9911796707
TMI Blog1955 (12) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... core Legislature passed Act XIV of 1124 (M. E.) modelled on our Act XXX of 1947, styled the Travancore Taxation on Income (Investigation Commission) Act, 1124, to provide for an investigation into matters relating to taxation on income. Section 1(3) of the Act provided that it was to come into force on such date as the Travancore Government may by notification in the Government Gazette appoint. Under section 3, a Commission to be called the Income-tax Investigation Commission was to be constituted inter alia to investigate in accordance with the provisions of the Act cases referred to it under section 5 and report thereon to the Government. The Commission was to be appointed to act in the first instance up to the last day of Karkadakom, 1125 (16th August, 1950), but the Government was empowered to extend its appointment to any period up to the last day of Karkadakom, 1126 (16th August, 1951). Section 5(1) enacted that the Government might, at any time before the last day of Makaram, 1125 (15th February, 1950), refer to the Commission for investigation and report any case or points in a case in which the Government had prima facie reasons for belief that a person had to a substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ordered investigation into the matter, you are hereby required to produce the following on or before 21st December, 1949, before the Commission. 1. The account books (day books and ledgers) for the years 1942 and 1943. 2. .................................... 3. .................................... 4. .................................... 5. .................................... 6. .................................... " Pursuant to this notice the petitioner produced the relevant books and the Commission duly completed its investigation under the terms of the Travancore Act XIV of 1124 Before the Commission could, however, make its report, the Constitution of India came into force on the 26th January, 1950, and the United State of Travancore and Cochin became a part of the territory of India, forming a Part " B " State. Under article 372(1) of the Constitution, the Travancore Taxation on Income (Investigation Commission) Act, 1124 (Travancore Act XIV of 1124), was continued in force " until altered, amended or repealed by a competent authority. " An Indian States Finance Enquiry Committee had been appointed in 1948-49 and it had ma de its recommendations regarding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to the Central Commission, the Commission shall have and exercise the same powers as it has and exercises in the investigation of cases referred to it under the Taxation on Income (Investigation Commission) Act, 1947 (XXX of 1947), and shall be entitled to act for the same term as under sub-section (3) of section 4 of that Act " and it was further provided that any decision given by the Chief Revenue Authority of Travancore or of Travancore-Cochin shall be deemed a decision of the Income-tax Authority for the purposes of sub-section (2) of section 8 of the Travancore Act XIV of 1124. On the 18th October, 1951, a notification was issued by the Indian Income-tax Investigation Commission appointing M. Venkitachalam Potty, Income-tax Officer on Special Duty, Trivandrum, as an authorised official under section 6 of the Travancore Taxation on Income (Investigation Commission) Act, 1124, read with Act XXXIII of 1950. The authorised official, hereinafter referred to as respondent 1, forwarded to the petitioner on the 21st November, 1951, for his information a copy of that notification investing him with the powers of an authorised official and intimated that the investigation propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nquiry was without legislative warrant. The petitioner appealed in so far as the order of the High Court was against him permitting the enquiry for the years 1942 and 1943, his appeal being Civil Appeal No. 21 of 1954. Respondents 1 and 2 appealed against the order of the High Court in so far as it prohibited respondent 1 from conducting investigation for the years which were not covered by the Evasion Cases Nos. 1 and 2 of 1125, their appeal being Civil Appeal No. 22 of 1954. Both these appeals came for hearing and final disposal before us on the 20th September, 1955. After the arguments had proceeded for some time Shri Nambiyar, for the petitioner, asked for leave to urge additional grounds, viz., (a) that section 5(1) of Travancore Act XIV of 1124 was ultra vires under articles 14 and 19 of the Constitution, and (b) that in particular the said section 5(1) infringed article 14 of the Constitution inasmuch as it was not based on any rational classification whatsoever, and the word " substantial " therein could not possibly be deemed to be any form of classification. On our giving him such leave the learned Attorney-General, appearing for respondents 1 and 2, asked for time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of Travancore under its direction did not make it amenable to the jurisdiction of the High Court. He, therefore, contended that the High Court had no Jurisdiction to entertain the writ petition against respondent 2. He further contended that the High Court could not do indirectly what it was not able to do directly and that it could not issue any writ of prohibition against respondent 1 either even though he had his office at Trivandruum and had a permanent location within the jurisdiction of the High Court inasmuch as he was merely an arm of respondent 2 and any writ issued against him would have the indirect effect