| COURT: | Supreme Court |
| CORAM: | A.K. Sikri J., Ashok Bhushan J |
| SECTION(S): | 119, Rule 68 of Second Schedule |
| GENRE: | Domestic Tax |
| CATCH WORDS: | CBDT Circular, jurisdictional issue, notification, ultra vires |
| COUNSEL: | Devendra Singh |
| DATE: | July 13, 2017 (Date of pronouncement) |
| DATE: | September 8, 2017 (Date of publication) |
| AY: | - |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 119: The CBDT has no jurisdiction to issue a Circular to amend the legislative provisions set out in the Act. Such action is ultra vires and liable to be quashed | |
The Department filed an appeal to challenge the judgement of the Andhra Pradesh High Court in S.V. Gopala Rao vs. Commissioner of Income-tax 270 ITR 433 (AP) where it was held that the CBDT had no jurisdiction under section 119 of the Act to issue a Notification [see [1996] 218 ITR (St.) 121] to amend rule 68B of the Second Schedule to the Act. HELD by the Supreme Court dismissing the appeal:
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.
OFFHAND
It is noted that, the Judgment of the SC, as reported HEREIN, – in SV Gopal Rao’s case- is prima facie on the same question of law, though on a different factual matrix, also decided in taxpayer’s favour, recently so, as by the Bom. HC as reported
@ https://taxguru.in/income-tax/sale-of-attached-property-after-3-years-not-barred-by-limitation-when-settlement-commission-order-not-become-final.html.(Bhale's case)
While on the first blush, the fact that it is so , may not at all be clear by a simple reading of he cited HC Judgment; however, the extract below, is seen to provide sufficient clarity:
“45. To interpret Rule 68 B of the Second Schedule to the IT Act in the above manner would amount to reading of the words “part of” or “portion of” before the phrase “order becoming conclusive” into the said Rule 68B. This is not permitted in the garb of interpretation.”
On that premise, the point of issue, which is a pure and simple but identical “question of law”, within its legal connotation, in both the referred cases, it may be expected, and hoped, with no further procrastination /prolongation, that the SC Judgment in Gopal Rao’s case will be conceded to be a binding ‘precedent’, hence to be followed, in all other cases, including in the Bhale’s case, regardless of the varying factual matrix in a case to case basis, -wherever/ at whatever stage, the same question of law is pending disposal.
It may be worth waiting for, but keeping a close watch, on further developments , in the near future !
On further thought:
Presumably, if not taxpayers, or their representing counsels, the Department are supposed to have been, or might have been, aware that the same and identical , pure and simple, “question of law” are pending in dispute, in several cases, and at different stages of appeal. If so, perhaps, by having the data of all such cases, updated from time to time,on its national network, it should not but have been desirably possible to think of and devise ways and means, and decide, as a matter of standing policy, as to how best to avoid such a multiplicity of litigation. All the more so, had any such question of law been noted to have been already taken up and pending adjudication and settlement by the apex court !