1953 (9) TMI 30 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the High Court under Article 226 of the Constitution.
2. Validity and continuity of the Travancore Taxation on Income (Investigation Commission) Act, 1124.
3. Scope of the investigation by the Income-tax Investigation Commission.
4. Authority of the Income-tax Investigation Commission to investigate beyond the specified years.

Detailed Analysis:

1. Jurisdiction of the High Court under Article 226 of the Constitution:
The preliminary objection raised by the learned Advocate-General was that the High Court lacked jurisdiction to entertain the petition because the second respondent, the Income-tax Investigation Commission, was not amenable to its jurisdiction. The High Court, referencing the Supreme Court's decision in Election Commission, India v. Saka Venkata Rao, emphasized the two-fold limitation on its powers: writs cannot run beyond the territories subject to its jurisdiction, and the person or authority must be within those territories. However, the High Court concluded that since the first respondent, the Authorised Official and Income-tax Officer on Special Duty, was resident within the State of Travancore-Cochin and his activities were confined to the State, he was amenable to its jurisdiction. Consequently, the preliminary objection to jurisdiction was overruled.

2. Validity and continuity of the Travancore Taxation on Income (Investigation Commission) Act, 1124:
The legislative sequence and the validity of the Travancore Taxation on Income (Investigation Commission) Act, 1124, were critical for adjudicating the contentions. The Act was brought into force on 22nd July 1949, and continued under the United State of Travancore and Cochin Administration and Application of Laws Ordinance, 1124. The High Court concluded that sub-section (3) of Section 1 of the Act came into force immediately upon the passing of the Act, while the operation of other sections was postponed to a date appointed by the Government. The Act was deemed to be in force at least from the date of the notification (22nd July 1949), thus continuing its existence under the provisions of the Ordinance.

3. Scope of the investigation by the Income-tax Investigation Commission:
The main contentions were whether the Commission had the power to investigate the petitioner's income for any year and whether it could go beyond the years 1942 and 1943. The High Court referred to Section 5 of the Travancore Taxation on Income (Investigation Commission) Act, 1124, which stipulated that any reference by the Government had to be made before the last day of Makarom, 1125 (11th February 1950). The only reference made before this date was for Evasion Cases Nos. 1 and 2 of 1125, covering the years 1942 and 1943. Thus, the Commission had no jurisdiction to investigate beyond these years.

4. Authority of the Income-tax Investigation Commission to investigate beyond the specified years:
The High Court emphasized that the Commission's jurisdiction was confined to the years covered by the initial reference (1942 and 1943). Any attempt to enlarge the scope of the investigation was without legislative warrant and had to be prohibited. The High Court issued a writ to this effect, prohibiting the first respondent from investigating beyond the specified years.

Conclusion:
The petition was allowed to the extent that the Income-tax Investigation Commission was prohibited from investigating the petitioner's income beyond the years 1942 and 1943. The High Court certified the case as fit for appeal to the Supreme Court, recognizing the substantial questions of law involved.