:

Provided further that where adjustments are made under the firstproviso, an intimation shall be sent to the assessee, notwithstanding A

B

C

D

E

F

G

H

Athat no tax or interest is found due from him after making thesaid adjustments:

Provided also that an intimation under this clause shall not besent after the expiry of two years from the end of the assessmentyear in which income was first assessable.”

B11. Sub-section (1-A), as it originally read, was thus:

“143. (1-A)(a) Where, in the case of any person, the total income,as a result of the adjustments made under the first proviso toclause (a) of sub-section (1), exceeds the total income declaredin the return by any amount, the Assessing Officer shall,—

C

(i) further increase the amount of tax payable under sub-section (1) by an additional income tax calculated at therate of twenty per cent of the tax payable on suchexcess amount and specify the additional income tax inthe intimation to be sent under sub-clause (i) of clause(a) of sub-section (1); D

(ii) where any refund is due under sub-section (1), reducethe amount of such refund by an amount equivalent tothe additional income tax calculated under sub-clause(i).”

E

12. Sub-section (1-A) was amended by the Finance Act, 1993with effect from 1-4-1989, which was the date upon which sub-section(1-A) had been introduced into the Act. The substituted sub-section(1-A) read thus:

F“143. (1-A)(a) Where as a result of the adjustments made underthe first proviso to clause (a) of sub-section (1),—

(i) the income declared by any person in the return isincreased; or

(ii) the loss declared by such person in the return is reducedGor is converted into income, the Assessing Officer shall,—

(A) in a case where the increase in income under sub-clause (i) of this clause has increased the totalincome of such person, further increase the amount H

of tax payable under sub-section (1) by an additionalincome tax calculated at the rate of twenty per centon the difference between the tax on the totalincome so increased and the tax that would havebeen chargeable had such total income beenreduced by the amount of adjustments and specifythe additional income tax in the intimation to be sentunder sub-clause (i) of clause (a) of sub-section (1); (B) in a case where the loss so declared is reducedunder sub-clause (ii) of this clause or the aforesaidadjustments have the effect of converting that lossinto income, calculate a sum (hereinafter referredto as additional income tax) equal to twenty per centof the tax that would have been chargeable on theamount of the adjustments as if it had been the totalincome of such person and specify the additionalincome tax so calculated in the intimation to be sentunder sub-clause (i) of clause (a) of sub-section (1)

(C) where any refund is due under sub-section (1),reduce the amount of such refund by an amountequivalent to the additional income tax calculatedunder sub-clause (A) or sub-clause (B), as the casemay be.”

13. The amendments brought by Finance Act, 1993 withretrospective effect i.e. from 01.04.1989 are fully attracted with regardto assessment in question i.e. for assessment year 1991-92. Thesubstituted sub-section (1-A) makes it clear that where the loss declaredby an assessee had been reduced by reason of adjustments made undersub-section(1)(a), the provisions of sub-section (1-A) would apply. Asnoted above the Commissioner of Income Tax while rejecting therevision petition of the petitioner has taken the view that wheneveradjustment is made, additional tax would be charged @ 20% of thetax payable on such excess amount. The excess amount refers to theincrease in the income and by implication the reduction in loss whereeven after the addition there is negative income. Whether there shouldbe levy of additional tax in all circumstances and cases where loss isreduced, is the question to be answered in the present case.

14. By Taxation Laws (Amendment) Act, 1991 in Section 32

A

B

C

D

E

F

G

H

Athird proviso was inserted to the following effect:

“Provided also that, in respect of the previous year relevant tothe assessment year on the 1[st] day of April, 1991, the deductionin relation to any block of assets under this clause shall, in thecase of a company, be restricted to seventy-five per cent of theBamount calculated at the percentage, on the written down valueof such assets, prescribed under this Act immediately before thecommencement of the Taxation Laws (Amendment) Act, 1991.”

