Mukerjee, J. - (1.) THIS writ petition raises the question of vires of Section 298 of the Income Tax Act 1961 and the Removal of Difficulties Order No. 2 of 1963 issued by the Central Government thereunder by notification dated the 11th June, 1963. The material facts are as follows:
(2.) THE applicant, who is the assessee in this case, is a firm constituted with effect from the first day of October, 1963, to carry on the business of manufacture of hosiery and sale of cotton yarn at Kanpur. Its first accounting period commenced on the 1st of October, 1961 and ended on the 31st March, 1962. For this period, the applicant returned an Income of Rs. 74,129/- assessable for the assessment year 1962-63. THE income was ultimately assessed at Rs. 86,302/-. THE Indian Income Tax Act, 1922, hereafter referred to as the old Act, was in force throughout this account period. THE applicant was a new assessee and, therefore, Section 18-A (3) of the Old Act was applicable to It. Section 18-A (3) ran as follows:-- "18A (3). Any person who has not hitherto been assessed shall, before the 15th day of March in each financial year, if his total income of the period which would be the previous year for an assessment for the financial year next following is likely to exceed the maximum amount not chargeable to tax in his case by two thousand five hundred rupees, send to the Income-tax Officer an estimate of the tax payable by him on that part of his income to which the provisions of Section 18 do not apply of the said previous year calculated in the manner laid down In Sub-section (1) and shall pay the amount on such of the dates specified in that Sub-section as have not expired, by instalments which may be revised according to the proviso to Sub-section (2)." Under this section, read with Section 18A (1). there was clearly an obligation on the part of the applicant to submit an estimate of the tax payable by him and pay the amount by equal instalments on the 15th of December, 1961 and on the 15th of March, 1962. THE applicant, however, did not either file the estimate nor pay the amount of the advance tax as required by Section 18A (3). On the 1st April, 1962 the Income Tax Act, 1961, hereafter referred to as the new Act, came into force and, by Sub-section (1) of Section 297 thereof, the old Act stood repealed with effect from the said date. As the applicant had not complied with the provisions of Section 18A (3) of the old Act, the Income Tax Officer issued a notice to the applicant on the 18th September, 1964 requiring it to show cause why penalty should not be imposed under Section 273 of the new Act. In reply the applicant stated that the penal provisions of Section 273 of the new Act were not attracted in case of non-compliance with the provisions of Section 18A (3) of the old Act. The Income Tax Officer rejected the contention and imposed a penalty of Rs. 500/-under Section 273 (b) of the new Act by his order dated 28th February, 1966. The applicant appealed to the Appellate Assistant Commissioner and contended that Section 273 (b) of the new Act, under which penalty had been imposed would be applicable if the applicant had committed the default under Section 212 (3) of the new Act (corresponding to Section 18A (3) of the old Act). As, however, the new Act was not in force, on the 15th December, 1961 and the 15th March, 1962, when the defaults in question were committed, the provisions of Section 273 (b) could not be pressed into service for imposition of penalty for such defaults. The Appellate Assistant Commissioner overruled the objection. He found that by virtue of the powers conferred on the Central Government by Section 298 (1) of the new Act, the Removal of Difficulties Order No. 2 of 1963 had been promulgated which provided that the reference to Sections 212, 215, 216 and 217 in Section 273 of the new Act should be treated as reference to the corresponding provisions of Section 18-A of the old Act in cases where there had been default under Section 18-A of the old Act for the financial year commencing on the 1st day of April, 1961. As, in the instant case, the relevant accounting period fell within the financial year commencing on the 1st day of April, 1961, the Appellate Assistant Commissioner held that the Removal of Difficulties Order was applicable and the default under Section 18-A (3) of the old Act should be regarded as a default under Section 212 (3) of the new Act. The Appellate Assistant Commissioner, therefore, sustained the penalty of Rs. 500/- imposed by the Income Tax Officer.
(3.) AT the hearing before us it was contended on behalf of the applicant that, in the first place, Section 298 of the new Act was ultra vires in so far as it authorises the Central Government to "do anything" in the garb of removal of difficulties. This, it was contended, amounts to excessive delegation of powers, including legislative powers, and it should be struck down on that ground. Secondly, it was argued, assuming that Section 298 was validly enacted, the Central Government went beyond the powers conferred by Section 298 in promulgating the Removal of Difficulties Order No. 2 of 1963 which authorised the I. T. O. to levy penalty under Section 273 of the new Act in respect of default under Section 18-A (3) committed under the old Act. It was contended that the power conferred by the Legislature to the Central Government under Section 298 related only to details regarding the working of taxation laws; such powers were not intended to be exercised for imposition of penalty in respect of a default committed under an Act which had been repealed. It was also contended that the Central Government had no power to give a retrospective effect to the Removal of Difficulties Order from the 1st of April, 1962. Further, it was urged that the order was discriminatory and, therefore, unconstitutional. The challenge to the vires of Section 298 of the new Act must fail in view of the decision of the Supreme Court in the case of Kalawati Devi Harlalka v. Commissioner of Income Tax, West Bengal (1967) 66 ITR 680 : (AIR 1968 SC 162), in which it was held that the section had been validly enacted. It is true that the point now raised by the applicant in the present case, namely, excessive delegation of powers, was not considered by the Supreme Court in that case, but it is not open to this Court to disregard the decision of the Supreme Court on that ground. Under Article 141 of the Constitution, the law declared by the Supreme Court is binding on all courts within the territory of India and we are bound to proceed on the basis that Section 298 of the new Act is valid.;