H G MISRA AND CO Vs. APPELLATE ASSISTANT COMMISSIONER

JUDGEMENT

(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:--

(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not intended to be exercised for imposition of penalty in respect of a default committed under an Act which had been repealed.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.