Commissioner of Income Tax v. Babu Ram Kichha — 1979 DIGILAW 1153 (ALL)

JUDGMENT C.S.P. Singh, J. - The ITAT has referred the following question for the opinion of this Court: Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was legally correct in upholding the Appellate Assistant Commissioner's order cancelling the penalty of Rs. 2,550 imposed by the income tax Officer u/s 140A(3) of the income tax Act, 1961? The assessee had filed a return showing an income of Rs. 47,758. As the tax on that exceeded Rs. 500 u/s 140A(3), the tax on the returned income had to be paid within 30 days of the return, but it was paid later on 11-12-1968. As a consequence proceedings for penalty u/s 140A(3) were started against the assessee, and the ITO imposed a penalty of Rs. 2,550. The assessee appealed against this order, and the AAC, relying on the decision of the Madras High Court in the case of A.M. Sali Maricar and Another Vs. Income Tax Officer and Another, (1973) 90 ITR 116 which held that section 140A(3) was unconstitutional, knocked off the penalty. The Revenue appealed against this- decision to the Tribunal but the appeal failed, as the Tribunal relied on the decision of the Madras High Court referred to earlier. Counsel for department has urged that the Andhra Pradesh High Court in the case of Kashiram Vs. Income Tax Officer, E-Ward, (1977) 107 ITR 825 has taken a view contrary to the Madras High Court on the constitutionality of section 140A(3), which gets implied support from the decision of this Court in the case of Maharaja Shri Vibhuti Narain Singh v. WTO [1974] UPTC 298, and as such the decision of the Tribunal should not be upheld. So far as the decision of this Court in Maharaja Shri Vibhuti Narain Singh's case (supra) is concerned, it dealt with the vires of section 15B(3) of the Wealth-tax Act, and held that the provision was constitutional. The Bench deciding the case referred to the decision of the Madras High Court in the case of A.M. Sali Maricar v. ITO (supra) but did not comment on it, as counsel for the petitioner in that case did not rely on that decision for impugning the validity of section 15B(3) of the Wealth-tax Act. The Bench deciding the case referred to the decision of the Madras High Court in the case of A.M. Sali Maricar v. ITO (supra) but did not comment on it, as counsel for the petitioner in that case did not rely on that decision for impugning the validity of section 15B(3) of the Wealth-tax Act. It is no doubt true that the provisions of section 15B(3) are to a great extent similar to that section 140A(3) of the income tax Act, but that decision does not declare section 140A(3) of the income tax Act intra vires. This being so it does not wipe out the effect of the decision of the Madras High Court in Sali Maricar's case (supra) declaring that provision unconstitutional. So far as the decision of the Andhra Pradesh High Court is concerned, that came subsequent to the decision of the Tribunal. Thus, on the date when the Tribunal disposed of the appeal, section 140A(3) had been declared unconstitutional by the Madras High Court, and as such it cannot be said that the Tribunal was not justified in taking the view on a date it disposed of the appeal. The Bombay High Court had occasion to consider such a situation in the case of Commissioner of Income Tax Vidarbha Vs. Godavaridevi Saraf, (1978) 2 ELT 624 and it was held that the income tax Act being a Central Act the law declared by one particular High Court binds a Tribunal not only of that State but also those sitting within the jurisdiction of other High Courts, till such time that a contrary view is not taken by the High Court of the State in which the Tribunal functions. The same situation prevails here. Although the dictum of this Court in Maharaja Shri Vibhuti Narain Singh's case (supra) may throw doubt on the correctness of the decision of the Madras High Court, yet, in the absence of direct authority of this Court on the vires of section 140A(3), the Tribunal was on the date when it decided the appeal bound to follow the decision of the Madras High Court for that was the only current decision on that matter at that time. It was also contended on behalf of the department that while deciding this reference the decision of the Andhra Pradesh High Court should be taken into account as, according to him, the declaration of the law on a particular point, at a particular point of time by a Court relates back to the date of the passing of the enactment, for the Court declares the true interpretation of the law as from its inception by its judgment. The proposition that the declaration of law by a Court relates back to the date of the promulgation of the statute, is not open to serious doubt, for a Court of law does not legislate, as its function is merely to declare the true interpretation to be put upon a particular law, and as such the law declared by it relates back to the promulgation of the enactment. But this contention does not solve the problem for the department as neither the Tribunal in appeal nor we, sitting in this reference, can properly go into the question as to which of the two decisions, i.e., of the Madras High Court or the Andhra Pradesh High Court is correct, for if we did so, we would be indirectly going to the question of the vires of section 140A(3) in a reference. It is settled that neither the Tribunal nor the High Court can examine the vires of a provision of the income tax Act, whose creation they themselves are, and what cannot be done directly should not be attempted to be done by indirect approach to the problem. We, therefore, refrain from expressing any view as to the vires of section 140A(3), or as to the correctness of the view expressed by the Madras High Court or the Andhra Pradesh High Court. As has been seen earlier, on the day the Tribunal disposed of the appeal the decision of the Madras High Court held the field, and, on the frame of the question, it has to be held that the view taken by the Tribunal was justified. We, accordingly, answer the question in the affirmative in favour of the assessee, and against the department. As none appeared on behalf of the assessee, there shall be no order as to costs.