2017 (9) TMI 1467 - HC - Income Tax

Constitutionality of Sections 115 WA (2) and 115 WB (1) and 115 WB (2) of the Income Tax Act, 1961 as introduced by the Finance Act, 2005 - whether is ultra vires of Article 14, 19(1)(g) and 265 of the Constitution of India and as beyond the legislative competence of Parliament, in so far as the petitioner is concerned? - Petitioner as well as Revenue submitted that the declaration sought for in this Writ Petition has been now seized of by the Hon ble Supreme Court and similar Writ Petition has been transferred to the Hon ble Supreme Court from the other High Courts as well. Held that - Considering the fact that the matter is now seized of by the Hon ble Supreme Court, this Writ Petition can be disposed of with appropriate directions, leaving it open to the parties i.e. the petitioner as well as the Revenue to abide by the decision of the Hon ble Supreme Court.The Revenue need not have any apprehension in this regard, as the Court proposes to safeguard the interest of the Revenue by passing the following orders The petitioner is directed to abide by the decision of the Hon ble Supreme Court where the challenge to the impugned provisions are pending. It is made clear that in the event the Hon ble Supreme Court upholds the impugned legislation and the Department initiates action or proceeds with the action already initiated, the petitioner/assessee is not entitled to plead limitation and the period during which this Writ Petition is pending as well as the period till the matter is decided by the Hon ble Supreme Court, shall stand excluded for computation of limitation .

Summary

Issues: Challenge to the constitutional validity of sections of the Income Tax Act, 1961

In this judgment, the petitioner filed a Writ Petition challenging the constitutional validity of Sections 115 WA (2), 115 WB (1), and 115 WB (2) of the Income Tax Act, 1961, introduced by the Finance Act, 2005. The petitioner argued that these sections were ultra vires of Article 14, 19(1)(g), and 265 of the Constitution of India and beyond the legislative competence of Parliament as it pertains to the petitioner. Both the petitioner's counsel and the Revenue's counsel acknowledged that similar issues were before the Hon'ble Supreme Court, which had taken cognizance of the matter transferred from other High Courts as well.

The Court noted that since the matter was already under consideration by the Hon'ble Supreme Court, the Writ Petition could be disposed of with appropriate directions, allowing the parties, i.e., the petitioner and the Revenue, to abide by the decision of the Hon'ble Supreme Court. The Revenue expressed concerns about the possibility of the Hon'ble Supreme Court upholding the impugned provisions and the petitioner then claiming that any action taken by the Department was time-barred.

To address the Revenue's apprehensions, the Court issued directions for the petitioner to comply with the decision of the Hon'ble Supreme Court regarding the challenged provisions. It was clarified that if the Hon'ble Supreme Court upheld the legislation and the Department proceeded with any action, the petitioner would not be able to claim limitation based on the period during which the Writ Petition was pending and until the final decision by the Hon'ble Supreme Court. Consequently, the Court disposed of the Writ Petition without costs, and the connected miscellaneous petition was closed.