CHANDI RAM Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE notice dt. 13th Feb., 1995 issued under s. 148 of the IT Act, 1961 in respect of asst. yr. 1987 -88 has been challenged on the ground that the proceedings under s. 147 as amended by Direct Tax laws (Amendment) Act, 1987 could not have been initiated in respect of asst. yr. 1987 -88 and the said provisions are applicable from 1st April, 1989, i.e., the asst. yr. 1989 -90. The notice is without jurisdiction. This argument is based that there is substantial change in the provisions of s. 147 and now the power which has been given effect vested right. Sec. 147 could not be considered merely procedural but is substantive in nature.

(2.) THE assessment of the assessee was completed on the basis of the return submitted on 8th Oct., 1987 declaring the income of Rs. 54,419. The investment allowance on purchase of new machinery under s. 32A at the rate of 25% to the extent of Rs. 2,03,684 was allowed. The proceedings under s. 154/155 were also initiated to withdraw the said claim but the same were dropped.

(3.) THE ITO has no reason to believe that the income chargeable to tax has escaped assessment or there was failure on the part of the petitioner to disclose fully and truly all material facts of assessment. The amended provisions of s. 147 are not applicable. The Circular No. 549, dt. 31st Oct., 1989 issued by the CBDT [(1990) 182 ITR (St) 1] clarifying the amendment as retrospective is also illegal.