FARRUKHABAD GRAMIN BANK Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The judgment of the court was delivered by Prakash Krishna J.-Challenging the validity of three notices issued under section 148 of the Income-tax Act, 1961, for the assessment years 1995-96, 1996-97 and 1997-98 the present writ petition has been filed.

(2.) The petitioner is a regional rural bank and is an incorporated body established on March 29, 1976, under the provisions of section 3(1) of the Regional Rural Banks Act, 1976. The shareholding in the petitioner is as follows :

(3.) It was established mainly with a view to provide basic banking facility in the remote rural areas and to mobilise savings from the rural masses. In the course of banking business the petitioner made investment with the nationalised bank and financial institutions, etc., to earn income. The petitioner for the assessment years 1995-96 to 1997-98 filed its income-tax returns. The assessments were completed and the disclosed income in the returns was accepted by the Income-tax Department. The assessing authority while passing the assessment order under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), granted exemption from tax on the income accrued from the investment. Presumably, it was treated as income attributable to the banking business under section 80P of the Act.