The Supreme Court has observed that Section 143(1-A) of the Income Tax Act can only be invoked when the lesser amount stated in the return filed by the assessee is a result of an attempt to avoid tax lawfully payable by the assessee.
The opinion taken in this appeal was that the 20% additional tax sought to be imposed under Section 143(1-A) is in the nature of a penalty and can be imposed only when the assessee had intentionally sought to file an incorrect return.
The revenue department has to prove that the return filed by the assessee is false, it can be done by establishing facts and circumstances from which a sufficient assumption can be brought that the assessee has, in fact, attempted to evade tax lawfully payable by it.
The bench comprising Justices Ashok Bhushan and Mohan M. Shanthanagoudar noted that in Commissioner of Income Tax, Guhati vs Sati Oil Udyog Limited and other (2015) 7 SCC 304, the Supreme Court had considered the provisions of Section 143(1-A), its object and validity. The constitutional validity of Section 143(1-A) (as inserted by the Finance Act, 1993) was upheld subject to holding that 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.