INCOME TAX ACT, 1961

Section 143(1A)

Assessment - Leviability of additional tax - Assessee claimed higher depreciation due to bona fide mistake -

Assessee, a Government Company due to a bona fide mistake claimed 100% depreciation on written down value of assets instead of 75% depreciation. AO disallowed 25% of depreciation and demanded additional tax under section 143(1A). Assessee filed a petition under section 264 before CIT against the demand of additional tax which came to be dismissed. Also, Division Bench of the High Court upheld demand of additional tax. Assessee aggrieved by the judgment of the Division Bench file civil appeal before Supreme Court. Held: In assessee's case, there was not even whisper, that claim of 100% depreciation by the assessee, 25% of which was disallowed was with intend to evade tax. Even after disallowing 25% of depreciation, the return remained in loss. CIT by deciding revision petition had also not made any observation to the effect that 100% depreciation was claimed by assessee with intend to evade payment of tax lawfully payable by assessee, rather CIT in his Order, observed that whenever adjustment is made, additional tax has to be charged @ 20% of tax payable on such excess amount. However, view taken by CIT fell wrong since section 143(1A) can only be invoked when lesser amount stated in the return filed by assessee was a result of an attempt to evade tax lawfully payable by assessee and mechanical application of section 143(1A) in the facts of assessee's case was thus uncalled for as. 100% depreciation was clearly claimed by assessee in the return due to a bona fide mistake. Accordinlgy, demand of additional tax was set aside.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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