TaxTMI 
TaxTMI 
2015 (3) TMI 854
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....on of India, (1994) 210 ITR 121 (Ker); Sanctus Drugs Pharmaceuticals Pvt. Ltd. v. Union of India, (1997) 225 ITR 252 (MP); DCIT v. Rajasthan State Electricity Board, (2008) 299 ITR 253 (Raj); Bidar Sahakari Sakkare Karkhane Niyamat v Union of India, (1999) 237 ITR 445 (Kar); Aluminium Industries Ltd. v. DCIT (Asst), (1998) 234 ITR 165 (Ker); Sukra Diamond Tools Pvt. Ltd. v. DCIT, (1998) 229 ITR 682 (Mad)). 3. The facts necessary to decide these appeals are as follows. The respondent-herein in its annual return for assessment years 1989-1990 and 1991-1992 showed a loss of Rs. 1,94,13,440/- and Rs. 1,80,22,480/- respectively. By an assessment order dated 14.12.1992, the Assessing Officer levied an additional tax under Section 143 (1A) of Rs. 5,62,490/- and Rs. 8,09,290/- respectively for the two assessment years in question calculated in the manner provided in the Section. 4. Being aggrieved by the order dated 14.12.1992, the respondent filed two separate writ petitions to declare the provisions of Section 143 (1A) as ultra vires and consequentially prayed for the quashing of the order dated 14.12.1992. The learned Single Judge who heard the two petitions upheld Section 143 (1A) a....
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.... in a case where the additional income-tax is reduced, the excess amount paid, if any, shall be refunded. Explanation. - For the purposes of this sub-section, tax payable on such excess amount" means:- (i) in any case where the amount of adjustments made under the first proviso to clause (a) of sub-section (1) exceed the total income, the tax that would have been chargeable had the amount of the adjustments been the total income; (ii) in any other case, the difference between the tax on the total income and the tax that would have been chargeable had such total income been reduced by the amount of adjustments." 6. By the Finance Act of 1993, Section 143 (1A)(a) was substituted with retrospective effect from 1.4.1989 as follows:- "(a) Where as a result of the adjustments made under the first provisoto clause(a) of sub-section(1),-- (i) the income declared by any person in the return is increased;or (ii) the loss declaredby such personin the return is reducedor is convertedinto income, the AssessingOfficer shall,-- (A) in a case wherethe increasein incomeunder sub-clause(i) of this clause has increased the total income of such person, further increase the amount of tax ....
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....total income been reduced by the amount of adjustments. In cases where the loss declared in the return has been reduced as a result of the aforesaid adjustments or the aforesaid adjustments have the effect of converting that loss into income, the Bill seeks to provide that the Assessing Officer shall calculate a sum (referred to as additional income tax) equal to twenty per cent of the tax that would have been chargeable on the amount of the adjustments as if it had been the total income of such person.The proposed amendment will take effect from 1 st April, 1989 and will, accordingly, apply in relation to the assessment year 1989-90 and subsequent years." 8. On a cursory reading of the provision, it is clear that the object of Section 143(1A) is the prevention of evasion of tax. By the introduction of this provision, persons who have filed returns in which they have sought to evade the tax properly payable by them is meant to have a deterrent effect and a hefty amount of 20% as additional income tax is payable on the difference between what is declared in the return and what is assessed to tax. 9. A plain reading of the provision as it originally stood refers to "the total incom....
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....Harprasad and Co. (P) Ltd. [(1975) 3 SCC 868 : 1975 SCC (Tax) 158 : (1975) 99 ITR 118] and followed in Reliance Jute and Industries Ltd. v. CIT [(1980) 1 SCC 139 : 1980 SCC (Tax) 67 : (1979) 120 ITR 921. After an elaborate and detailed discussion, this Court held with reference to the charging provisions of the statute that the expression "income" should be understood to include losses. The expression "profits and gains" refers to positive income whereas "losses" represents negative profit or in other words minus income. Considering this aspect of the matter in greater detail, Gold Coin [(2008) 9 SCC 622: (2008) 304 ITR 308] overruled the view expressed by the two learned Judges in Virtual Soft Systems [(2007) 9 SCC 665 : (2007) 289 ITR 83]. 24. Relevant ITR paras 11 and 12 of Gold Coin [(2008) 9 SCC 622 : (2008) 304 ITR 308] dealing with income and losses are reproduced hereinbelow: (SCC p. 628, paras 15-16) "15. When the word 'income' is read to include losses as held in Harprasad case [(1975) 3 SCC 868 : 1975 SCC (Tax) 158 : (1975) 99 ITR 118] it becomes crystal clear that even in a case where on account of addition of concealed income the returned loss stands reduced ....
