Commissioner of Income-tax, Gauhati & Ors. v. Sati Oil Udyog Ltd
[Citation -2015-LL-0324]

Citation 2015-LL-0324
Appellant Name Commissioner of Income-tax, Gauhati & Ors.
Respondent Name Sati Oil Udyog Ltd.
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 24/03/2015
Judgment View Judgment
Keyword Tags additional income-tax • excess amount • fair market value • positive income • retrospective amendment • tax evasion • capital asset
Bot Summary: The learned single judge who heard the two petitions upheld section 143(1A) as amended in 1993 prospectively but held that in so far as it operated with effect from 1989 on losses made by companies, the section is arbitrary and unreasonable and would have to be struck down. On being questioned by the Bench about the true construction of section 143(1A), he very fairly submitted that since the object of section 143(1A) is to prevent tax evasion, the said section would have to be read in the light of the aforesaid object. Where as a result of an order under of this section or) section 154 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, the amount on which additional income-tax is payable under clause has been increased or reduced, as the case may be, the additional income-tax shall be increased or reduced accordingly, and,- in a case where the additional income-tax is increased, the Assessing Officer shall serve on the assessee a notice of demand under section 156; in a case where the additional income-tax is reduced, the excess amount paid, if any, shall be refunded. The Bill seeks to amend section 143(1A) of the Incometax Act to provide that where as a result of the adjustments made under the first proviso to section 143(1)(a), the income declared by any person in the return is increased, the Assessing Officer shall charge additional income-tax at the rate of twenty per cent. Although section 6 classifies income under six heads, the main charging provision is section 3 which levies income-tax, as only one tax, on the'total income' of the assessee as defined in section 2(15). Even on a reading of section 143(1)(a) which is referred to in section 143(1A), a loss is envisaged as being declared in a return made under section 139. Subject to the aforesaid construction of section 143(1A), we uphold the retrospective clarificatory amendment of the said section and allow the appeals.


REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.9133-9134 OF 2003 COMMISSIONER OF INCOME TAX, GAUHATI & ORS. APPELLANTS VERSUS M/S. SATI OIL UDYOG LTD. & ANR. RESPONDENTS WITH CIVIL APPEAL NO.9135 OF 2003 JUDGMENT R.F.Nariman, J. 1. question which arises for consideration in present appeals is constitutional validity of retrospective Signature Not Verified amendment to Section 143(1A) of Income Tax Act, 1961. Digitally signed by Meenakshi Kohli Date: 2015.03.24 17:08:00 IST Reason: Both Single Judge and Division Bench of Gauhati High Court have held that retrospective effect given to 1 amendment would be arbitrary and unreasonable inasmuch as provision, being penal provision, would operate harshly on assessees who have made loss instead of profit, difference between loss showed in return filed by assessee and loss assessed to income tax having to bear additional income tax at rate of 20%. 2. It may be mentioned at outset that same provision in its retrospective operation has been upheld by Kerala, Madhya Pradesh, Rajasthan, Karnataka and Madras High Courts. (Kerala State Coir Corpn Ltd. v. Union 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. facts necessary to decide these appeals are as follows. 2 respondent-herein in its annual return for assessment years 1989-1990 and 1991-1992 showed loss of Rs.1,94,13,440/- and Rs.1,80,22,480/- respectively. By assessment order dated 14.12.1992, Assessing Officer levied additional tax under Section 143 (1A) of Rs.5,62,490/- and Rs.8,09,290/- respectively for two assessment years in question calculated in manner provided in Section. 4. Being aggrieved by order dated 14.12.1992, respondent filed two separate writ petitions to declare provisions of Section 143 (1A) as ultra vires and consequentially prayed for quashing of order dated 14.12.1992. learned Single Judge who heard two petitions upheld Section 143 (1A) as amended in 1993 prospectively but held that insofar as it operated with effect from 1989 on losses made by companies, section is arbitrary and unreasonable and would, therefore, have to be struck down. Division Bench agreed with Single Judge and dismissed two writ appeals before it. 5. Shri Neeraj Kaul, learned Additional Solicitor General of India appearing on behalf of appellants stated that 3 amendment made to Section 143 (1A) with retrospective