1956 (1) TMI 39 - HC - Income Tax

Summary

Issues Involved:
1. Constitutionality of Sub-sections (7A) and (7B) of Section 5, Income Tax Act.
2. Alleged violation of Article 14 of the Constitution of India.
3. Discriminatory treatment due to transfer of assessment cases.
4. Validity of the procedural aspects under the Income Tax Act.

Detailed Analysis:

Constitutionality of Sub-sections (7A) and (7B) of Section 5, Income Tax Act:
The petition challenges the constitutionality of Sub-sections (7A) and (7B) of Section 5 of the Income Tax Act on the grounds that they contravene the equal protection clause in Article 14 of the Constitution. Sub-section (7A) allows the Commissioner of Income Tax to transfer any case from one Income Tax Officer to another without necessitating the reissue of any notice. Sub-section (7B) empowers higher authorities to issue instructions and conduct inquiries with the same powers as an Income Tax Officer.

Alleged Violation of Article 14 of the Constitution of India:
The petitioners argue that the transfer of their assessment cases from the Income Tax Officer, Jullundur, to the Income Tax Officer, Special Circle, Ambala, subjects them to discriminatory treatment, violating their fundamental rights under Article 14. The petitioners contend that this transfer divides assessees into two categories: those assessed under ordinary law and those under special officers, leading to unequal treatment.

Discriminatory Treatment Due to Transfer of Assessment Cases:
The petitioners claim that being assessed by a special officer at Ambala, instead of their local officer at Hoshiarpur, is discriminatory. They argue that the special officers, guided by superior authorities, would treat their cases differently, denying them ordinary legal remedies available to other assessees. However, it was admitted that the department offered to conduct the assessment proceedings at Hoshiarpur, which the petitioners declined.

Validity of the Procedural Aspects Under the Income Tax Act:
The court examined whether the procedural aspects under the Income Tax Act, particularly the transfer of cases, result in any discrimination. It was noted that Sub-section (7A) allows for the transfer of cases without changing the procedure or taking away any privileges or rights of the assessee. The court referred to various precedents, including the Supreme Court's rulings in 'Suraj Mall Mohta and Co. v. A. V. Visvanatha Sastri' and 'Shree Meenakshi Mills Ltd. v. Sri A. V. Visvanatha Sastri,' which dealt with discriminatory legislation and procedures.

Conclusion:
The court concluded that the two Sub-sections (7A) and (7B) of Section 5 of the Income Tax Act do not violate the equal protection clause of Article 14. The Sub-sections are of universal application and do not inherently import any discrimination. There was no evidence of intentional or purposeful discrimination by the tax authorities. The procedural safeguards and remedies available under the Income Tax Act remain unchanged, and the transfer of cases does not expose the assessees to any increased punitive consequences. Therefore, the petition was dismissed, and the rule was discharged, with the petitioners ordered to pay the costs of the opposite party.