# about costs throughout. Appeal dismissed. SHREE MEENAKSHI MILLS LTD., MADURAI v. SRI A. V. VISVANATHA SASTRI AND ANOTHER

- **Citation:** [1955] 1 S.C.R. 787
- **Court:** Supreme Court of India
- **Decided:** 1955
- **Case number:** Civil Appeals Nos. 145 and 147 of 1952
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/about-costs-throughout-appeal-dismissed-shree-meenakshi-mills-ltd-madurai-v-sri-1201
- **Pages:** 12

## Headnote

-
j
» •
S.C.R.
SUPREME COURT REPORTS
787
mentioned and, as before, a second order setting out
the purpose, housing a person without accommodation,
was made in
August, 1951. For the
reasons already
given, we hold that
there was
a public purpose and
that the orders here were valid.
The
only
other
question,
namely
whether a
mandamus can issue now, becomes unnecessary.
Civil
Appeals Nos. 145
and 147 of
1952 are allowed and
the
petitions in these
two
cases
will be dismissed
but here also there
will be
no order about costs
throughout.
Civil Appeal No. 146 of 1952 will be dismissed because
of the undertaking
given
by the learned AttorneyGeneral, and the order of the
High
Court will stand.
In view of this we need not decide. whether a mandamus
can or should have been issued.
As we have said, this
appeal will be dismissed but there will be no order
about costs throughout.
Appeal dismissed.
SHREE
MEENAKSHI
MILLS LTD.,
MADURAI
v.
SRI A. V. VISVANATHA SASTRI
AND ANOTHER.
(With Connected Petitions.)
[MEHR CHAND MAHAJAN C.J., s. R. DAS,
GHULAM HASAN, BHAGWATI
and VENKATARAMA
AYYAR JJ.]
Constitution of India, Art. 14-Taxation on Income (Investigation Commission) Act, 1947 (XXX of 1947), s. 5(1)-Whether ultra
vires the Constitution-S. 5(1) of Act XXX of 1947 and Indian
Income-tax Act (XI of 1922), s. 34 as amended by Indian Incometax (Amendment)
Act, 1954-Whether cover the same field-Discriminatory procedure before the date of Constitution and after the
date of Constitution-Validity thereof.
Parliament by amending s. 34 of the Indian Income-tax
Act,
1922, by passing the Indian Income-tax (Amendment) Act (XXXIII
of 1954) has now provided that cases of those very persons who
originally fell within the ambit of s. 5(1) of Taxation on Income
(Investigation Commission) Act, 1947 (XXX of 1947) and who, it
1954
The State of
Bombay
v.
Bhanji Munji
and Anothn-.
Bose].
1954
October 21.
1954
Shree Meenakshi
Mills Ltd.
v.
Sri A. V. Vi.svanatlw Sastri
and Another.
788
SUPREME COURT REPORTS
[1955]
"
was alleged, formed a distinct class, can be dealt with under
the
amended s. 34 and under the procedure provided
in
the Indian
Income-tax Act.
Both categories of persons, namely, those
who
calne \Vithin the scope of s. 5(1) as well as those who came within
the ambit of s. 34, now form one class.
Held, that after the coming into force of the Indian Incomctax (Amendment) Act, 1954 (XXXIII of 1954) which operates on
the same field as s. 5(1) of Act XXX of 1947 the provisions of
s. 5(1) of Taxation on Income (Investigation Com1nission) Act, 1947
(XXX of 1947), assuming they were based on a rational classification, have becorne void and
unenforceable as
being discriminatory in character.
Article I 4
of the
Constitution not only guarantees
equal
protection as regards substantive laws but procedural laws as well.
When an Act is valid in its entirety before the date of the
Constitution the part of
the proceedings regulated by the special
procedure and taken during the pre-Constitution period cannot be
questioned however discriminatory it may have been but the discrin1inatory procedure after the coining into force of the Constitution cannot be continued.
Suraj Mal Mohta v. Sri A. V. Visvanatha
Sastri (A.LR. 1954
S.C. 545), Keshava Madhava Menon v. The State of Bombay ([1951]
S.C.R. 228), Lachmandas Kewalram Ahuja and Another v. The
State of Bombay· ([1952] S.C.R. 710), Syed Qasin Razvi v. State of
Hyderabad ([1953] S.C.R. 589) and Habeeb
Mohammad v. State of
Hyderabad ([1953] S.C.R. 661) referred to.
ORIGINAL
JuRISDICTION :
Petitions
Nos.
330
to
333 of 1954.
Under article 132 of the
Constitution of India for
the enforcement of Fundamental
Rights.
P. R. Das (B. Sen, Balaprasad Singh and
Ganpat
Rai, with him) for the petitioner.
M. C.
Setalvad,
Attorney-General for India, and
C. K. Daphtary, Solicitor-General for India (G. N. Joshi,
Porus A. Mehta and P. G. Gokhale, with them) for the
respondents.
1954. October 21. The Judgment of the Court was
delivered by
MEHR CHAND
MAH

