2017 (9) TMI 589 - SCH - Income Tax

Power to the CBDT - Instructions to subordinate authorities u/s 119 - amendment to the Rule 68B - sale was effected beyond time - deeming provision in rule 68B(3) amended by Notification No. 9995 by which the period of three years mentioned in rule 68B of the Act has been extended to four years - Held that - The Central Board of Direct Taxes (CBDT) issued a Circular under Section 119 of the Income Tax Act,1961. In fact, it amended the provisions contained in Rule 68B of the IInd Schedule to the Income Tax Act, 1961, which otherwise have statutory force. Such legislative provisions cannot be amended by CBDT in exercise of its power under Section 119 of the Act. The High Court has, therefore, rightly held the circular ultra virus and quashed the same. We do not find any infirmity in the order of the High Court 2004 (8) TMI 96 - ANDHRA PRADESH High Court wherein held failure to understand what difficulty was removed by the Board by amending a provision which had been enacted by Parliament. Even otherwise, we have not seen any power under section 119 of the Act, which gives any power to the Board to issue such notifications. Therefore, in our view, rule 68B(1) of the Act as on today lays down the period of three years alone and the notification referred to by the respondents has no effect at all. Therefore, clearly the sale was carried out beyond time and as such is set aside.

Summary

The Supreme Court dismissed the appeal regarding a Circular issued by the Central Board of Direct Taxes under Section 119 of the Income Tax Act, 1961. The Circular attempted to amend provisions in Rule 68B of the Act, which have statutory force. The Court upheld the High Court's decision that the Circular was ultra vires and quashed it.