of prohibiting respondent 2 from exercising its legitimate functions within the ambit of its powers under the Travancore Act XIV of 1124 read with Act XXX of 1950 and Act XLIV of 1951. Reliance was placed by him on the decision of this Court in Election Commission, India v. Saka Venkata Subba Rao. The respondent in that case had applied to the High Court of Madras under article 226 for a writ restraining the Election Commission, a statutory authority constituted by the President and having its office permanently located at New Delhi, from enquiring into his alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is decision in Saka Venkata Subba Rao's case was followed by this Court in K. S. Rashid & Son v. The Income-tax Investigation Commission, etc. In that case, the assessees who were within the State of U.P. and whose original assessments were made by the Income-tax authorities of that State had filed writ petitions in the Punjab High Court for the issue of writs under article 226 to the Income-tax Investigation Commission located in Delhi and investigating their cases under section 5 of the Taxation on Income (Investigation Commission) Act, 1947. The Punjab High Court had sustained the objection urged on behalf of the respondents to the effect that the assessees having belonged to the State of U.P. their assessment was to be made by the Income-tax Commissioner of that State and the mere fact that the location of the Investigation Commission was in Delhi would not confer jurisdiction on the Punjab High Court to issue writs under article 226 and had dismissed the petitions. This Court, on appeal, distinguished the decision in Parlakimedi's case, which was sought to be relied upon by the respondents before it and followed the position in law as it had been enunciated in Saka Venkata Sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpower the Commission to require any person or banking or other company to prepare and furnish written statements of accounts and affairs giving information on such points or matters as in the opinion of the Commission may directly or indirectly be useful or relevant to any case referred to it ; to administer oaths and exercise all powers of a Civil Court under the Code of Civil Procedure for the purpose of taking evidence on oath, enforcing attendance of witnesses and of persons whose cases are being investigated, compelling the production of documents and issuing commissions for the examination of witnesses and to impound and retain in its custody for such period as it thinks fit any documents produced before it. The authorised official is, under section 6, sub-section (10), to have full and free access to all documents, books and other papers which in his opinion are relevant to the proceedings in any case or cases under the Act and if specially authorised in this behalf by the Commission to any buildings and places where he may have reason to believe that such books, documents or papers may be found and also to have power to place identification marks on such books, documents o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certainly issue an appropriate writ against him under article 226. The jurisdiction under article 226 is exercised by the High Court in order to protect and safeguard the rights of the citizens and wherever the High Court finds that any person within its territories is guilty of doing an act which is not authorised by law or is violative of the fundamental rights of the citizen, it exercises that jurisdiction in order to vindicate his rights and redress his grievances and the only conditions of its exercise of that jurisdiction are those laid down in the passage from Patanjali Sastri, C.J.'s judgment cited above. The argument that by issuing a writ against the agent under those circumstances the High Court would be putting him in a position whereby he would be compelled to disobey the directions of his principal is also of no avail for the simple, reason that an agent is bound to obey all lawful directions of his principal and not directions which the High Court holds to be unlawful or not justified in law. The agent could certainly be prohibited from obeying the unlawful directions of his principal and even if the principal cannot be reached by reason of his being outside the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st him. As, therefore, no writ could be issued against that outside authority and as the orders against the authority within the territories would, in view of the orders of the superior authority, have been infructuous, the High Court concerned had, of necessity, to dismiss the petition. Such, however, was not the position in the present petition before the High Court of Travancore-Cochin. There was here no question of merger of any judicial order of respondent 1 into the judicial order of respondent 2. In this case respondent 1 was actually claiming to exercise powers conferred upon him by certain sections of the Travancore Act XIV of 1124 which, it was submitted, were contrary to law or discriminatory and consequently ultra vires the Constitution. The fact that respondent 1 was the agent of respondent 2, which being beyond its jurisdiction could not be reached by the High Court, could not make his acts any the less objectionable or discriminatory and ultra vires. It is sufficient to say that if his action was contrary to law or if the provisions of law under which he was claiming to act became, after the commencement of the Constitution, void under article 13(1) as being repugnan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 5(1), Government might refer to it for investigation and