Full Judgment
2. In the sole ground, the assessee has challenged the reopening of assessment u/s 147/148 of the I.T. Act.
3. Briefly the facts of the case are that the assessee is a company incorporated under the Company Act which is engaged in the construction business. The return filed by it was considered and assessment u/s 143(3) of the Act was completed. It appwears that in the order u/s 143(3), the investment allowance was allowed to the assessee. The CIT assumed jurisdiction u/s 263 of the Act and held that the assessee was not entitled to investment allowance. The order u/s 263 passed by the CIT was set aside by the Tribunal and the order of the AO was restored.
Subsequently, the AO issued notice u/s 48 of the Act and by relying on the decision of Hon'ble Supreme Court in the case of N.C. Budhi Raja reported in 204 ITR 412 held that income of the assessee has escaped assessment. Ultimately, he passed the order u/s 143(3)/148 and withdraw the investment allowance granted to it. The assessee has challenged the initiation of proceedings u/s 147/148 of the Act. The withdrawal of investment allowance on merits has not been challenged. While relying on the decision reported in 205 ITR 40 and 210 ITR 267, the learned counsel stated that the assumption of jurisdiction u/s 148 was not justified.
4. We have considered the rival submissions. Though assessment year in question was assessment year 85-86 the amended provisions will apply as the notice u/s 148 has been issued after 31.3.89. Hon'ble Delhi High Court in the case of Rakesh Agarwal reported in 225 ITR 496 has held that even if the assessment year in question was prior to assessment year 89-90, if the initiation of re-opening the assessment takes place on 1.4.89 or afterwards, the re-opening will be governed by the amended provisions of section 147. This position has already been admitted by the assessee. Section 147 under which the AO has assumed jurisdiction reads as under:- "If the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of section 148 to 153, assessee or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereinafter in this section and in section 148 to 153 referred to as the relevant assessment year)" The above definition pre-supposes two concepts i.e., the reason to believe and the escapement of income. The scope of the escapement of income has already been enlarged due to insertion of explanations to section 147. Clause C of explanation 2 provides that where the income chargeable to tax has been under assessed, or such income has made the subject excessive relief or excessive loss or depreciation allowance or any allowance under this Act has been computed the same will amount to deemed escapement of income. In the instant case, i has so happened.
Hon'ble Supreme Court in the case of N.C. Budhi Raja (Supra) has held that the construction companies will not be entitled to investment allowance. The decision of Hon'ble Supreme Court has laid down a particular law which dis-entitled the assessee in claiming deduction for investment allowance. Thus, in view of explanation 2, the income of the assessee has escaped assessment and the AO has rightly assumed jurisdiction u/s 147 of the Act.
5. We have also perused the decisions relied on by the learned counsel.
Both these decisions related to the information u/s 147(b) of the Act for the un-amended period. It was held in those cases that as the amendment to the section was brought subsequently but with retrospective effect. This will not amount to information u/s 147(b) of the Act. But as the facts in the instant case are different, the reliance on the case laws by the learned counsel is not justified. The CIT(A) appreciated the facts and up-held the findings of the AO. We do not find any infirmity in the same and dismiss the ground of appeal raised by the assessee.