Dr. S.Balachandran[1]
Dr. Sanjith.S[2]
Dr. C.A. Sathiya[3]
Introduction:
The authors writing this paper merely to emphasise an error committed by the legislature while enacting Income Tax Act, 2025 (ITA,2025). Parliament have every power to make, unmake repeal or modify any law. Therefore, enactment of ITA,2025 repealing ITA,1961 without upsetting the applecart structure of the enactment in principle in within the powers of parliament. However, parliament reenacted S. 254 of ITA,1961 as S.363 of ITA, 2025 without regard to the judgment of the SC[4] which invalidated S. 254 of the ITA,1961. In the humble opinion of the author the reenactment of the same provision which is invalidated the same provision has to meet the same fate, unless the SC takes a different view. The legislature is trying to bring a dead letter by giving fresh oxygen.
Section 254(2A) of the ITA, 1961.
Section 254(2A) of the ITA,1961 deals with the appellant jurisdiction of Income Appellant Tribunal. The said provisions deals with the power of the Tribunal to grant stay as well as the provision for automatic vacation of the stay(which is the point of controversy discussed herein)
The proviso to S.254 (2A) provides that if an appeal is not disposed within a time of Three hundred and sixty Five days, the order of stay granted by the tribunal will stand vacated. Even when the delay in disposal is without any reason from the part of the assessee, this provision is not only unjustified to the assessee but also the interference with judicial power of the tribunal. This proviso is re-enacted in S. 363 (8) of ITA,2025. In the humble opinion of the authors, this is total disregard to the dictum laid down by the SC in DCIT v Pepsi Food Ltd. Company[5]. In this case, SC held that proviso S. 254(2A) of ITA,1961 does not distinguish between assessee who are responsible in causing the delay and those who are not. This classification was held to be arbitrary and unreasonably and henceforth within the teeth of Article 14 and Article 19 of the Constitution of the India. SC declared the provision as unconstitutional, when the tribunal is responsible for the delay, the litigant cannot be punished for the same.
Section 363(8), the Dead Letter is re-enacted in ITA,2025.
Section 363 (8)[6] of the ITA,2025, also re-enacting the same words, as found in the proviso to S. 254(2A) of ITA, 1961. In the humble opinion of the authors, the legislature turned a blind eye on the dictum laid down by SC in Pepsi Food Ltd., Co., case. In State of Tamilnadu v State of Kerala[7], The SC held that the parliament can change the basis of the law. However, when a law declared invalid due to its infringement of constitutional provisions, it cannot be revalidated by mere reenactment of the provisions, when the constitutional provisions remains intact. A similar view was taken by the State of Karnataka v Karnataka Pawn broker Association[8]. The recently in Madras Bar Association v Union of India (2025)[9], SC held that parliament cannot ignore the decisions of the SC and the same would be ignoring of constitutional jurisprudence and rule of law.
The authors are mindful about necessity of rechallenging the new provision (363(8)) in a Court of Law. In Gian Kaur v State of Punjab[10], SC upheld S. 309 of IPC (Attempt to Suicide) overruling P. Ratnam v Union of India[11], which declared that the said provisions unconstitutional. However, the humble opinion of the authors, such cases are capable of having divergence views. Treating assessees who are wilfully delaying the proceedings and others on the same platform is inherently unjust and unfair. The possibility of such a provision being declared valid by the SC by overruling its previous judgment might be a theoretical academic possibility but definitely a huge practical gamble.
Conclusion:
The legislature merely reenacted an invalidated provision in the different form. The legislature might have done it inadvertently or rather gambled that SC might change its view, when the new provision is put to challenge. In the humble opinion of the authors the possibility of the upholding a provision once declared invalid might erase as in the case of Gian Kaur v State of Punjab. However, even otherwise parliament should not retreat an assessee who got the favourable stay; but the appeal proceedings extended beyond 365 days because of reason beyond his control with an assessee who wilfully prolonged the proceedings through capricious means. Legislature should stop in bringing Zombie clauses in the new enactments and requires judicial intervention.
[1] Advocate
[2] Associate Professor, School of Law, SASTRA UNIVERSITY
[3] Assistant Professor (III), School of Law, SASTRA UNIVERSITY
[4] Supreme Court
[5] AIR 2021 Supreme Court 2692
[6] “The order of stay shall stand vacated if the appeal is not disposed of within the period allowed……, even if hr delay in disposing of the appeal is not attributable to the assessee”.
[7] (2014) 12 SCC 696
[8] (2018) 6 SCC 363
[9] (2025) INSC 847
[10] (1996) 2 SCC 648
[11] (1994) 3 SCC 394