15. Prior to insertion of the above proviso the depreciation wasnot restricted to 75% of the amount calculated at the percentage onCthe written down value of such assets. The return was filed by theassessee on 31.12.1991, prior to which date the Taxation Laws(Amendment) Act, 1991 had come into operation. It was due to bonafidemistake and oversight that the assessee claimed 100% depreciationinstead of 75%. The 100% depreciation of Rs.333,77,70,317/- wasclaimed on written down value of assets, 25% depreciation was, thus,Ddisallowed restricting it to 75% and after reducing 25% of thedepreciation loss remained to the extent of Rs.(-)3,43,94,90,393/-. Evenas per reduction of 25% depreciation the return of loss income of theassessee remained. In claiming 100% depreciation the assessee claimsthat there was no intention to evade tax and the said claim was only aEbonafide mistake. As noted above by the Finance Act, 1993 Section143(1-A) was substituted with retrospective effect from 01.04.1989.The memorandum explaining the provisions of the Finance Bill withretrospective effect was to the following effect:

“The provisions of Section 143(1-A) of the Income Tax ActFprovide for levy of twenty per cent additional income tax wherethe total income, as a result of the adjustments made under thefirst proviso to Section 143(1)(a), exceeds the total incomedeclared in the return. These provisions seek to cover cases ofreturned income as well as returned loss. Besides its deterrenteffect, the purpose of the levy of the additional income tax is toGpersuade all the assesses to file their returns of income carefullyto avoid mistakes.

In two recent judicial pronouncements, it has been held that theprovisions of Section 143(1-A) of the Income Tax Act, as theseare worded, are not applicable in loss cases.

HThe Bill, therefore, seeks to amend Section 143(1-A) of the

Income Tax Act to provide that where as a result of theadjustments made under the first proviso to Section 143(1)(a),the income declared by any person in the return is increased,the assessing officer shall charge additional income tax at therate of twenty per cent, on the difference between the tax onthe increased total income and the tax that would have beenchargeable had such total income been reduced by the amountof adjustments. In cases where the loss declared in the returnhas been reduced as a result of the aforesaid adjustments or theaforesaid adjustments have the effect of converting that loss intoincome, the Bill seeks to provide that the assessing officer shallcalculate a sum (referred to as additional income tax) equal totwenty per cent of the tax that would have been chargeable onthe amount of the adjustments as if it had been the total incomeof such person.

The proposed amendment will take effect from 1-4-1989 and will,accordingly, apply in relation to Assessment Year 1989-1990 andsubsequent years.”

16. Learned counsel for the Revenue has rightly submitted thatobject of Section 143(1-A) was the prevention of evasion of tax. Thememorandum explaining the provisions of the Finance Bill as notedabove was also to persuade to the assessee to file Income Tax Returncarefully to avoid mistakes.

17. This Court in Commissioner of Income Tax, Gauhati vs.Sati Oil Udyog Limited and another, (2015) 7 SCC 304, hadoccasion to consider elaborately the provisions of Section 143(1-A), itsobject and validity. There was a challenge to the retrospectivity of theprovisions of Section 143(1-A) as introduced by Finance Act, 1993. TheGauhati High Court had held that retrospective effect given to theamendment would be arbitrary and unreasonable. The appeal was filedby the Revenue in this Court in which appeal, this Court had occasionto examine the constitutional validity of the provisions. This Court inthe above judgment held that object of Section 143(1-A) was theprevention of evasion of tax. In paragraph 9 of the judgment followinghas been laid down:

“9. On a cursory reading of the provision, it is clear that the objectof Section 143(1-A) is the prevention of evasion of tax. By theintroduction of this provision, persons who have filed returns in AB

C

DE

F

G

H

SUPREME COURT REPORTS

Awhich they have sought to evade the tax properly payable bythem is meant to have a deterrent effect and a hefty amount of20% as additional income tax is payable on the differencebetween what is declared in the return and what is assessed totax.”

