The Supreme Court of India recently ruled that the Central Board of Direct Taxes (CBDT) has no power to amend the provisions of the law through issuing circulars.
In the instant case, the petitioners, S V Gopala Rao and Sons, challenged the validity of the CBDT circular wherein the Board amended the provisions contained in Rule 68B of the IInd Schedule to the Income Tax Act, 1961, which otherwise have statutory force.
The High Court accepted the contentions of the assesse and invalidated the circular finding the same as unconstitutional.
As per section 119 of the Income Tax Act, the Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board.
Upholding the High Court decision, the two-judge bench comprising of Justices A K Sikri and Ashok Bhushan ruled that “Such legislative provisions cannot be amended by CBDT in exercise of its power under Section 119 of the Act. The High Court has, therefore, rightly held the circular ultra virus and quashed the same.”
Read the full text of the Judgment below.