## Text

-
j
» •
S.C.R.
SUPREME COURT REPORTS
787
mentioned and, as before, a second order setting out
the purpose, housing a person without accommodation,
was made in
August, 1951. For the
reasons already
given, we hold that
there was
a public purpose and
that the orders here were valid.
The
only
other
question,
namely
whether a
mandamus can issue now, becomes unnecessary.
Civil
Appeals Nos. 145
and 147 of
1952 are allowed and
the
petitions in these
two
cases
will be dismissed
but here also there
will be
no order about costs
throughout.
Civil Appeal No. 146 of 1952 will be dismissed because
of the undertaking
given
by the learned AttorneyGeneral, and the order of the
High
Court will stand.
In view of this we need not decide. whether a mandamus
can or should have been issued.
As we have said, this
appeal will be dismissed but there will be no order
about costs throughout.
Appeal dismissed.
SHREE
MEENAKSHI
MILLS LTD.,
MADURAI
v.
SRI A. V. VISVANATHA SASTRI
AND ANOTHER.
(With Connected Petitions.)
[MEHR CHAND MAHAJAN C.J., s. R. DAS,
GHULAM HASAN, BHAGWATI
and VENKATARAMA
AYYAR JJ.]
Constitution of India, Art. 14-Taxation on Income (Investigation Commission) Act, 1947 (XXX of 1947), s. 5(1)-Whether ultra
vires the Constitution-S. 5(1) of Act XXX of 1947 and Indian
Income-tax Act (XI of 1922), s. 34 as amended by Indian Incometax (Amendment)
Act, 1954-Whether cover the same field-Discriminatory procedure before the date of Constitution and after the
date of Constitution-Validity thereof.
Parliament by amending s. 34 of the Indian Income-tax
Act,
1922, by passing the Indian Income-tax (Amendment) Act (XXXIII
of 1954) has now provided that cases of those very persons who
originally fell within the ambit of s. 5(1) of Taxation on Income
(Investigation Commission) Act, 1947 (XXX of 1947) and who, it
1954
The State of
Bombay
v.
Bhanji Munji
and Anothn-.
Bose].
1954
October 21.
1954
Shree Meenakshi
Mills Ltd.
v.
Sri A. V. Vi.svanatlw Sastri
and Another.
788
SUPREME COURT REPORTS
[1955]
"
was alleged, formed a distinct class, can be dealt with under
the
amended s. 34 and under the procedure provided
in
the Indian
Income-tax Act.
Both categories of persons, namely, those
who
calne \Vithin the scope of s. 5(1) as well as those who came within
the ambit of s. 34, now form one class.
Held, that after the coming into force of the Indian Incomctax (Amendment) Act, 1954 (XXXIII of 1954) which operates on
the same field as s. 5(1) of Act XXX of 1947 the provisions of
s. 5(1) of Taxation on Income (Investigation Com1nission) Act, 1947
(XXX of 1947), assuming they were based on a rational classification, have becorne void and
unenforceable as
being discriminatory in character.
Article I 4
of the
Constitution not only guarantees
equal
protection as regards substantive laws but procedural laws as well.
When an Act is valid in its entirety before the date of the
Constitution the part of
the proceedings regulated by the special
procedure and taken during the pre-Constitution period cannot be
questioned however discriminatory it may have been but the discrin1inatory procedure after the coining into force of the Constitution cannot be continued.
Suraj Mal Mohta v. Sri A. V. Visvanatha
Sastri (A.LR. 1954
S.C. 545), Keshava Madhava Menon v. The State of Bombay ([1951]
