TMI Blog1989 (1) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... res 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. 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 146A(1) of the Act, within a period of one month of the Ming 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 levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that of Kerala in Mary Issac v. IAC [1987] 163 ITR 341. The basic question that arises here is with regard to the jurisdiction of the Tribunal and the High Court in a reference under section 256 of the Act to declare any of the provisions of the Income-tax Act to be ultra vires the Constitution. Considering the importance and complexity of the issues raised, Mr. B. S. Gupta, Advocate, when called upon, very willingly came forth to assist us in this matter with his usual competence and clarity. It will be seen that the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal as also the High Court, in a reference under section 256 of the Act, are but functionaries created by the Act. They cannot, therefore, on princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Bench of the High Court of Bombay in Dhrangadhra Chemical Works Ltd. v. CIT [1975] 101 ITR 491, held that the Supreme Court had consistently taken the view that in a reference under the Income-tax Act or any other taxing statute, since the taxing authorities would have no jurisdiction to go into the vires of a statutory provision, order or notification, neither the High Court on a reference, nor the Supreme Court in an appeal from the decision of the High Court, will be entitled to go into such question. The court further observed, "It was well-settled that the jurisdiction possessed by the High Court in exercise of its advisory jurisdiction in a taxing statute, was not the same as the one that had been conferred upon it under articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction and not on other High Courts, and the courts and the Tribunals functioning in the territorial area of that other High Court . . . " A somewhat different theory, however, appears to have been expounded by the High Court of Bombay in CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589, namely, that once a provision is declared ultra vires by a competent High Court, that decision has to be accepted by the Tribunal wherever constituted, that is, even in the jurisdiction of another High Court, implying thereby that the decisions of the High Courts would be binding upon Tribunals beyond their jurisdiction too. The court, in this case, was dealing with a reference under section 256 of the Act, which was in the following terms Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of another High Court. The High Court of Madhya Pradesh, on its part in CIT v. Vrajlal Manilal and Co. [1981] 127 ITR 512, following Smt. Godavaridevi Saraf's case [1978] 113 ITR 589 (Bom), went a step further in arrogating to itself the jurisdiction, in a reference under section 256 of the Act, to pronounce upon the constitutional validity of a provision of the Income-tax Act, namely, section 140A(3) thereof, on the ground that different High Courts had expressed conflicting views with regard to it. What had happened in this case was that relying upon the judgment in A. M. Sali Maricar's case [1973] 90 ITR 116 (Mad), the Tribunal had cancelled the penalty levied under section 140A(3) of the Act. This order of the Tribunal was upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d provisions. Further, it is also our view that as the decision of a High Court is binding only upon the authorities and the tribunals within its jurisdiction, no tribunal beyond such jurisdiction can treat or hold as constitutionally invalid any provision of the Income-tax Act, solely for the reason that High Court of another State may have declared the said provision to be ultra vires. To grant such power to the Tribunal or even to a High Court, in a reference under section 256 of the Act, would again amount to conferring jurisdiction upon them to pronounce upon the constitutional validity of the provisions of the statute creating them, which would clearly be contrary to the well-settled position in law, in this behalf. This is not to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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