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Issues Involved:
The jurisdiction and competence of authorities u/s Income-tax Act, 1961 to declare provisions ultra vires the Constitution. Summary: Issue 1: Jurisdiction to Declare Provisions Ultra Vires The case involved a dispute regarding the penalty imposed u/s 140A(3) of the Income-tax Act, where the assessee argued that the provision had been declared ultra vires by the High Court of Madras. The Income-tax Officer, Appellate Assistant Commissioner, and Tribunal had differing views on the matter. The High Court was tasked with determining whether the Tribunal was correct in holding section 140A(3) as ultra vires. Issue 2: Binding Nature of High Court Decisions The High Court discussed the binding nature of its decisions on authorities, tribunals, and courts within its territorial jurisdiction, emphasizing that decisions have persuasive force in other jurisdictions. It referenced cases where different High Courts upheld the constitutional validity of section 140A(3), highlighting the importance of respecting the law laid down by the respective High Courts. Issue 3: Tribunal's Authority on Constitutional Validity The High Court rejected the notion that a Tribunal or High Court, in a reference u/s 256 of the Act, could pronounce on the constitutional validity of provisions based on conflicting views from other High Courts. It emphasized that unless declared ultra vires by the Supreme Court or the High Court under Article 226 of the Constitution, provisions must be treated as constitutionally valid. Conclusion: The High Court held that the Tribunal erred in declaring section 140A(3) ultra vires, emphasizing that only the Supreme Court or the relevant High Court could make such a determination. The reference was answered in favor of the Revenue, directing the Tribunal to decide the appeal afresh. The judgment highlighted the limited jurisdiction of authorities to pronounce on the constitutional validity of Income-tax Act provisions.
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