M/S. PRAGATHI ENTERPRISES V. UNION OF INDIA

WP/62995/2009

AI Insights

The case involves M/s. Pragathi Enterprises, represented by its partner Sri. H. Eresha, challenging the constitutionality of the amendment to the Income-Tax Act, 1961, specifically the insertion of Section 40(a)(ia), which they argued was unreasonable and unconstitutional, violating Articles 14 and 19(1)(g) of the Constitution of India. The petitioner sought to quash an assessment order dated 29/12/2008, which added a sum of Rs. 51,54,207 under the provisions of the Income Tax Act, 1961. The High Court's decision to dismiss the writ petition was influenced by a Supreme Court ruling that found the amendments to be satisfactory, thus addressing the petitioner's concerns.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 677969 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 05-03-2018
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax vs. Omprakash R. Chaudhari and Others
• Laws Referred To: Income-Tax Act, 1961, Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: M B KANAVI; Y V RAVIRAJ
• Assessee Lawyers: SHASHANK HEGDE
• Keywords: Amendment; Arbitrary; Income Tax Act; Ultra Vires; Unconstitutional; Unreasonable
• Section: 40(a)(ia)

Judgement Text

"IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH ON THE 5TH DAY OF MARCH 2018 BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH WRIT PETITION NO. 62995 OF 2009 (T-IT) BETWEEN: M/S. PRAGATHI ENTERPRISES, REPRESENTED BY ITS PARTNER SRI. H. ERESHA, AGE: 42 YEARS, NO.97-A, MAIN BAZAAR, SANDUR-583 119. ... PETITIONER (BY SRI. SHASHANK HEGDE, ADVOCATE FOR SRI. A. SHANKAR) AND 1. UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF FINANCE, SOUTH BLOCK NEW DELHI, NEW DELHI. 2. CENTRAL BOARD OF DISTRICT TAXES, REPRESENTED BY ITS CHAIRMAN, DEPARTMENT OF REVENUE, 4TH FLOOR JEEVANDEEP BUILDING, PARLIAMENT STREET, NEW DELHI-110 001. 3. THE COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN, SEDAM ROAD, GULBARGA-585 105 2 4. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, AAYAKAR BHAVAN, STAFF ROAD, FORT, BELLARY-583102. ... RESPONDENTS (BY SRI. M. B. KANAVI, ADVOCATE FOR RESPONDENT NO.1; SRI. Y.V. RAVIRAJ, ADVOCATE FOR RESPONDENT NOS.2 TO 4) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE AMENDMENT TO THE INCOME-TAX ACT, 1961 BY WAY OF INSERTION OF SECTION 40 (a)(ia) IS UNREASONABLE AND UNCONSTITUTIONAL BEING OPPOSED TO ARTICLE 14 OF THE CONSTITUTION OF INDIA. HOLD THE SAID IMPUGNED PROVISION OF SECTION 40 (a) (ia) OF THE INCOME-TAX ACT, 1961 AS VIOLATIVE OF THE CONSTITUTION OF INDIA AND AS ULTRA VIRES OF THE CONSTITUTION OF INDIA AND HENCE CANNOT FORM PART OF THE INDIAN INCOME-TAX ACT, 1961. DECLARE THE AMENDMENT TO THE INCOME- TAX ACT, 1961 BY WAY OF INSERTION OF SECTION 40 (a) (ia) IS UNREASONABLE AND UNCONSTITUTIONAL BEING OPPOSED TO ARTICLE 19(1)(g) AND ARTICLE 14 OF THE CONSTITUTION OF INDIA. DECLARE THAT THE SECTION 40(a) (ia) IS ARBITRARY AND IS VIOLATIVE OF ARTICLE 14 AND ARTICLE 19(1)(g) OF THE CONSTITUTION OF INDIA. QUASH THE ASSESSMENT ORDER TO THE EXTENT ULTRA VIRES TO THE CONSTITUTION DATED 29/12/2008 VIDE ANNEXURE-B AND ISSUED UNDER THE PROVISIONS OF THE INCOME TAX ACT 1961 TO ADD A SUM OF RS. 51,54,207/-. ***** 3 THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING: ORDER In terms of the order dated 03.07.2013, it was noted that similar questions involved in this writ petition was pending consideration before the Hon’ble Supreme Court. Presently, the petitioner’s counsel has filed a certified copy of the order of the Hon’ble Supreme Court passed in Transferred Case(Civil) No.110 of 2011 dated 10th September 2014. In terms thereof, the order passed by the Hon’ble Supreme Court is as follows: “ Section 40(a)(ia) of the Income-Tax Act, 1961 was initially amended by Finance Bill, 2008 with retrospective effect from 01.04.2005. In continuation of this amendment, by Finance Act, 2010, Section 40(a)(ia) of the Income-Tax Act, 1961 was further amended. Having regard to these amendments and the decision of the Gujarat High Court in group of matters being Tax Appeal 4 No.412 of 2013, ‘Commissioner of Income Tax vs. Omprakash R. Chaudhari and Others’, we are satisfied that grievance of the petitioner is taken care of. 2. In view of the above, it is not necessary to go into the merits of diverse contentions raised in the transferred cases and transfer petitions. Transferred cases and transfer petitions are disposed of as infructuous. However, if any of the petitioners has any grievance, such petitioner may approach the High Court for redressal of his grievance in accordance with law. 3. With the above observations, these transferred cases and transfer petitions stand disposed of with no order as to costs.” 5 In view of the submission made, the petition is dismissed as being infructuous and is disposed off in terms of the aforesaid order of the Hon’ble Supreme Court. Sd/- JUDGE kmv "