effect was merely clarificatory and that even without such amendment, same position would obtain qua losses as would obtain qua profits inasmuch as expression income would comprehend both profits as well as losses. He cited number of judgments before us which we will refer to presently. On being questioned by Bench about true construction of Section 143 (1A), he very fairly submitted that since object of Section 143(1A) is to prevent tax evasion, said Section would have to be read in light of aforesaid object. Despite being served, no one appears for respondents. Section 143 (1A) as it stood in 1989 is as follows:- (a) Where, in case of any person, total income, as result of adjustments made under first proviso to clause (a) of sub-section (1), exceeds total income declared in return by any amount, Assessing Officer shall, - (i) further increase amount of tax payable under sub-section (1) by additional income-tax calculated at rate of twenty per cent of tax payable on such excess amount and specify additional income-tax in intimation to be sent under sub-clause (i) of clause (a) of sub-section (1); 4 (ii) where any refund is due under sub-section (1), reduce amount of such refund by amount equivalent to additional income-tax calculated under sub-clause (i). (b) Where as result of order under (sub-section (3) of this section or) section 154 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, amount on which additional income-tax is payable under clause (a) has been increased or reduced, s case may be, additional income-tax shall be increased or reduced accordingly, and, - (i) in case where additional income-tax is increased, Assessing Officer shall serve on assessee notice of demand under Section 156; (ii) in case where additional income-tax is reduced, excess amount paid, if any, shall be refunded. Explanation. For purposes of this sub-section, tax payable on such excess amount means:- (i) in any case where amount of adjustments made under first proviso to clause (a) of sub-section (1) exceed total income, tax that would have been chargeable had amount of adjustments been total income; (ii) in any other case, difference between tax on total income and tax that would have been chargeable had such total income been reduced by amount of adjustments. 6. By Finance Act of 1993, Section 143 (1A)(a) was substituted with retrospective effect from 1.4.1989 as follows:- 5 (a) Where as result of adjustments made under first provisoto clause(a) of sub-section(1), (i) income declared by any person in return is increased;or (ii) loss declaredby such personin return is reducedor is convertedinto income, AssessingOfficer shall, (A) in case wherethe increasein incomeunder sub-clause(i) of this clause has increased total income of such person, further increase amount of tax payable under sub-section (1) by additional income tax calculated at rate of twenty per cent on difference between tax on total income so increasedand tax that would have been chargeablehad such total incomebeen reduced by amount of adjustments and specify additional income tax in intimation to be sent under sub-clause(i) of clause(a) of sub-section(1); (B) in case where loss so declared is reduced under sub-clause (ii) of this clause or aforesaid adjustmentshave effect of converting that loss into income, calculate sum (hereinafter referred to as additional income tax) equal to twenty per cent of tax that would have been chargeable on amountof adjustmentsas if it had beenthe total income of such person and specify additional income tax so calculated in intimation to be sent under sub-clause (i) of clause(a) of sub-section(1); (C) where any refund is due under sub-section (1), reduce amount of such refund by amount equivalent to additional income tax calculated under sub-clause (A) or sub-clause(B), as casemaybe. 6 7. Memorandum explaining provisions of Finance Bill which introduced said retrospective amendment is as under: provisions of section 143(1A) of Income-tax Act provide for levy of twenty per cent additional income-tax where total income, as result of adjustments made under first proviso to section 143(1)(a), exceeds total income declared in return. These provisions seek to cover cases of returned income as well as returned loss. Besides its deterrent effect, purpose of levy of additional income-tax is to persuade all assesses to file their returns of income carefully to avoid mistakes. In two recent judicial pronouncements, it has been held that provisions of section 143 (1A) of Income-tax Act, as these are worded, are not applicable in loss cases. Bill, therefore, seeks to amend section 143(1A) of Income-tax Act to provide that where as result of adjustments