report any case or points in a case in which the Government had prima facie reasons for believing that a person had to a substantial extent evaded payment of taxation on income. Such reference, however, could be made at any time before the 16th February, 1950, but not later. Again, under sub-section (4) of the same section, if in the course of investigation into any case or points in a case referred to it under sub-section (1) the Commission had reason to believe that some other person had evaded payment of taxation on income or some other points required investigation, it might make a report to the Government and the Government would forthwith refer to the Commission for investigation the case of such other person or such additional points as might be indicated in that report. All that was done in the present case was that by two separate orders made under section 5(1) of the Act the Government referred two cases of the petitioner for the two years 1942 and 1943 to the Commission and they were registered as Evasion Cases Nos. 1 and 2 of 1125. There was no other order under section 5(1) at anytime before the 16th Febr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on income for the two specific years in the two orders. It is, therefore, clear that neither respondent 2 nor respondent 1 who was appointed an authorised official by respondent 2 had jurisdiction to cover any period beyond those specific years 1942 and 1943 and the notice which was issued by respondent 1 on the 21st November, 1951, was, therefore, not warranted by law. Respondent 1 had no warrant or authority whatever for issuing the said notice and we are of the opinion that the High Court was right in the conclusion to which it came that the action of respondent 1 was clearly illegal, without jurisdiction and unsupported by law. The writ of prohibition issued against respondent 1 was, therefore, in order and Civil Appeal No. 22 of 1954 must stand dismissed with costs. As regards Civil Appeal No. 21 of 1954, the petitioner contended that respondent 2 had no power or authority to conduct an investigation in regard to the alleged evasion of tax by the petitioner for the years in re 1942 and 1943 also. Shri Nambiyar urged that : (i) The Travancore Act XIV of 1124 was not a law in force prior to the integration and was not an " existing law " continued in force by Ordinance I of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinance I of 1124 but had lapsed and, therefore, the subsequent notification issued on the 26th July, 1949, was wholly ineffective and consequently the reference of the cases of the petitioner to the Commission for investigation under section 5(1), the appointment of respondent 1 as the authorised official and the notices issued by him were unauthorised and wholly devoid of any authority of law. The question for our consideration is whether Act XIV of 1124 or any part of it was, on the 1st July, 1949, an existing law. The general rule of English law, as to the date of the commencement of a statute, since 1797, has been and is that when no other date is fixed by it for its coming into operation it is in force from the date when it receives the royal assent (33 Geo. 3, C. 13). The same rule has been adopted in section 5 of our General Clauses Act, 1897. We have not been referred to any Travancore law which provides otherwise. If, therefore, the same principle prevailed in that State, Travancore Act XIV of 1124 would have come into force on the 7th March, 1949, when it was passed by the Travancore Legislature. What prevented that result ? The answer obviously points to section 1(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the validity of the notification issued on the 26th July, 1949, under section 1(3), the reference of the case of the petitioner, the appointment of respondent 1 as the authorised official and all proceedings under the Travancore Act XIV of 1124 cannot be questioned on the ground that the Act lapsed and was not continued by Ordinance I of 1124. Re. (2) : It is urged that the notification issued on the 26th July, 1949, was bad in that it purported to bring the Act into operation as from the 22nd July, 1949. The reason relied upon is that the Government could not, in the absence of express provision authorising it in that behalf, fix the commencement of the Act retrospectively. The reason for which the Court disfavours retroactive operation of laws is that it may prejudicially affect vested rights. No such reason is involved in this case. Section 1(3) authorises the Government to bring the Act into force on such date as it may, by notification, appoint. In exercise of the power conferred by this section the Government surely had the power to issue the notification bringing the Act into force on any date subsequent to the passing of the Act. There can, therefore, be no objection to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of respondent 2 was adverse to the petitioner the assessment orders which were concluded by the Chief Revenue Authority could not be affected by the provisions of section 8(2) and could not be re-opened. This argument is based on a misconception of the true position of the Chief Revenue Authority. The Chief Revenue Authority was an income-tax authority mentioned in the hierarchy under the Travancore Act VIII of 1096. When the Travancore Act XXIII of 1121 came to be passed, the income-tax authorities enumerated therein included the Board of Revenue at the apex, substituting the Board of Revenue for the Chief Revenue Authority which occupied a similar position in the old Act. By section 10 of the Travancore Act XIV of 1124, the Travancore Act