Law: Income Tax Act, 1961

Section: 143,143(1A),234

Law: Income Tax Act, 1961

Section: 143,143(1A),234

Law: Finance Act, 1990

Section: 28

Section 143 of the Income-tax Act, 1961 - Assessment - Additional tax - Assessment year 1989-90 - Assessee had received certain amount by way of cash compensatory support but did not include same in its return filed on 29-12-1989 - Subsequently in 1990, clause (iiib) came to be inserted in section 28 treating cash compensatory support as profits and gains of business or profession with retrospective effect from 1-4-1967 - Assessing Officer treated said amount as additional income under section 143(1A) and levied additional tax - Whether, in view of fact that when assessee had filed its, return of income, it was correct as per law on date of filing of return, levy of additional tax was not warranted - Held, yes FACTS The assessee had received in the previous year relevant to the assessment year 1988-89 certain amount by way of cash compensatory support. It did not include this income in its return which was filed on 29-12-1989. The Assessing Officer treated cash compensatory support receipt as additional income under section 143(1A) in view of insertion of clause (iiib) to section 28 by the Finance Act, 1990 with retrospective effect from 1-4-1967, and levied tax at higher rate and also charged interest under section 234. The Commissioner (Appeals) allowed the assessee's appeal partly. The Tribunal, however, held that no additional tax could be levied in respect of amount of cash compensatory support and no interest under section 234 could be levied. The High Court also favoured the assessee. On revenue's appeal to the Supreme Court: HELD One has to see the law on the date of filing the return. To attract penal provisions, there has to be some element of lack of bona fides unless the law specifically provides otherwise. The instant case did not represent even a bona fide mistake. In fact it was not a case where under some mistaken belief the assessee did not disclose the cash compensatory support received by it which it 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 the Finance Act, 1990 which amendment could not have been known…

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