COMMISSIONER OF INCOME-TAX Vs. VED PARKASH

JUDGEMENT

(1.) THE matter here concerns the jurisdiction and competence of the authorities constituted under the Income-tax Act, 1961 (hereinafter referred to as "the Act"), namely, the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal as also the High Court, in a reference under Section 256 thereof, to declare or treat any of its provisions to be ultra vires the Constitution of India. This arises in the context of the provisions of Section 140a (3) of the Act, having been held to be ultra vires by the High Court of Madras in A. M. Sali Maricar v. ITO [1973] 90 ITR 116.

(2.) WHAT had happened in the present case was that the assessee did not deposit an amount of Rs. 12,153 which was payable by him under Section 140a (1) of the Act, within a period of one month of the filing of his return. A show-cause notice was consequently issued to him calling upon him to explain why penalty be not levied upon him under Section 140a (3) of the Act. In reply, one of the points taken by the assessee was that Section 140a (3) of the Act had been declared to be ultra vires and that, therefore, no penalty could be levied under that provision. The Income-tax Officer did not accept this explanation and accordingly held the assessee liable to a penalty of Rs. 5,000. In appeal, the Appellate Assistant Commissioner reduced the penalty to Rs. 4,000. The Tribunal, however, set aside the penalty levied on the ground that the provisions of Section 140a (3) of the Act had been declared to be ultra vires by the High Court of Madras in A. M. Sali Maricar's case [1973] 90 ITR 116. This is the factual background leading to the following question being referred to this court for its opinion : "whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the provision of Section 140a (3) of the Income-tax Act, was ultra vires the Constitution and accordingly the penalty of Rs. 4,000 upheld by the Appellate Assistant Commissioner was not sustainable?"

(3.) THE provisions of Section 140a (3) of the Act being ultra vires as per A. M. Sali Maricar's case [1973] 90 ITR 116 (Mad), appears to be a lone view as several other High Courts have since upheld the constitutional validity of this provision. Amongst such High Courts are that of Calcutta in Gunny Exporters Pvt. Ltd. v. ITO [1976] Tax LR 603; that of Andhra Pradesh in Kashiram v. ITO [ 1977] 107 ITR 825 ; that of Jammu and Kashmir in Seva Ram v. ITO [1983] 141 ITR 933 ; that of Rajasthan in Mewar Textile Mills Ltd. v. ITAT [ 1985] 151 ITR 127 ; that of Karnataka in K. Sampangirama Raju v. Vth ITO [ 1988] 173 ITR 609 and that of Kerala in Mary Issac v. IAC [1987] 163 ITR 341.