made under first proviso to section 143 (1)(a), income declared by any person in return is increased, Assessing Officer shall charge additional income-tax at rate of twenty per cent, on difference between tax on increased total income and tax that would have been chargeable had such total income been reduced by amount of adjustments. In cases where loss declared in return has been reduced as result of aforesaid adjustments or aforesaid adjustments have effect of converting that loss into income, Bill seeks to provide that Assessing Officer shall calculate sum (referred to as additional income tax) equal to twenty per cent of 7 tax that would have been chargeable on amount of adjustments as if it had been total income of such person. proposed amendment will take effect from 1 st April, 1989 and will, accordingly, apply in relation to assessment year 1989-90 and subsequent years. 8. On cursory reading of provision, it is clear that object of Section 143(1A) is prevention of evasion of tax. By introduction of this provision, persons who have filed returns in which they have sought to evade tax properly payable by them is meant to have deterrent effect and hefty amount of 20% as additional income tax is payable on difference between what is declared in return and what is assessed to tax. 9. plain reading of provision as it originally stood refers to total income . 10. Mr. Kaul, learned Additional Solicitor General is right in referring to definition of income in Section 2(24) of Income Tax Act, 1995 and drawing our attention to fact that said definition is inclusive one. Further, it is settled law at least since 1975 that word income would include within 8 it both profits as well as losses. This is clear from Commissioner of Income Tax Central, Delhi v. Harprasad & Company Pvt. Ltd., (1975) 3 SCC 868, paragraph 17 of which lays down law as follows: 17. From charging provisions of Act, it is discernible that words income or profits and gains should be understood as including losses also, so that, in one sense profits and gains represent plus income whereas losses represent minus income [CIT v. Karamchand Prem Chand, (1960) 3 SCR 727 : 40 ITR 106 (SC) : CIT v. Elphinstone Spinning and Weaving Mills, (1960) 3 SCR 953 : 40 ITR 143 (SC)] . In other words, loss is negative profit. Both positive and negative profits are of revenue character. Both must enter into computation, wherever it becomes material, in same mode of taxable income of assessee. Although Section 6 classifies income under six heads, main charging provision is Section 3 which levies income tax, as only one tax, on total income of assessee as defined in Section 2(15). income in order to come within purview of that definition must satisfy two conditions: Firstly, it must comprise total amount of income, profits and gains referred to in Section 4(1) . Secondly, it must be computed in manner laid down in Act . If either of these conditions fails, income will not be part of total income that can be brought to charge. 11. This judgment has subsequently been followed in several judgments. fairly recent judgment of this Court in CIT Joint 9 Commissioner of Income Tax, Surat v. Saheli Leasing & Industries Ltd., (2010) 6 SCC 384 referred to aforesaid judgment and held as follows:- 23. In aforesaid decision in Gold Coin case [(2008) 9 SCC 622 : (2008) 304 ITR 308] , expression income in statute appearing in Section 2(24) of Act has been clarified to mean that it is inclusive definition and includes losses, that is, negative profit. This has been held so on strength of earlier judgments of this Court in CIT v. 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 elaborate and detailed discussion, this Court held with reference to charging provisions of statute that expression income should be understood to include losses. expression profits and gains refers to positive income whereas losses represents negative profit or in other words minus income. Considering this aspect of matter in greater detail, Gold Coin [(2008) 9 SCC 622: (2008) 304 ITR 308] overruled view expressed by 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 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 case where on account of addition of concealed income 10 returned loss stands reduced and even if final assessed income is loss, still penalty was leviable thereon even during period 1-4-1976 to 1-4-2003. Even in Circular dated 24-7-1976, referred to above, position was clarified by Central Board of Direct Taxes (in short CBDT ). It is stated that in case where on setting of concealed income against any loss incurred by assessee under any other head of income or brought forward from earlier years, total income is reduced to figure lower than concealed income or even to minus figure penalty would be imposable because in such case tax sought to be evaded will be tax chargeable on concealed income as if it is total income . 