Delhi HC upholds constitutional validity of Section 115BBE of Income Tax Act, 1961; Says ‘cannot be held unconstitutional on apprehension of misuse’

Delhi High Court: In a writ petition filed to challenge the orders dated 25-07-2022, passed under Section 148A(d) of the Income Tax Act, 1961 (‘the Act’), the Division Bench of Manmohan, ACJ* and Mini Pushkarna, JJ., opined that, unless the contrary intention was proved, it must be presumed, that administration and application of a particular law would be done not with an evil eye and unequal hand. Thus, the Court opined that, at the present stage, Section 115-BBE of the Act could not be held unconstitutional on the ground that there was an apprehension of misuse of the provision.

In an instant case, the petitioner stated that the notices issued under Section 148 of the Act had been issued after three years from the end of the relevant Assessment Years and they could have been issued after obtaining the sanction from the Principal Chief Commissioner of Income Tax and not from the Principal Commissioner of Income Tax, as had been done in the present cases.

However, the respondent contended that in the present cases, after passing the order under Section 148-A(d) of the Act, final assessment orders had been passed for assessment years. Further, issue of limitation, being a mixed question of fact and law should be raised before the Appellate Authorities. However, the petitioner stated that the constitutional validity of Section 115-BBE of the Act could not be adjudicated upon by the Appellate Authority.

The Court opined that it was a settled law that statutory acts and their provisions were not to be declared unconstitutional on fanciful theory that the power would be exercised in an unrealistic fashion or on the ground that there was an apprehension of misuse of statutory provision or possibility of abuse of power. The Court relied on Maganlal Chhaganlal (P) Ltd. v. Municipal Corporation of Greater Bombay, (1974) 2 SCC 402, and Collector of Customs v. Nathella Sampathu Chetty, 1962 SCC OnLine SC 30 and opined that, unless the contrary intention was proved, it must be presumed, that administration and application of a particular law would be done not with an evil eye and unequal hand. Thus, the Court opined that, at the present stage, Section 115-BBE of the Act could not be held unconstitutional on the ground that there was an apprehension of misuse of the provision.

The Court further relied on CIT v. Chhabil Das Agarwal, (2014) 1 SCC 603 and opined that it was settled law that the Act provided a complete machinery for assessment or re-assessment of tax and the assessee was not permitted to abandon that machinery to invoke the jurisdiction of the High Court under Article 226 of the Constitution. Thus, the Court granted the liberty to the petitioner to raise all contentions and submissions before the Appellate Authority in accordance with the law.

[Triveni Enterprises Ltd. v. CIT, 2023 SCC OnLine Del 8343, decided on 18-12-2023]

*Judgment authored by- Acting Chief Justice Manmohan

Advocates who appeared in this case :

For the Petitioner: Nishit Gandhi, Advocate;

For the Respondents: Aseem Chawla with Pratishtha Chaudhary and Aditya Gupta, Advocates.

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