VIII of 1096 was deemed to be in force for the purpose of the Act and to the extent necessary, with the result that in construing the provisions of section 8(2) of the Act, the words " any income-tax authority " would include the Chief Revenue Authority which was an income-tax authority under the Travancore Act VIII of 1096. It may also be noted that section 4 of the Travancore Act XVII of 1122 continued all proceedings and petitions pending b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases referred to it should be transferred to the corresponding Commission in India. These recommendations of the Committee in so far as they applied to Travancore-Cochin were accepted by and incorporated into the agreement entered into between the President of India and the Rajpramukh of Travancore-Cochin on the 25th February, 1950, subject to certain modifications which are not relevant for the purpose of the present enquiry. The result of the agreement was the enactment of Act XXXIII of 1950 which extended to Travancore-Cochin the Act XXX of 1947 and section 3 of that Act provided that the law of Travancore corresponding to Act XXX of 1947 shall continue to remain in force with the modification that all cases referred to or pending before the Travancore Commission shall stand transferred to the Central Commission for disposal and that the State law shall determine the procedure to be followed and the powers to be exercised by The Central Commission 'In the disposal of those cases. Evasion Cases Nos. 1 and 2 of 1125 which were pending before the Travancore Commission thus became transferred to respondent 2 and were to be disposed of in accordance with the procedure laid down a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Legislature under article 245. We do not, however, consider it necessary to decide this question as, in our opinion, the life of respondent 2 was not a part of the law of Travancore State which was to govern the procedure followed or the powers exercised by it in the investigation of the cases of the petitioner. Respondent 2, to which the pending cases of the petitioner were transferred, was a body with a longer lease of life and the fact that the Travancore Commission had a shorter lease could not have the effect, of curtailing the life of respondent 2. The life of respondent 2 depended upon the law which established it and it was extended from time to time by subsequent legislation up to December 1955, and that accident which gave to respondent 2 a longer lease of life did not contravene any provision of the Travancore law which determined the procedure to be followed and the powers to be exercised by the Travancore Commission. The transfer to respondent 2 of the cases pending before the Travancore Commission, of necessity involved that those cases would be dealt with by respondent 2 which had a longer lease of life and respodent 2 could conduct the investigation of these cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of such belief, and may at any time before the first day of September, 1948, apply to the Commission for the withdrawal of any case or points in a case thus referred, and if the commission approves of the withdrawal, no further proceedings shall thereafter be taken by or before the Commission in respect of the case or points so withdrawn. We may also at this stage refer to the provisions of section 47 of the Travancore Act XXIII of 1121 which relates to income escaping assessment : " Section 47(1) : If in consequence of definite information which has come into his possession the Income-tax Officer discovers that income, profits or gains chargeable to income-tax have escaped assessment in any year, or have been under-assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act the Income-tax Officer may, in any case in which he has reason to believe that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve on the person liable to pay tax on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions of that section set out above. The true nature, scope and effect of article 14 of the Constitution have been explained by this Court in a series of cases beginning with Chiranjit Lal Chowdhuri v. The Union of India, and ending with Budhan Chowdhury and Others v. The State of Bihar. It is, therefore, not necessary to refer to the earlier cases and it will suffice to quote the principle as summarised in the decision of the Full Court in the last mentioned case at page 1049 in the following terms : " It is now well-established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and was bound to fall with section 5(1) if his contention regarding its invalidity prevailed. In the alternative, it was urged that assuming that section 5(1) was valid, even then section 5(4) had to be declared void because it gave arbitrary power to the Commission to pick and choose and secondly because the clause was highly discriminatory in character inasmuch as an evasion, whether substantial or insubstantial, came within its ambit as well as within the ambit of section 34(1) of the Indian Income-tax Act. This Court considered it sufficient for the decision of that case to examine the contentions urged against the validity of section 5(4) of the Act because the case of the petitioner was referred to the Commission under those provisions of the Act and not under section 5(1) and decided that case on the assumption that section 5(1) of the Act was based on a valid classification and dealt with a group of persons who came within the class of war-profiteers which required special treatment, that the classification was rational and that reasonable grounds existed for making