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

Citation: [2020] 4 S.C.R. 995 · Decided: 19-03-2020 · Supreme Court of India · Bench: ASHOK BHUSHAN · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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RAJASTHAN STATE ELECTRICITY BOARD JAIPUR
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.
   [2020] 4 S.C.R. 995
995
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SUPREME COURT REPORTS
[2020] 4 S.C.R.
Allowing the appeal, the Court
HELD: 1. 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]
2. 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]
Commissioner of Income Tax, Gauhati v. Sati Oil
Udyog Limited and Another (2015) 7 SCC 304 : [2015]
2 SCR 1099 ; K.P. Varghese v. ITO, (1981) 4 SCC
173 : [1982] 1 SCR 629 – relied on.
3. By Taxation Laws (Amendment) Act, 1991 in Section
32 third proviso was inserted. Prior to insertion of the above
proviso the depreciation was not restricted to 75% of the amount
calculated at the percentage on the written down value of such
assets. The return was filed by the assessee on 31.12.1991, prior
to which date the Taxation Laws (Amendment) Act, 1991 had
come into operation. It was due to bonafide mistake and
oversight that the assessee claimed 100% depreciation instead
of 75%. The 100% depreciation of Rs. 333,77,70,317/- was
claimed on written down value of assets, 25% depreciation was,
thus, disallowed restricting it to 75% and after reducing
25% of the depreciation loss remained to the extent of
Rs. (-)3,43,94,90,393/-. Even as per reduction of 25%
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depreciation, the return of loss income of the assessee
remained. In claiming 100% depreciation the assessee claims
that there was no intention to evade tax  and  the  said  claim
was  only  a  bonafide  mistake. [Paras 14 & 15] [1003-G-H; 1004-
B-D]
4. In the present case, even after dis-allowing 25% of the
depreciation, the assessee in the return remained in loss and
the 100% depreciation was claimed by the assessee in the return
due to a bonafide mistake. By Taxation Laws (Amendment) Act,
1991, th
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