DUNCAN SERVICES LIMITED Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS writ petition is directed against the notice dt. 23th March, 1978, issued by the ITO, Company Circle, New Delhi, under S. 148 of the INCOME TAX ACT, 1961. The relevant assessment year is 1974 -75.

(2.) IN the counter -affidavit, the reason furnished is as follows :

(3.) THE submissions of the petitioner have great deal of substance. It may be noted that S. 40A(7) was newly introduced in 1975 and was given retrospective effect from 1973. There was a lot of confusion regarding the application of this section and a circular was issued by the Board on 23th June, 1975 (See Iyengar's Law of Income -tax, Eighth Edition, at page 2359). In Indian & Eastern Newspaper Society vs. CIT (1979) 12 CTR (SC) 190 : (1979) 119 ITR 996 (SC), the Supreme Court has held that the report of the internal audit party of the IT Department is no information within the meaning of S. 147(b) of the IT Act, 1961. The Supreme Court has further held :