a distinction between those who fell within that class and others who did not come within it, but withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that persons dealt with under Act XXX of 1947 were submitted to a procedure which was more drastic and prejudicial than the procedure which was available to those who were dealt with under section 34 of the Indian Income-tax Act. This Court, therefore, was of the opinion that section 5(4) and the procedure prescribed by the impugned Act in so far as it affected the persons proceeded against thereunder being a piece of discriminatory legislation offended against the provisions of article 14 of the Constitution and were thus void and unenforceable. It was after this decision of this Court in Suraj Mall Mohta's case, that Parliament enacted the Indian Income-tax Amendment Act, 1954 (XXXIII of 1954), introducing sub-sections (1-A) to (1-D) in section 34 of the Indian Income-tax Act. Though Act XXXIII of 1954 received the assent of the President on the 5th September, 1954, it was to come into effect from the 17th July, 1954. Section 34(1-A) purported to meet two criticisms which had been, in the main, offered against the constitutionality of section 5(1) of the Act in Suraj Mall Mohta's case. One criticism was that the classification made in section 5(1) of the Act was bad becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been classified for special treatment by section 5(1) of Act XXX of 1947. This Court reiterated the conclusions to which it had come in Suraj Mall Mohta's case, that the procedure prescribed by the Act for making the investigation under its provisions was of a summary and drastic nature and it constituted a departure from the ordinary law of procedure and in certain important aspects was detrimental to the persons subjected to it and as such was discriminatory. It did not again express an opinion on the validity of section 5(1) as being based on a valid classification and being thus saved from the mischief of article 14 of the Constitution, but, on a comparison of the provisions of section 5(1) of the Act with those of section 34(1-A) of the Indian Income-tax Act which came into effect from the 17th July, 1954, came to the conclusion that this defence of the provisions of section 5(1) being saved from the mischief of article 14 of the Constitution on the basis of a valid classification was no longer available in support of it after the introduction of the new sub-section in section 34 of the Indian Income-tax Act which sub-section dealt with the same class of persons dealt w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the same class of persons were intended to be and could be dealt with under the provisions of section 47 of the Travancore Act XXIII of 1121. In order to ascertain the scope and purpose of the impugned section reference must first be made to the Act itself. The preamble of a statute has been said to be a good means of finding out its meaning and as it were a key to the understanding of it. The preamble to the Travancore Act XIV of 1124, like that of Act XXX of 1947, runs thus : "Whereas it is expedient for the purpose of ascertaining whether the actual incidence of taxation on income is and has been in recent years in accordance with the provisions of law and the extent to which the existing law and procedure for the assessment and recovery of such taxation is adequate to prevent the evasion thereof, to make provision for an investigation to be made into such matters : It is hereby enacted as follows." It does not unfortunately give any assistance in the solution of the problem before us. Section 5(1) itself, however, gives, some indication as to the real object of it. The condition on which the action of the Government under that section is made dependent is that the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anker, secretary of respondent 2, stating the reasons why it was thought necessary to enact the impugned Act including section 5(1). This affidavit clearly brings out the serious problem that faced the revenue authorities. A war of unprecedented magnitude had raged from September, 1939, to 1946. The war conditions brought in their train a sudden rise in the demand of all kinds of goods, both consumer and industrial, which, naturally pushed up the prices to abnormal heights affording a great opportunity to the producers, manufacturers and merchants to reap huge profits. There was good reason to believe that these abnormal profits were not being brought into regular accounts but were being concealed. Faced with this situation, means had to be devised to enquire into the tax evasions and to realise the legitimate dues of the State. If regard be had to this background it is obvious that section 5(1) had reference to a class of substantial evaders of income-tax who required to be specially treated under the drastic procedure provided by Act XXX of 1947. It was, however, urged that the words " substantial extent " were of such vague import that they did not afford any reasonable basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fell within the very group or category ; the Government might refer the case of A to the Commission leaving the case of B to be dealt with by the ordinary procedure laid down in the Travancore Act XXIII of 1121. The possibility of such discriminatory treatment of persons falling within the same group or category, however, cannot necessarily invalidate this piece of legislation. It is to be presumed, unless the contrary were shown, that the administration of a particular law would be done " not with an evil eye and unequal hand " and the selection