2017 (10) TMI 108 - HC - Income Tax

FBT - Writ of Declaration to declare Sections 115 WA(2) and 115 WB(1) and 115 WB (2) as introduced by the Finance Act, 2005 ultra vires of Article 14, 19(1)(g) and 265 of the Constitution of India - Held that - Considering the fact that the matter is now seized of by the Hon ble Supreme Court, these Writ Petitions can be disposed of with appropriate directions, leaving it open to the parties i.e. the petitioners as well as the Revenue to abide by the decision of the Hon ble Supreme Court. Revenue expressed an apprehension that in the event the Hon ble Supreme Court uphold the provisions as being a valid piece of legislation, then the assessees like the petitioners should not plead that the action that may be initiated by the Department or in the process of being initiated, is barred by limitation. 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 petitioners are 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 petitioners/assessees are not entitled to plead limitation and the period during which these Writ Petitions are 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 petitioners filed Writ Petitions seeking a declaration that certain sections of the Income Tax Act, 1961 were ultra vires of the Constitution of India and beyond the legislative competence of Parliament. The sections in question were 115 WA(2), 115 WB(1), and 115 WB(2) introduced by the Finance Act, 2005. Both the petitioners' counsel and the Revenue's counsel acknowledged that similar issues were pending before the Hon'ble Supreme Court and had been transferred from other High Courts. Given this, the High Court decided to dispose of the Writ Petitions with directions for the parties to abide by the Supreme Court's decision. The Revenue expressed concerns about the limitation period for any actions initiated if the impugned provisions were upheld. To address this, the Court directed the petitioners to comply with the Supreme Court's decision and clarified that the period during which the Writ Petitions were pending would be excluded from the computation of limitation if the Supreme Court upheld the legislation. Ultimately, the High Court disposed of the Writ Petitions without costs, and the connected miscellaneous petitions were closed.