Supreme Court affirms Income-tax Act amendment retroactively; High Court rules on rectification authority

The Supreme Court upheld the constitutionality of the amended section 80J of the Income-tax Act, 1961, with retrospective effect. The High Court ruled that the Inspecting Assistant Commissioner lacked the authority to rectify orders granting relief under section 80J, which had been finalized by the Tribunal and the Appellate Assistant Commissioner. Consequently, the petitions challenging the notices issued under section 154 were allowed, and the notices were quashed, with costs awarded to the assessee.

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Issues involved:
Challenging notices u/s 154 of Income-tax Act, 1961 for recomputing relief u/s 80J due to retrospective amendment.

Summary:

The High Court of Madras delivered a judgment on two petitions challenging notices issued u/s 154 of the Income-tax Act, 1961, regarding the recomputation of relief u/s 80J due to a retrospective amendment. The Supreme Court upheld the constitutionality of the amended section 80J, which had retrospective effect. The assessment years in question were 1972-73 and 1974-75 for a public limited company. The Income-tax Appellate Tribunal and the Appellate Assistant Commissioner had previously allowed the assessee the relief under section 80J. However, the Inspecting Assistant Commissioner issued notices in 1980, which were challenged on the grounds of lack of competence and interference with final orders. The High Court held that the Inspecting Assistant Commissioner was not entitled to rectify the orders as they were based on the directions of the Tribunal and the Appellate Assistant Commissioner, which had attained finality. The orders giving effect to the relief under section 80J could not be disturbed without proper legal process. Therefore, the petitions were allowed, and the notices u/s 154 were quashed, with costs awarded to the assessee.

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