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.... (ii) if any refund is due on the basis of such return, it shall be granted to the assessee : Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely:- (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified ; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is not claimed in the return, shall be allowed ; (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed : Provided further that an intimation shall be sent to the assessee whether or not any adjustment has been made under the first proviso and notwithstanding that no tax or interest is due from him: Provided also that an intimation under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the in....
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.... pointed out by this court in Khemka case [AIR 1955 SC 765 : (1955) 2 SCR 483 : (1955) 6 STC 627] the penalties became not payable. In this situation, where the dealers have utilised the money which should have been paid to the Government and have committed default in performing their duty, if Parliament calls upon them to pay penalties in accordance with the law as amended with retrospective effect it cannot be said that there has been any unreasonable restriction imposed on the rights guaranteed under Article 19(1)(f) and (g) of the Constitution, even though the period of retrospectivity is nearly 19 years. It is also pertinent to refer here to sub-section (3) of Section 9 of the Amending Act which provides that the provisions contained in sub-section (2) thereof would not prevent a person from questioning the imposition or collection of any penalty or any proceeding, act or thing in connection therewith or for claiming any refund in accordance with the Act as amended by the Amending Act read with sub-section (1) of Section 9 of the Amending Act. Explanation to sub-section (3) of Section 9 of the Amending Act also provides for exclusion of the period between February 27, 1975 i.e....
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....l tax would have been leviable on the cash compensatory support if the Finance Act, 1990 had not so provided even though retrospectively. The assessee could not have suffered additional tax but for the Finance Act, 1990. After he had filed his return of income, which was correct as per law on the date of filing of the return, it was thereafter that the cash compensatory support also came within the sway of Section 28. When additional tax has the imprint of penalty the Revenue cannot be heard saying that levy of additional tax is automatic under Section 143(1-A) of the Act. If additional tax could be levied in such circumstances it will be punishing the assessee for no fault of his. That cannot ever be the legislative intent. It shocks the very conscience if in the circumstances Section 143(1-A) could be invoked to levy the additional tax. The following observations by the Constitution Bench of this Court in Pannalal Binjraj v. Union of India [(1957) 31 ITR 565 : AIR 1957 SC 397] are apt: 'A humane and considerate administration of the relevant provisions of the Income Tax Act would go a long way in allaying the apprehensions of the assessees and if that is done in the true spir....
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....ns where the full value of the consideration for the transfer is correctly declared by the assessee. In such a situation, this Court held:- "We must therefore eschew literalness in the interpretation of Section 52 Sub-section (2) and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the legislature, the court may modify the language used by the legislature or even 'do some violence' to it, so as to achieve the obvious intention of the legislature and produce a rational construction, Vide: Luke v. Inland Revenue Commissioner [1963] AC 557. The Court may also in such a case read into the statutory provision a condition which, though not expressed, is implicit as constituting the basic assumption underlying the statutory provision. We think that, having regard to this well recognised rule of ....
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....respect of the transfer and the first condition is therefore satisfied. The Revenue must go further and prove that the second condition is also satisfied. Merely by showing that the first condition is satisfied, the Revenue cannot ask the Court to presume that the second condition too is fulfilled, because even in a case where the first condition of 15% difference is satisfied, the transaction may be a perfectly honest and bonafide transaction and there may be no under-statement of the consideration. The fulfilment of the second condition has therefore to be established independently of the first condition and merely because the first condition is satisfied, no inference can necessarily follow that the second condition is also fulfilled. Each condition has got to be viewed and established independently before sub-section (2) can be invoked and the burden of doing so is clearly on the Revenue. It is a well settled rule of law that the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue and the second condition being as much a condition of taxability as the first, the burden lies on the Revenue to show that there is understatement of the cons....