KRISHNA METAL INDUSTRIES Vs. ALOGOTAR H M

JUDGEMENT

(1.) THE petitioner -assessee has challenged the notices dated March 15, 1996, and April 18, 1996, at annexure 'A' issued under 148 of the Income -tax Act, 1961, in respect of the assessment year 1989 -90, on the ground that they are illegal and without jurisdiction being beyond the period of limitation prescribed by the Act.

(2.) IN respect of the assessment year 1989 -90, the Income -tax Officer had assessed the petitioner by his order dated March 16, 1990, made under 143(3) of the Act and allowed deduction of Rs. 1,31,800 under 32AB of the Act, stating in the order that it was being allowed as per the audit report in Part III. The impugned notices at annexure 'A' were issued on March 15, 1996, and April 18, 1996, for the assessment years 1988 -89 and 1989 -90, respectively, under 148 of the said Act. No reasons were however communicated in the notice or along with it. Therefore, one of the grievances made by the petitioner was about the reasons on the basis of which the notices were issued. The respondent in his affidavit -in -reply filed in this petition has placed on record the reasons which prompted the issuance of the said notices. It is recorded therein that in the return of income filed by the assessee on October 26, 1989, a total income of Rs. 4,28,716 was declared and that the assessment was finalised, at the total income of Rs. 4,34,852 under 143(3) of the Act. It is then recorded that on perusal of the statement of income filed along with the return of income it was noticed that a deduction of Rs. 1,31,800 was claimed by the assessee under 32AB, which was allowed by the Income -tax Officer. It is then stated that on perusal of the audit report, Part III, it was noticed that the assessee had deposited Rs. 1,00,000 with the IDBI in Account No. 695. Therefore, so far as that amount is concerned, there is no dispute that the amount was deposited as per the scheme, so as to make it permissible for deduction in accordance with the provisions of 32AB.

(3.) THERE is no dispute about the fact that in the assessment order the deduction in respect of Rs. 1,31,800 was allowed by the Income -tax Officer under 32AB as per the audit report in Part III. Therefore, the particulars of audit report filed by the assessee were before the Income -tax Officer when he made the assessment order under 143(3) of the Act. Both the sides have referred to a copy of the audit report which was the subject -matter of the said assessment. In the balance -sheet, there is a reference to investment allowance having been utilised to the tune of Rs. 1,10,931. The amount of Rs. 31,800 said to have been utilised for purchase of machinery is separately stated while claiming deductions under 32AB. There is no indication that new machinery was purchased from the amount of investment allowance of Rs. 1,10,931 which is shown to have been utilised.