Parliament has the power to enact laws on income tax, including retrospective laws, and Section 143(1A)(a)(B) is a valid provision that does not violate the Constitution.

1. The petitioner has by this petition prayed that the provisions of Section 143(1A)(a)(B) of the Income-tax Act, 1961, be declared as ultra vires the Constitution of India. It is also prayed that the demand raised under Section 143(1A) of the Act for a sum of Rs. 1,44,383, (annexures "P-2" and "P-3") be quashed and the notice issued on November, 16/23, 1994 (annexure "P-10"), under Section 226(3) of the Income-tax Act attaching the bank account of petitioner No. 1 in the State Bank of Indore be also quashed. Likewise, it is prayed that the notice dated September 1, 1994, annexure "P-11", issued by respondent No. 3 be quashed.

2. Petitioner No. 1 is a private limited company carrying on the business of manufacturing of drugs. Petitioner No. 2 is the managing director and the shareholder in petitioner No. 1-company and is interested in the various affairs of the company. Petitioner No. 1 filed a return showing a business loss of Rs. 14,09,666 and a carry forward of loss of the preceding two years, i.e., assessment years 1989-90 and 1990-91. Total loss inclusive of investment allowance and depreciation for three years from 1989-90 to 1991-92 is amounting to Rs. 67,17,825.

3. Respondent No. 2, Deputy Commissioner of Income-tax, passed an order under Section 143(1)(a) of the Income-tax Act, 1961, for the assessment year 1991-92, vide order dated March 6, 1992, determining the loss of Rs. 8,97,885. He had made an adjustment under Section 143(1)(a) on account of alleged provision of interest to M. P. Audyogik Vikas Nigam under Section 43B of the Act at Rs. 13,95,000. By this adjustment under Section 143(1)(a) of the Act, the additional tax was imposed at Rs. 1,44,383 under Section 143(1A) of the Act. On receipt of the aforesaid intimation, an appeal was filed before the Commissioner of Income-tax (Appeals)-I, Indore, on July 25, 1992, challenging the disallowance/adjustment of Rs. 13,95,000 and charging of additional tax at Rs. 1,44,383 and it is still pending for disposal.

4. The petitioner moved an application under Section 154 of the Act for rectification of mistake, challenging the charging of additional tax by application dated July 25, 1992. Respondent No. 2 rejected the said application in so far as the levy of additional tax was concerned. However, so far as the demand of additional tax was concerned, it was not enforced. Respondent No. 2 attached the bank account of petitioner No. 1 at the State Bank of Indore by order of March, 1993. Petitioner No. 1 made a representation dated March 6, 1993, challenging the attachment and requested to withdraw Use notice under Section 226(3) of the Act. Pursuant to the representation, respondent No. 2 cancelled the attachment by order dated March 9, 1993.

5. Petitioner No. 1 also filed an appeal against an order dated September 30, 1992, which was passed under Section 154 of the Act before the Commissioner of Income-tax (Appeals), Indore, respondent No.

4. Respondent No. 2 by order dated November 16/23, 1994, again attached the amount standing to the credit of petitioner No. 1 in the bank account in the State Bank of Indore, as a result of which a sum of Rs. 1,85,090 was attached. He also issued recovery notice for the said amount. Petitioner No. 1 made a representation dated September 22, 1994, to respondent No. 3 for not pressing the demand till the disposal of the appeal pending before the first appellate authority (CIT (Appeals)). Therefore, the petitioner has filed this petition challenging the validity of Section 143(1A)(a)(B) of the Act on the ground that it has been given retrospective effect, i.e., with effect from April 1, 1989. It is alleged that this tax is penal in nature and cannot be made retrospective. It is submitted that it is nothing but tax on a loss which is not covered by entry 82, List I, Seventh Schedule, of the Constitution.

6. The petition is contested by the respondents and they have alleged that under entry 82, List I, of the Seventh Schedule to the Constitut