16. law is well settled that applicable provision would be law as it existed on date of filing of return. It is of relevance to note that when any loss is returned in any return it need not necessarily be loss of previous year concerned. It may also include carried-forward loss which is required to be set up against future income under Section 72 of Act. Therefore, applicable law on date of filing of return cannot be confined only to losses of previous accounting years. 25. necessary consequence thereof would be that even if assessee has disclosed nil income and on verification of record, it is found that certain income has been concealed or has wrongly been shown, in that case, penalty can still be levied. aforesaid position is no more res integra and according to us, it stands answered in favour of Revenue and against assessee. 11 12. Apart from above, there is another indication contained in Section 143 1(a) as it stood in 1989. said Section reads as under: (1)(a) Where return has been made under section 139, or in response to notice under sub-section (1) of section 142,- (i) if any tax or interest is found due on basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to provisions of sub-section (2), intimation shall be sent to assessee specifying sum so payable, and such intimation shall be deemed to be notice of demand issued under section 156 and all provisions of this Act shall apply accordingly; and (ii) if any refund is due on basis of such return, it shall be granted to assessee : Provided that in computing tax or interest payable by, or refundable to, assessee, following adjustments shall be made in income or loss declared in return, namely:- (i) any arithmetical errors in return, accounts or documents accompanying it shall be rectified ; (ii) any loss carried forward, deduction, allowance or relief, which, on basis of information available in such return, accounts or documents, is prima facie admissible but which is not claimed in return, shall be allowed ; (iii) any loss carried forward, deduction, allowance or relief claimed in return, which, on basis of information available in such return, accounts or 12 documents, is prima facie inadmissible, shall be disallowed : Provided further that intimation shall be sent to assessee whether or not any adjustment has been made under first proviso and notwithstanding that no tax or interest is due from him: Provided also that intimation under this clause shall not be sent after expiry of two years from end of assessment year in which income was first assessable. 13. Even on reading of Section 143 1(a) which is referred to in Section 143 (1A), loss is envisaged as being declared in return made under Section 139. It is clear, therefore, that retrospective amendment made in 1993 would only be clarificatory of position that existed in 1989 itself. 14. It was pointed out to us that reason for retrospective amendment made in 1993 was judgments of Delhi High Court in Modi Cement Limited v. Union of India, (1992) 193 ITR 91 and JK Synthetics Limited v. Asstt. Commissioner of Income-Tax, (1993) 2000 ITR 594, and Allahabad High Court held in Indo Gulf Fertilizers & Chemicals Corpn. Ltd. v. Union of India, (1992) 195 ITR 485, 13 which held that losses were not within contemplation of Section 143(1A) prior to its amendment. 15. J.K. Synthetics judgment of Delhi High Court was expressly upset by this Court in (2003) 10 SCC 623. By time this Court delivered its judgment, retrospective amendment to Section 143 (1A) had already been made, and this Court, therefore, set aside Delhi High Court judgment. 16. Shri Kaul also cited before us judgment of Shiv Dutt Rai Fateh Chand v. Union of India, (1983) 3 SCC 529. In this judgment, validity of retrospective amendment of Section 9(2A) of Central Sales Tax Act was in question. This Court held that imposition of penalty by tax authority is civil liability, though penal in character. For that reason alone, retrospective imposition of penalty would not be hit by Article 20(1) of Constitution which concerns itself with penalties that are levied by criminal statutes. In paragraph 34, retrospective imposition of penalty under Section 9(2A) was upheld in following terms: 34. In instant case, facts are one shade better. There is no dispute in this case about 14 validity of tax payable under Act during period between January 1, 1957 and date of commencement of Amending Act. It has to be presumed that all tax has been collected by dealers from