1954 (10) TMI 6 - SC - Income Tax

Petition under Article 32 of the Constitution of India filed Held that - Petition is wholly misconceived. Whatever tax the petitioner has already paid, or whatever is still recoverable from him, is being recovered on the basis of the settlement proposed by him and accepted by the Central Government. Because of his request for a settlement no assessment was made against him by following the whole of the procedure of the Income-tax Act In this situation unless and until the petitioner can establish that his consent was improperly procured and that he is not bound thereby he cannot complain that any of his fundamental rights has been contravened for which he can claim relief under Article 32 of the Constitution. Article 32 of the Constitution is not intended for relief against the voluntary actions of a person. His remedy, if any, lies in other appropriate proceedings. Appeal dismissed.

Summary

Issues:
1. Alleged tax evasion during war years
2. Referral to Investigation Commission under Taxation on Income Act
3. Settlement proposal under Section 8-A of Act XXX of 1947
4. Petition under Article 32 of the Constitution challenging legality of proceedings
5. Claim of violation of fundamental rights under Articles 14, 19(1)(f), and 31
6. Contention regarding the binding nature of the settlement
7. Dismissal of the petition

Analysis:
1. The petitioner, engaged in various businesses, was accused of evading tax during the war years. The Central Government referred his case to the Investigation Commission for scrutiny of profits earned between 1939 and 1947.

2. During the investigation, the petitioner applied for settlement under Section 8-A of Act XXX of 1947, proposing a payment plan which was mutually agreed upon by the Central Government. The petitioner made substantial payments towards the agreed tax liability voluntarily.

3. Subsequently, the petitioner filed a petition under Article 32 of the Constitution, challenging the legality of the proceedings, alleging them to be illegal, ultra vires, void, and unconstitutional. The petitioner claimed that the Income-tax authorities were not entitled to recover the remaining amount from him.

4. The petition raised concerns about the validity of Sections 5, 6, 7, and 8 of Act XXX of 1947, alleging a violation of Articles 14, 19(1)(f), and 31 of the Constitution. The petitioner argued that the Act lacked a reasonable basis for classification and granted excessive powers to the executive.

5. The Court held that the petition was misconceived as the tax payments were based on a settlement proposed by the petitioner and accepted by the Central Government. Since no assessment was made against the petitioner under the regular Income-tax Act procedure, the petitioner could not claim a contravention of fundamental rights under Article 32.

6. The Court rejected the argument that the settlement was made under duress, stating that such contentions should be addressed through other legal avenues, not under Article 32 of the Constitution. The petitioner's consent to the settlement was deemed binding unless proven otherwise.

7. Consequently, the Court dismissed the petition, emphasizing that Article 32 was not intended to challenge voluntary actions and that any grievances regarding the settlement should be pursued through appropriate legal channels. The petitioner's claims of illegality and unconstitutionality were not upheld, and the petition was dismissed with costs.