Facts of the Case

  • Orders passed under Section 148A(d) of the Income Tax Act dated 25 July 2022.
  • Notices issued under Section 148 for Assessment Years 2015–16, 2016–17, and 2017–18.
  • Constitutional validity of Section 115BBE of the Act.
  • The notices were issued beyond the prescribed limitation period.
  • Mandatory sanction was obtained from the wrong authority.
  • Section 115BBE is arbitrary and violative of constitutional rights.

Issues Involved

  1. Whether notices issued under Section 148 were valid in law considering limitation and approval requirements.
  2. Whether writ jurisdiction under Article 226 is maintainable when alternative remedies are available.
  3. Whether Section 115BBE of the Income Tax Act is unconstitutional.
  4. Whether apprehension of misuse of statutory provisions can be a ground for invalidating a law.

Petitioner’s Arguments

  • Notices under Section 148 were issued after three years without proper sanction from the competent authority.
  • Section 115BBE is arbitrary and violative of Articles 14 and 19.
  • The provision allows excessive discretion to the Assessing Officer, leading to unequal treatment of similarly placed taxpayers.
  • Discretion under Sections 68–69D combined with Section 115BBE may result in excessive taxation (up to 60% plus surcharge and penalties).
  • The constitutional validity of Section 115BBE cannot be adjudicated by appellate authorities.
  • CIT vs P.K. Noorjahan

Respondent’s Arguments

  • Final assessment orders had already been passed; hence, the matter should be challenged before appellate authorities.
  • The issue of limitation involves mixed questions of fact and law and is best suited for appellate adjudication.
  • The Income Tax Act provides a complete mechanism for redressal.

 

Court Findings / Judgment


1. On Constitutional Validity of Section 115BBE

  • A statutory provision cannot be declared unconstitutional merely on apprehension of misuse.
  • Courts must presume lawful and fair application of statutes unless proven otherwise.
  • Possibility of abuse does not invalidate a law.
  • Maganlal Chhaganlal Pvt Ltd vs Municipal Corporation of Greater Bombay
  • Collector of Customs vs Nathella Sampathu Chetty

 

2. On Maintainability of Writ Petition

  • The Income Tax Act provides a complete machinery for assessment and reassessment.
  • Assessees must exhaust statutory remedies before invoking Article 226.

Relied on:

  • Commissioner of Income Tax vs Chhabil Dass Agarwal

 

3. On Challenge to Notices & Orders

  • Since assessment orders were already passed, the petitioner must approach appellate authorities.
  • Issues like limitation and procedural defects should be adjudicated in appeal.

Court Order

  • Writ petitions were dismissed.
  • Petitioner granted liberty to raise all contentions before appellate authorities in accordance with law.

 

Important Clarification

  • Mere possibility of misuse of a statutory provision is not a valid ground to declare it unconstitutional.
  • Taxpayers must follow the statutory appellate mechanism before invoking writ jurisdiction.
  • Constitutional challenges must be based on real and demonstrable arbitrariness, not hypothetical scenarios.

 

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/MMH18122023CW162802023_115850.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.