their customers. There is also no dispute that law required dealers to pay tax within specified time. dealers had also knowledge of provisions relating to penalties in general sales tax laws of their respective States. It was only owing to deficiency in Act pointed out by this court in Khemka case [AIR 1955 SC 765 : (1955) 2 SCR 483 : (1955) 6 STC 627] penalties became not payable. In this situation, where dealers have utilised money which should have been paid to Government and have committed default in performing their duty, if Parliament calls upon them to pay penalties in accordance with law as amended with retrospective effect it cannot be said that there has been any unreasonable restriction imposed on rights guaranteed under Article 19(1)(f) and (g) of Constitution, even though period of retrospectivity is nearly 19 years. It is also pertinent to refer here to sub-section (3) of Section 9 of Amending Act which provides that provisions contained in sub-section (2) thereof would not prevent person from questioning imposition or collection of any penalty or any proceeding, act or thing in connection therewith or for claiming any refund in accordance with Act as amended by Amending Act read with sub-section (1) of Section 9 of Amending Act. Explanation to sub-section (3) of Section 9 of Amending Act also provides for exclusion of period between February 27, 1975 i.e. date on which judgment in Khemka case [AIR 1955 SC 765 : (1955) 2 SCR 483 : (1955) 6 STC 627] was delivered up to date of commencement of Amending Act in computing period of limitation for questioning any order levying penalty. 15 In those proceedings authorities concerned are sure to consider all aspects of case before passing orders levying penalties. contention that impugned provision is violative of Article 19(1)(f) and (g) of Constitution has, therefore, to be rejected. 17. In present case as well, all assessees were put on notice in 1989 itself that expression income contained in Section 143 (1A) would be wide enough to include losses also. That being case, on facts here there is in fact no retrospective imposition of additional tax such tax was imposable on losses as well from 1989 itself. 18. We have already stated in our judgment that object of Section 143 (1A) is prevention of tax evasion. Read literally, both honest asessees and tax evaders are caught within its net. interesting example of such case is contained in Commissioner of Income Tax, Bhopal v. Hindustan Electro Graphites, Indore, (2000) 3 SCC 595. On facts, assessee had filed its return of income in which it showed that it had received certain sum by way of cash compensatory support. Under law as was then in force, said amount was not taxable and, therefore, not included in 16 return. Subsequently, such cash assistance was made taxable retrospectively. Section 143 (1A) was pressed into service by Department, and this Court ultimately held as follows:- 12. case before us does not represent even bona fide mistake. In fact it is not case where under some mistaken belief assessee did not disclose cash compensatory support received by it which he could offer to tax. It is true that income by way of cash compensatory support became taxable retrospectively with effect from 1-4-1967 but that was by amendment of Section 28 by Finance Act of 1990 which amendment could not have been known before Finance Act came into force. Levy of additional tax bears all characteristics of penalty. Additional tax was levied as assessee did not in his return show income by way of cash compensatory support. Assessing Officer on that account levied additional income tax. No additional tax would have been leviable on cash compensatory support if Finance Act, 1990 had not so provided even though retrospectively. assessee could not have suffered additional tax but for Finance Act, 1990. After he had filed his return of income, which was correct as per law on date of filing of return, it was thereafter that cash compensatory support also came within sway of Section 28. When additional tax has imprint of penalty Revenue cannot be heard saying that levy of additional tax is automatic under Section 143(1-A) of Act. If additional tax could be levied in such circumstances it will be punishing assessee for no fault of his. That cannot ever be legislative intent. It shocks very conscience if in circumstances Section 143(1-A) could be invoked to levy additional tax. following observations 17 by Constitution Bench of this Court in Pannalal Binjraj v. Union of India [(1957) 31 ITR 565 : AIR 1957 SC 397] are apt: humane and considerate administration of relevant provisions of Income Tax Act would go long way in allaying apprehensions of assessees and if that is done in true spirit, no assessee will be in position to charge Revenue with administering provisions of Act with evil eye and unequal hand . 