B18. Relying on earlier judgment of this Court in K.P. Varghesev. ITO, (1981) 4 SCC 173, this Court in the above case held thatprovisions of Section 143(1-A) should be made to apply only to taxevaders. In paragraphs 21 and 25 following was laid down:

“21. In the present case, the question that arises before us isCalso as to whether bona fide assessees are caught within the netof Section 143(1-A). We hasten to add that unlike in J.K.Synthetics case, Section 143(1-A) has in fact been challengedon constitutional grounds before the High Court on the facts ofthe present case. This being the case, we feel that since theprovision has the deterrent effect of preventing tax evasion, itDshould be made to apply only to tax evaders. In support of thisproposition, we refer to the judgment in K.P. Varghese v. ITO.The Court in that case was concerned with the correctconstruction of Section 52(2) of the Income Tax Act: (K.P.Varghese case, SCC p. 179, para 4 : SCR p. 639)

E

“52. (2) Without prejudice to the provisions of sub-section (1),if in the opinion of the Income Tax Officer the fair marketvalue of a capital asset transferred by an assessee as on thedate of the transfer exceeds the full value of the considerationdeclared by the assessee in respect of the transfer of suchFcapital asset by an amount of not less than fifteen per centof the value declared, the full value of the consideration forsuch capital asset shall, with the previous approval of theInspecting Assistant Commissioner, be taken to be its fairmarket value on the date of its transfer.”

G25. Taking a cue from Varghese case, we therefore, hold thatSection 143(1-A) can only be invoked where it is found on factsthat the lesser amount stated in the return filed by the assesseeis a result of an attempt to evade tax lawfully payable by theassessee. The burden of proving that the assessee has soattempted to evade tax is on the Revenue which may beHdischarged by the Revenue by establishing facts and

circumstances from which a reasonable inference can be drawnthat the assessee has, in fact, attempted to evade tax lawfullypayable by it. Subject to the aforesaid construction of Section143(1-A), we uphold the retrospective clarificatory amendmentof the said section and allow the appeals. The judgments of theDivision Bench2of the Gauhati High Court are set aside. Therewill be no order as to costs.”

19. This Court in the above case upheld the constitutional validityof Section 143(1-A) (as inserted by the Finance Act, 1993) subject toholding that Section 143(1-A) can only be invoked where it is found onfacts that the lesser amount stated in the return filed by the assesseeis a result of an attempt to evade tax lawfully by the assessee.

20. Applying the ratio of the above judgment in the present case,we need to find out as to whether 100% depreciation as mentioned inreturn filed by the assessee was a result of an attempt to evade taxlawfully payable by the assessee.

21. We have seen from the facts, as noted above, that even afterdis-allowing 25% of the depreciation, the assessee in the returnremained in loss and the 100% depreciation was claimed by theassessee in the return due to a bonafide mistake. By Taxation Laws(Amendment) Act, 1991, the depreciation in the case of Company wasrestricted to 75% which due to oversight was missed by the assesseewhile filing the return. The Commissioner of Income Tax by decidingthe revision petition has also not made any observation to the effactthat 100% depreciation claimed by the assessee was with intend toevade payment of tax lawfully payable by the assessee, rather theCommissioner in his order dated 31.03.1992 has observed thatwhenever adjustment is made, additional tax has to be charged @ 20%of the tax payable on such excess amount.

22. It is true that while interpreting a Tax Legislature theconsequences and hardship are not looked into but the purpose andobject by which taxing statutes have been enacted cannot be lostsight. This Court while considering the very same provision i.e. Section143(1-A), its object and purpose and while upholding the provision heldthat the burden of proving that the assessee has attempted to evadetax is on the Revenue which may be discharged by the Revenue byestablishing facts and circumstances from which a reasonable inferencecan be drawn that the assessee has, in fact, attempted to evade tax A

B

D

E

F

G

H

Alawfully payable by it. In the present case, not even whisper, that claimof 100% depreciation by the assessee, 25% of which was disallowedwas with intend to evade tax. We cannot mechanically apply theprovisions of Section 143(1-A) in the facts of the present case and inview of the categorical pronouncement by this Court in Commissionerof Income Tax, Gauhati vs. Sati Oil Udyog Limited and anotherB(supra), where it is held that Section 143(1-A) can only be invokedwhen the lesser amount stated in the return filed by the assessee is aresult of an attempt to evade tax lawfully payable by the assessee. Inview of the above, we hold that mechanical application of Section143(1-A) in the facts of the present case was uncalled for.

C23. In the result, we allow the appeal, set aside the judgment ofthe Division Bench of the High Court as well as demand of additionaltax dated 12.02.1992 as amended on 28.02.1992.

Kalpana K. TripathyD

Appeal allowed.

E

F

G

H