Implementation of additional tax U / s 143(1-A) IT Act can only be levied if the assessee intends to evade tax - Synopsis
Lakshay Parmar 31 Mar 2020

Case name: Rajasthan State Electricity Board v. DY. Commissioner of Income Tax Civil Appeal No. 8590 of 2010

The Supreme Court bench comprising Justice Ashok Bhushan and Justice Mohan M. Shanthanagoudar observed that Section 143(1-A) of the Income Tax Act 1961, can only be invoked if it is found from evidence that the lesser amount claimed in the assesse’s return is the product of an attempt by the assesse to evade tax lawfully.

The view taken in this appeal was that the additional 20% tax sought to be levied under section 143(1-A) is in the essence of a penalty and can only be enforced if the assessee has deliberately attempted to file an incorrect return.

However, the bench noted in the case of Commissioner of Income Tax, Gauhati vs. Sati Oil Udyog Limited and another, (2015) 7 SCC 304,  the Apex court had considered the object and validity of Section 143(1-A). The statutory validity of Section 143(1-A) (as set out in the Finance Act, 1993) has been upheld, subject to the assumption that Section 143(1-A) can only be invoked if it is found from evidence that the lesser amount mentioned in the assessee's return is the result of an attempt by the assessee to evade tax lawfully.

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