19. This case was cited before this Court in J.K. Synthetics judgment which we have already dealt with, reported in (2003) 10 SCC 623. This Court first held that judgment in Hindustan Electro Graphites had no application to facts contained in J.K. Synthetics case and then added that they had reservations about correctness of judgment in Hindustan Electro Graphites Limited principally because assessee in that case had not challenged provisions of Section 143 (1A). 20. In present case, question that arises before us is also as to whether bonafide assessees are caught within net of Section 143 (1A). We hasten to add that unlike in J.K. Synthetics case, Section 143 (1A) has in fact been challenged 18 on Constitutional grounds before High Court on facts of present case. This being case, we feel that since provision has deterrent effect of preventing tax evasion, it should be made to apply only to tax evaders. In support of this proposition, we refer to judgment in K.P. Varghese v. ITO, (1982) 1 SCR 629. Court in that case was concerned with correct construction of Section 52 (2) of Income Tax Act: without prejudice to provisions of Sub-section (1), if in opinion of Income-tax Officer fair market value of capital asset transferred by assessee as on date of transfer exceeds full value of consideration declared by assessee in respect of transfer of such capital assets by amount of not less than fifteen per cent of value declared, full value of consideration for such capital asset shall, with previous approval of Inspecting Assistant Commissioner, be taken to be its fair market value on date of its transfer. 21. On strictly literal interpretation of Section 52 (2), moment fair market value of capital asset by assessee exceeds full value of consideration declared by assessee, in amount of not less than 15% of value declared, full value for consideration for such capital 19 asset shall be taken to be fair market value. strictly literal reading would take into tax net persons who have entered into bonafide transactions where full value of consideration for transfer is correctly declared by assessee. In such situation, this Court held:- We must therefore eschew literalness in interpretation of Section 52 Sub-section (2) and try to arrive at interpretation which avoids this absurdity and mischief and makes provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from tyranny of literal interpretation. It is now well settled rule of construction that where plain literal interpretation of statutory provision produces manifestly absurd and unjust result which could never have been intended by legislature, court may modify language used by legislature or even 'do some violence' to it, so as to achieve obvious intention of legislature and produce rational construction, Vide: Luke v. Inland Revenue Commissioner [1963] AC 557. Court may also in such case read into statutory provision condition which, though not expressed, is implicit as constituting basic assumption underlying statutory provision. We think that, having regard to this well recognised rule of interpretation, fair and reasonable construction of Section 52 sub-section (2) would be to read into it condition that it would apply only where consideration for transfer is under-stated or in other words, assessee has actually received larger consideration for transfer than what is declared in instrument of transfer and it would have no application in case of bonafide 20 transaction where full value of consideration for transfer is correctly declared by assessee. Court further went on to hold:- Thus it is not enough to attract applicability of Sub-section (2) that fair market value of capital asset transferred by assessee as on date of transfer exceeds full value of consideration declared in respect of transfer by not less than 15% of value so declared, but it is furthermore necessary that full value of consideration in respect of transfer is under-stated or in other words, shown at lesser figure than that actually received by assessee. Sub-section (2) has no application in case of honest and bonafide transaction where consideration in respect of transfer has been correctly declared or disclosed by assessee, even if condition of 15% difference between fair market value of capital asset as on date of transfer and full value of consideration declared by assessee is satisfied. If therefore Revenue seeks to bring case within sub-section (2), it must show not only that fair market value of capital asset as on date of transfer exceeds full