2000 (8) TMI 263 - AT - Income Tax

Summary

Issues:
Levy of additional tax under section 143(1A) for assessment year 1991-92 based on rectification order under section 154.

Detailed Analysis:

1. Background: The appeal was filed by the assessee against the order of the CIT (Appeals) for the assessment year 1991-92, challenging the levy of additional tax under section 143(1A) based on a rectification order under section 154.

2. Assessee's Contentions: The assessee contended that the levy of additional tax was erroneous as the initial loss declaration of Rs. 3,14,053 was a bona fide mistake. The Assessing Officer accepted this loss without making any adjustments initially, and it was only later rectified to Rs. 1,49,543, leading to the additional tax levy.

3. Revenue's Arguments: The Departmental Representative supported the levy of additional tax, stating that the reduction in loss warranted the additional tax under section 143(1A), even if it resulted from rectification. The revenue argued that the initial error in computation should have been rectified earlier.

4. Legal Precedents: The Department cited the case of Sukra Diamond Tolls P. Ltd. v. Dy. CIT, where it was held that even a reduction in loss could incur a penalty under section 143(1A). However, the Supreme Court's decision in Hindustan Electro Graphites Ltd. highlighted that the levy of additional tax under this section should not be automatic and should not punish the assessee for bona fide mistakes.

5. Decision: The Tribunal, considering the legal precedents and the nature of the mistake made by the assessee, ruled in favor of the assessee. It held that the imposition of additional tax in this case, amounting to Rs. 17,027, was unjustified as it was a result of a bona fide mistake in computation. Therefore, the Tribunal reversed the CIT(A)'s order and deleted the additional tax levied on the assessee for the assessment year 1991-92, allowing the appeal.