2016 (3) TMI 458 - HC - Income Tax

Constitutionality of Section 234-E of the Income Tax Act, 1961 of Chapter XVI - Held that - In view of amendment to Section 200 A Counsel for the respondents-Department has stated that the impugned demand notices are appealable under Sections 234-E and 246-A of the Income Tax Act. Counsel for the petitioners has also not disputed this legal position. In view of the above, we find that the impugned orders are appealable before the Forum CIT (A) and in consequence of the amendments if the appeals as required are filed before the Competent Authority within a period of 15 days from today; limitation if any shall not stand in the way of the petitioners.

Summary

Issues:
Challenge to the vires of Section 234-E of the Income Tax Act, 1961 under Article 226 of the Constitution of India. Appeal against demand notices issued under Section 156 of the Income Tax Act. Interpretation of amendments to Section 200A and Section 246A of the Income Tax Act.

Analysis:
The petitioners, Tax Practitioners' Association, Indore, and others challenged the constitutionality of Section 234-E of the Income Tax Act, 1961, alleging it to be arbitrary, unjust, unfair, and violative of Article 14 of the Constitution of India. The petition also sought to quash demand notices issued under Section 156 of the Income Tax Act. However, the petitioners' counsel later withdrew the challenge to the vires of Section 234-E, expressing satisfaction if the demand notices were decided in appeal.

The respondents, representing the Income Tax Departments, presented an amendment to Section 200A of the Income Tax Act, effective from 01/06/2015, which introduced appeal provisions under Sections 234-E and 246-A. The respondents clarified that the impugned demand notices were now appealable under these sections, a legal position not disputed by the petitioners' counsel. Consequently, the High Court found that the impugned orders were appealable before the CIT (A), and directed the petitioners to file appeals within 15 days from the judgment date, with no limitation hindrance.

The petitioners' counsel referenced a previous decision regarding the maintainability of appeals under Section 234-E, which the court directed should not obstruct the petitioners' course of action. With these observations and directions, the High Court disposed of the writ petition, allowing for appeals under the amended provisions of the Income Tax Act.