value of consideration declared by assessee by not less than 15% of value so declared, but also that consideration has been under-stated and assessee has actually received more than what is declared by him. There are two distinct conditions which have to be satisfied before sub-section (2) can be invoked by Revenue and burden of showing that these two conditions are satisfied rests on Revenue. It is for Revenue to show that each of these two conditions is satisfied and Revenue cannot claim to have discharged this burden which lies upon it, by merely establishing 21 that fair market value of capital asset as on date of transfer exceeds by 15% or more full value of consideration declared in respect of transfer and first condition is therefore satisfied. Revenue must go further and prove that second condition is also satisfied. Merely by showing that first condition is satisfied, Revenue cannot ask Court to presume that second condition too is fulfilled, because even in case where first condition of 15% difference is satisfied, transaction may be perfectly honest and bonafide transaction and there may be no under-statement of consideration. fulfilment of second condition has therefore to be established independently of first condition and merely because first condition is satisfied, no inference can necessarily follow that second condition is also fulfilled. Each condition has got to be viewed and established independently before sub-section (2) can be invoked and burden of doing so is clearly on Revenue. It is well settled rule of law that onus of establishing that conditions of taxability are fulfilled is always on Revenue and second condition being as much condition of taxability as first, burden lies on Revenue to show that there is understatement of consideration and second condition is fulfilled. Moreover, to throw burden of showing that there is no understatement of consideration, on assessee would be to cast almost impossible burden upon him to establish negative, namely, that he did not receive any consideration beyond that declared by him. Finally, Court held: We must therefore hold that Sub-section (2) of Section 52 can be invoked only where consideration for transfer has been understated by assessee or in other words, consideration 22 actually received by assessee is more than what is declared or disclosed by him and burden of proving such under-statement or concealment is on Revenue. This burden may be discharged by Revenue by establishing facts and circumstances from which reasonable inference can be drawn that assessee has not correctly declared or disclosed consideration received by him and there is understatement of concealment of consideration in respect of transfer. Sub-section (2) has no application in case of honest and bonafide transaction where consideration received by assessee has been correctly declared or disclosed by him, and there is no concealment or suppression of consideration. 22. Taking cue from Varghese case, we therefore, hold that Section 143 (1A) can only be invoked where it is found on facts that lesser amount stated in return filed by assessee is result of attempt to evade tax lawfully payable by assessee. burden of proving that assessee has so attempted to evade tax is on revenue which may be discharged by revenue by establishing facts and circumstances from which reasonable inference can be drawn that assessee has, in fact, attempted to evade tax lawfully payable by it. Subject to aforesaid construction of Section 143 (1A), we uphold retrospective clarificatory amendment 23 of said Section and allow appeals. judgments of Division Bench of Gauhati High Court are set aside. There will be no order as to costs. .. .. ...J. (A.K. Sikri) . .. .. ...J. (R.F. Nariman) New Delhi, March 24, 2015. 24 ITEM NO.1A COURT NO.15 SECTION IIIA (For judgment) S U P R E M E C O U R T O F I N D I RECORD OF PROCEEDINGS Civil Appeal Nos. 9133-9134 of 2003 COMMNR. OF INCOME TAX, GAUHATI & ORS. Appellant(s) VERSUS M/S. SATI OIL UDYOG LTD. & ANR. Respondent(s) WITH C.A. No. 9135/2003 Date : 24/03/2015 These appeals were called on for pronouncement of reportable judgment today. For Appellant(s) Mr. Arijit Prasad, Adv. Ms. Sadhana Sandhu, Adv. Mrs. Anil Katiyar, Adv. For Respondent(s) Mr. Abhijit Sengupta, Adv. Hon'ble Mr. Justice R. F. Nariman pronounced reportable judgment of Bench comprising Hon'ble Mr. Justice A. K. Sikri and His Lordship. appeals are allowed in terms of signed reportable judgment. (Nidhi Ahuja) (Suman Jain) COURT MASTER COURT MASTER [Signed reportable judgment is placed on file.] 25 Commissioner of Income-tax, Gauhati & Ors. v. Sati Oil Udyog Ltd
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