Court directs compliance with Supreme Court ruling on Income Tax Act challenge

The Court disposed of the Writ Petition challenging the constitutional validity of certain sections of the Income Tax Act, 1961, by directing the parties to abide by the decision of the Supreme Court, which was already considering similar issues. The petitioner was instructed to comply with the Supreme Court's ruling on the contested provisions, with a clarification that any Departmental action taken post the Supreme Court's decision would not be time-barred due to the pendency of the Writ Petition. The Court closed the Writ Petition without costs.

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Issues: Challenge to the constitutional validity of sections of the Income Tax Act, 1961

In this judgment, the petitioner filed a Writ Petition challenging the constitutional validity of Sections 115 WA (2), 115 WB (1), and 115 WB (2) of the Income Tax Act, 1961, introduced by the Finance Act, 2005. The petitioner argued that these sections were ultra vires of Article 14, 19(1)(g), and 265 of the Constitution of India and beyond the legislative competence of Parliament as it pertains to the petitioner. Both the petitioner's counsel and the Revenue's counsel acknowledged that similar issues were before the Hon'ble Supreme Court, which had taken cognizance of the matter transferred from other High Courts as well.

The Court noted that since the matter was already under consideration by the Hon'ble Supreme Court, the Writ Petition could be disposed of with appropriate directions, allowing the parties, i.e., the petitioner and the Revenue, to abide by the decision of the Hon'ble Supreme Court. The Revenue expressed concerns about the possibility of the Hon'ble Supreme Court upholding the impugned provisions and the petitioner then claiming that any action taken by the Department was time-barred.

To address the Revenue's apprehensions, the Court issued directions for the petitioner to comply with the decision of the Hon'ble Supreme Court regarding the challenged provisions. It was clarified that if the Hon'ble Supreme Court upheld the legislation and the Department proceeded with any action, the petitioner would not be able to claim limitation based on the period during which the Writ Petition was pending and until the final decision by the Hon'ble Supreme Court. Consequently, the Court disposed of the Writ Petition without costs, and the connected miscellaneous petition was closed.

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