1999 (3) TMI 52 - HC - Income Tax

Summary

Issues: Validity of section 148 of the Income-tax Act, 1961 challenged as violative of articles 14 and 19(1)(g) of the Constitution.

Analysis:
The judgment revolves around the challenge to the validity of section 148 of the Income-tax Act, 1961, on the grounds of being violative of articles 14 and 19(1)(g) of the Constitution. The petitioner contended that the retrospective amendment made by the Finance (No. 2) Act, 1996, deleting the requirement of a minimum period of 30 days for furnishing the return under section 148 was unfair and unreasonable. The court examined the legality of this retrospective amendment and its implications on the assessing authorities.

The court referred to a previous case where it was held that the assessee must be allowed a minimum period of 30 days for filing the return, which was not in conformity with the notice served under section 148. The Commissioner of Income-tax (Appeals) also found the proceedings vitiated due to the lack of specified time in the notice. However, the retrospective amendment made the order erroneous, leading to its cancellation under section 154(2)(b). The court analyzed the retrospective effect of the amendment and the power of Parliament to enact laws prospectively or retrospectively.

The court emphasized that Parliament has the authority to enact laws retrospectively, and the judiciary cannot interfere with this legislative power. It noted that the discretion to provide a reasonable time for filing the return lies with the assessing authority, and any arbitrary action in a specific case does not render the provision of the Act arbitrary. The judgment highlighted that orders not in conformity with retrospective laws can be rectified under section 154 by the taxation authorities. It concluded that no illegality was committed, and the petition challenging the validity of section 148 was dismissed for lacking merit.

In summary, the judgment delves into the constitutional validity of section 148 of the Income-tax Act, 1961, in light of a retrospective amendment and the implications on assessing authorities. It underscores the legislative power of Parliament to enact laws retrospectively and highlights the discretionary role of the assessing authority in providing a reasonable time for filing returns. The court's analysis emphasizes the need for conformity with retrospective laws and the rectification of orders not aligned with such amendments. Ultimately, the petition was dismissed as it lacked legal merit.