Judgment

R.F. Nariman, J.

1. The question which arises for consideration in the present appeals is the constitutional validity of the retrospective amendment to Section 143(1A) of the Income Tax Act, 1961. Both the Single Judge and the Division Bench of the Gauhati High Court have held that the retrospective effect given to the amendment would be arbitrary and unreasonable inasmuch as the provision, being a penal provision, would operate harshly on assessees who have made a loss instead of a profit, the difference between the loss showed in the return filed by the assessee and the loss assessed to income tax having to bear an additional income tax at the rate of 20%.

2. It may be mentioned at the outset that the same provision in its retrospective operation has been upheld by the Kerala, Madhya Pradesh, Rajasthan, Karnataka and Madras High Courts. (Kerala State Coir Corpn Ltd. v. Union of India, (1994) 210 ITR 121 (Ker); Sanctus Drugs Pharmaceuticals Pvt. Ltd. v. Union of India, (1997) 225 ITR 252 (MP); DCIT v. Rajasthan State Electricity Board, (2008) 299 ITR 253 (Raj); Bidar Sahakari Sakkare Karkhane Niyamat v Union of India, (1999) 237 ITR 445 (Kar); Aluminium Industries Ltd. v. DC