Constitutionality of section 140A(3) upheld as the court rejected claims that it was confiscatory or unreasonable.

Section 140A(3) of the Income-tax Act, 1961 was upheld as constitutionally valid because the Madhya Pradesh High Court followed an earlier Division Bench ruling that it was neither confiscatory nor unreasonable. The court rejected the contrary Madras High Court view relied on by the Tribunal and concluded that the provision did not violate article 19(1)(f) of the Constitution. The issue was therefore decided against the assessee and in favour of the Department.

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Issues: Whether section 140A(3) of the Income-tax Act, 1961 was unconstitutional as violative of article 19(1)(f) of the Constitution of India.

Analysis: The issue was covered by an earlier Division Bench decision which had held that section 140A(3) could not be regarded as confiscatory or unreasonable. That view expressly rejected the contrary opinion of the Madras High Court relied upon by the Tribunal.

Conclusion: Section 140A(3) of the Income-tax Act, 1961 was held not to be violative of article 19(1)(f) of the Constitution of India, and the answer was against the assessee and in favour of the Department.

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