Section 143(1-A) additional tax cannot be imposed for a bona fide depreciation mistake absent any tax evasion element.

Section 143(1-A) additional tax could not be imposed where a return showing a loss was reduced by a depreciation adjustment but still remained in loss, and there was no material to show an attempt to evade tax. The SC construed the provision in line with its anti-evasion purpose and held that it cannot operate mechanically against a bona fide assessee. On the facts, the higher depreciation claim was a genuine mistake, so the additional tax demand was unsustainable.

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Issues: Whether additional income tax under Section 143(1-A) of the Income-tax Act, 1961 could be levied where the return disclosed a loss and the reduction in depreciation still left the assessee in loss, absent any finding of an attempt to evade tax.

Analysis: Section 143(1-A), as substituted with retrospective effect, covered cases where the declared loss was reduced by adjustments made under Section 143(1)(a). However, the provision was construed in the light of its object, namely prevention of tax evasion and deterrence against inaccurate returns. The Court applied the earlier authoritative construction that the provision cannot operate mechanically against a bona fide assessee and can be invoked only where the lesser amount in the return is found to be the result of an attempt to evade tax lawfully payable. On the facts, the assessee's claim of higher depreciation was a bona fide mistake, the return continued to reflect a loss even after the adjustment, and there was no material showing any intention to evade tax.

Conclusion: Additional tax under Section 143(1-A) was not leviable in the facts of the case and the demand could not be sustained.

Ratio Decidendi: Section 143(1-A) can be invoked only where the adjustment to the return reflects an attempt to evade tax lawfully payable by the assessee, and not where the return is altered only because of a bona fide mistake without any tax evasion element.

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