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TMI Blog1961 (4) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... hich had been taken against the petitioner before January 26, 1950 ? We are unable to answer this question in favour of the petitioner. Appeal dismissed. - - - - - Dated:- 14-4-1961 - Judge(s) : T. L. VENKATARAMA AYYAR, S. K. DAS., J. L. KAPUR., M. HIDAYATULLAH., J. C. SHAH JUDGMENT The judgment of the court was delivered by S. K. DAS, J.---One Ranjit Singh is the petitioner before us. The respondents are the Commissioner of Income-tax, Lucknow, the Income-tax Officer, Lucknow, and the Collectors of three districts in Uttar Pradesh, namely, Dehra Dun, Kanpur and Lucknow, being officers under whose orders certain properties of the petitioner and his family have been attached in pursuance of a notice of demand issued under section 29 of the Indian Income-tax Act, 1922, in circumstances which we shall presently state. The facts are shortly these : In 1948, the Central Government referred a number of cases in which the petitioner was concerned to the Income-tax Investigation Commission set up under the relevant provisions of the Taxation on Income (Investigation Commission) Act, 1947 (XXX of 1947), hereinafter referred to as the Act. On May 30, 1948, the Secretary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to pay the aforesaid amount of Rs. 6,61,917 as per the following instalments: (1) on or before the 31st March, 1951: Rs. 1,00,000. (2) on or before the 31st March, 1952: Rs. 2,31,000. (3) on or before the 30th June, 1952: Rs. 3,30,917. (4) We, however, pray that so far as the last instalment is concerned in case we are unable to pay the same by the date mentioned above and are able to satisfy the Central Board of Revenue that we have failed to raise the money for reasons beyond our control and for no fault of our own, a suitable extension of time may be granted. (5) In respect of the other instalments, we agree that in case of default in the payment of any one of them, the whole amount of tax outstanding at the time shall become immediately payable. " The report of the Commission and the terms suggested by the petitioner for a settlement were accepted by the Central Government and an order was passed under section 8A(2) of the Act on November 21, 1949, which stated in its operative part that a demand notice be served immediately by the Income-tax Officer concerned under section 29 of the Indian Income-tax Act, 1922, on the petitioner in accordance with the terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf is that the legality of the demand notice dated December 2, 1949, cannot be challenged by the petitioner on the strength of the provisions of the Constitution, because the Constitution is prospective and not retrospective; secondly, it is contended on behalf of the respondents that the subsequent proceedings taken in pursuance of the demand notice aforesaid do not in any way violate the right of equal protection of the laws guaranteed under article 14 of the Constitution. It is convenient at this stage to refer to some of the earlier decisions of this court on the question of constitutionality of some of the provisions of the Act. On May 28, 1954, this court delivered judgment in Suraj Mall Mohta and Co. v. Visvanatha Sastri. It is not necessary to state the facts of that decision. It is enough to say that it was held therein that sub-section (4) of section 5 of the Act was bad, as it offended the provisions of article 14 of the Constitution. Sub-section (4) of section 5 of the Act having been declared void, Parliament passed the Indian Income-tax Amendment Act (33 of 1954) amending section 34 of the Indian Income-tax Act, 1922. As a result of this amendment, the validit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down in Syed Qasim Razvi v. State of Hyderabad did not apply. The point which requires emphasis with regard to these earlier decisions is this: they all dealt with the operation of a discriminatory procedure under the different provisions of the Act after the commencement of the Constitution. The position in the case under our present consideration is that the settlement, the order under section 8A(2) of the Act, and even the notice of demand in pursuance of that order----all these took place before the coming into force of the Constitution, and this vital distinction must be borne in mind in considering the contentions urged by learned counsel for the petitioner. The main contention is that the proceedings taken against the petitioner in pursuance of the order under section 8A(2) are violative of the guarantee of equal protection of the laws under article 14 of the Constitution. There are, however, two subsidiary contentions which do not directly raise any question of the violation of a fundamental right, and these may be disposed of before we deal with the main contention. In his petition the petitioner has stated that he received the demand notice dated December 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in so far as it relates to him, the Commission shall, if it is of opinion that the terms of the settlement contained in the application may be approved, refer the matter to the Central Government, and if the Central Government accepts the terms of such settlement, the Commission shall have the terms thereof recorded and thereupon the investigation, in so far as it relates to matters covered by such settlement, shall be deemed to be closed. (2) For the purpose of enforcing the terms of any settlement arrived at in pursuance of sub-section (1), the Central Government may direct that such proceedings as may be appropriate under the Indian Income-tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), or any other law may be taken against the person to whom the settlement relates, and, in particular, the provisions of the second proviso to clause (a) of sub-section (5) of section 23, section 24B, the proviso to sub-section (2) of section 25A, the proviso to sub-section (2) of section 26 and sections 44 and 46 of the Indian Income-tax Act, 1922, shall be applicable to the recovery of any sum specified in such settlement by the Income-tax Officer having jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner a special remedy is provided which is more drastic and envisages the imposition of a penalty under section 46 of the Indian Income-tax Act, 1922, if the petitioner is in default in making a payment of the amount due. This, it is argued, is a discriminatory procedure which has been continued even after the coming into force of the Constitution. We are unable to accept this argument as correct. First of all, the petitioner does not really belong to the larger class of persons whom learned counsel has characterised as debtors of Government. The petitioner belongs to a special class who had evaded payment of income-tax and had entered into a settlement to pay the amount due as income-tax or arrear of income-tax. For this class of persons the procedure laid down in section 8A(2) is one and the same, and no discrimination is made in favour of or against any member of the same class. The classification is a reasonable classification having a just relation to the object of the provision. For the recovery of the amount due as income-tax or arrear of income-tax all these persons are treated on the same footing. Neither is there any discrimination between them and other persons s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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