made by the Government of the cases of persons to be referred for investigation by the Commission would not be discriminatory. This question was considered by this Court in two cases, viz., Kathi Raning Rawat v. State of Saurashtra and Kedar Nath Bajoria v. State of West Bengal. Mr. Justice Mukherjea, as he then was, dealt with the argument in Kathi Raning Rawat v. State of Saurashtra' as under : " It is a doctrine of the American courts which seems to be well-founded on principle that the equal protection clause can be invoked not merely where discrimination appears on the express terms of the statute itself, but also when it is the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to be achieved by the impugned piece of legislation is quite definite and that is to catch substantial evaders of income-tax out of those who have made huge profits during the war period. They form a class by themselves and have to be specially treated under the procedure laid down in the Act. Being a class by themselves, the procedure to which they are subjected during the course of investigation of their cases by the Commission is not at all discriminatory because such drastic procedure has reasonable nexus with the object sought to be achieved by the Act and therefore such a classification is within the constitutional limitations. The selection of the cases of persons falling within that category by the Government cannot be challenged as discriminatory for the simple reason that it is not left to the unguided or the uncontrolled discretion of the Government. The selection is guided by the very objective which is set out in the terms of section 5(1) itself and the attainment of that object controls the discretion which is vested in the Government and guides the Government in making the necessary selection of cases of persons to be referred for investigation by the Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of taxation on income would have their cases referred by the Government for investigation by the Commission. Those persons in respect of whom no such information was available to the Government would certainly escape detection but that is the position with regard to each and every law which may be passed in order to detect evasion of payment of income-tax. Even under the provisions of section 47 of the Travancore Act XXIII of 1121 (corresponding to section 34 of the Indian Income-tax Act as it stood before the amendment in 1948), those persons in respect of whom the Income-tax Officer had gathered definite information and consequently discovered that income, profits or gains chargeable to income-tax had escaped assessment in any year could be dealt with under the relevant provisions of that Act. Those persons in respect of whom no such information had been received by the Income-tax Officer could not be reached at all. The fact that some persons falling within a particular category may escape detection altogether is not necessarily destructive of the efficacy of the particular legislation. The only thing required is that, as between persons who fall within the same category and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancore Legislature by a necessary amendment of the Travancore Act XIV of 1124, and if such an amendment had been grafted on the Act as originally passed, no one belonging to the particular class or category of substantial evaders of income-tax could have complained against the same. The next question to consider is whether the same class of persons dealt with under section 5(1) of the Travancore Act XIV of 1124 were intended to and could be dealt with under the provisions of section 47 of the Travancore Act XXIII of 1121. Because, if that was the position at any particular period of time, section 5(1) of the Travancore Act XIV of 1124 would certainly be discriminatory in so far as there will be two distinct provisions simultaneously existing in the statute book, one of which could be applied to some persons within the same class or category and the other could be applied to others also falling within the same class or category, thus discriminating between the two groups. Section 47 of the Travancore Act XXIII of 1121, as already observed, was in the same terms as section 34(1) of the Indian Income tax Act as it stood before its amendment in 1948. Each of the following condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of payment of taxation on income made during the war period. It cannot, therefore, be urged that section 5(1) of the Travancore Act XIV of 1124 was discriminatory in comparison with section 47(1) of the Travancore Act XXIII of 1121, for the persons who came under section 5(1) were not similarly situated as persons who came under section 47(1). Section 5(1) of Act XXX of 1947 was struck down in Shree Meenakshi Mills case, as it comprised the same class of persons who were brought in the amended section 34(1-A) of the Indian Income-tax Act, 1922, but the same cannot be said about section 5(1) as compared to section 47(1). These two sections do not overlap and do not cover the same class of persons. The result, therefore, is that section 5(1) of the Travancore Act XIV of 1124 which has to be read for this purpose in juxtaposition with section 47 of the Travancore Act XXIII of 1121 cannot be held to be discriminatory and violative of the fundamental right guaranteed under article 14 of the Constitution. The proceedings which took place in the course of investigation by the Commission up to the 26th January, 1950, were valid and so also were the proceedings during the course of invest ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
