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Wednesday, March 25, 2015

Sec.143 (1A) of the Income Tax Act - Constitutional Validity - High court and Division Bench held that the retrospective effect given to amendment would be arbitrary and unreasonable - Apex court set aside the same and held that Section 143 (1A) 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 payable by the assessee.The burden of proving that the assessee has so attempted to evade tax is on the revenue which may be discharged by the revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has, in fact, attempted to evade tax lawfully payable by it. Subject to the aforesaid construction of Section 143 (1A), we uphold the retrospective clarificatory amendment of the said Section and allow the appeals - 2015 S.C. MSK LAW REPORTS



the constitutional validity of the retrospective  amendment
      to Section 143(1A) of the Income Tax Act, 1961.  Both the Single Judge
      and the Division Bench of the Gauhati High Court have  held  that  the
      retrospective effect given to the amendment  would  be  arbitrary  and
      unreasonable inasmuch as the provision, being a penal provision, would
      operate harshly on assessees who have made a loss instead of a profit,
      the difference between the loss showed in  the  return  filed  by  the
      assessee and the loss  assessed  to  income  tax  having  to  bear  an
      additional income tax at the rate of 20%.

we  therefore,  hold  that
      Section 143 (1A) 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 payable  by  the  assessee.
      The burden of proving that the assessee has so attempted to evade  tax
      is  on  the  revenue  which  may  be  discharged  by  the  revenue  by
      establishing facts and circumstances from which a reasonable inference
      can be drawn that the assessee has, in fact, attempted  to  evade  tax
      lawfully payable by it.  Subject  to  the  aforesaid  construction  of
      Section 143 (1A), we uphold the retrospective clarificatory  amendment
      of the said Section and allow  the  appeals.   The  judgments  of  the
      Division Bench of the Gauhati High Court are set aside.  There will be
      no order as to costs. - 2015 S.C. MSK LAW REPORTS

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