RAJASTHAN STATE ELECTRICITY BOARD JAIPUR v. THE DY. COMMISSIONER OF INCOME TAX (ASSESSMENT) & Anr.

4 S.C.R. 995 995 RAJASTHAN STATE ELECTRICITY BOARD JAIPUR A v. THE DY. COMMISSIONER OF INCOME TAX (ASSESSMENT) & ANR. (Civil Appeal No. 8590 of 2010) MARCH 19, 2020 [ASHOK BHUSHAN AND MOHAN 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%, Assessing Officer restricted the depreciation to 75% – Additional tax u/s. 143(I-A) imposed – Assessee’s application for rectification of demand was rejected – Revision Petition against the demand of additional tax was also dismissed – In Writ Petition filed by the assessee, levy of additional tax was quashed by Single Judge of High court – In special appeal, Division Bench upheld the levy – Appeal to Supreme Court – Held: Object of s. 143(I-A) was prevention of evasion of tax and can be invoked only when found that lesser amount stated in the return is a result of an attempt to evade tax lawfully by the assessee – Depreciation was restricted to 75% after amendment of the Act by Taxation Laws (Amendment) Act, 1991 – The return in the present case was filed by the assessee prior to the date when the Amendment Act of 1991 came into operation – 100% depreciation was claimed by the assessee due to bonafide mistake – Burden of proving assessee’s attempt to evade tax, is on the Revenue – In the present case Revenue failed to discharge such burden – Therefore, in the facts of the present case, provisions of s. 143 (I-A) are not applicable and hence demand of additional tax set aside. Interpretation of Statutes: Interpretation of Taxing Statute – Held: While interpreting a taxing statute, the purpose and object for which the statute have been enacted cannot be lost sight. 995 B C D E F G H 996 SUPREME COURT REPORTS [2020] 4 S.C.R. A Allowing the appeal, the Court HELD:

Sub-section (1-A) of s. 143 of Income Tax Act, 1961 was amended by the Finance Act, 1993 with effect from 1-4-1989, which was the date upon which sub-section (1- A) had been introduced into the Act. 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. The substituted sub- section (1-A) makes it clear that where the loss declared by an assessee had been reduced by reason of adjustments made under sub-section(1)(a), the provisions of sub-section (1-A) would apply. [Paras 12 & 13] [1002-E; 1003-E-F]

Object of Section 143(1-A) was the prevention of evasion of tax. The memorandum explaining the provisions of the Finance Bill was also to persuade to the assessee to file Income Tax Return carefully to avoid mistakes. Section 143(1- A) 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 assessee. [Paras 16 & 19] [1005-D; 1007-B]