S.C.R. 228), Lachmandas Kewalram Ahuja and Another v. The
State of Bombay· ([1952] S.C.R. 710), Syed Qasin Razvi v. State of
Hyderabad ([1953] S.C.R. 589) and Habeeb
Mohammad v. State of
Hyderabad ([1953] S.C.R. 661) referred to.
ORIGINAL
JuRISDICTION :
Petitions
Nos.
330
to
333 of 1954.
Under article 132 of the
Constitution of India for
the enforcement of Fundamental
Rights.
P. R. Das (B. Sen, Balaprasad Singh and
Ganpat
Rai, with him) for the petitioner.
M. C.
Setalvad,
Attorney-General for India, and
C. K. Daphtary, Solicitor-General for India (G. N. Joshi,
Porus A. Mehta and P. G. Gokhale, with them) for the
respondents.
1954. October 21. The Judgment of the Court was
delivered by
MEHR CHAND
MAHAJAN C.J.-Writ Petitions
Nos.
330 to 333 of 1954, though
presented
by
different
persons, raise identical questions for consideration and
decision and can be conveniently disposed of by one
judgment.
\
-
-
•
-
-
S.C.R.
SUPREME COURT REPORTS
789
In April, 1947, Taxation on Income (Investigation
Commission) Act, 1947 (Act XXX of 1947), was passed
by the Central Legislature. By section 3 of the Act the
Central
Government was empowered to constitute an
Income-tax
Investigation
Commission for investigating
matters relating to taxation on income with particular
reference to the qμestion whether the existing law was
adequate for
preventing the evasion
thereof.
Section
5(1) of the Act further empowered the
Q~ntral Government to make a reference by the 30th June, 1948, to the
Commission for investigation
and
report of any cases
wherein it had prima facie reason for believing that a
person had, to a substantial extent, evaded payment of
taxation on ilKome. The date for making the reference
was subsequently extended to 1st of
September, 1948.
By an Amendment Act passed in 1948 it was provided
that the life of the
Commission, in the first instance,
would be up to the 31st of March, 1950, but that it
could be further extended to 31 of March,
1951.
By
subs1~quent legislations the life of the
Commission has
been extended to
December, 1955.
The procedure prescribed by the Act for making the
investigation under its provisions is of a summary and
drastic nature. It constitutes a departure
from the
ordinary law of procedure and m certain important
aspects is detrimental
to the persons subjected to it
and as such is discriminatorv. The substantial
differences 111 the normal procedure of the Income-tax Act
for
catching escaped
mcome and in the procedure
prescribed by
Act X~X of 1947. were fully discussed
by this Court in Suraj Mal Mohta v. Sri A. V. Visvanatha Sastri (1) and require no further discussion here.
Sub-section ( 4) of section 5 of the Act provided that
the Central Government could refer to the Commission
cases of persons other than those whose cases had been
referred to it by the
1st of September, 1948,
under
section 5(1) if, after investigation, the
Commission
made a report to that effect. Thus, two categories
of
cases under Act XXX of 1947 could be referred to the
investigation Commission by the Central Government, ,
[1955] I S.C.R. 448.
1954
Shree Meenakshi
Mills Laid.
v.
Sri A. V. Visvanatha Sastri
and Another.
Mahajan C. ].
1 ~54
Shret Mteiiakhsi
Mills Ltd.
v.
Sri A. V. Visva·
nat!llJ Sastri
and Another.
Mahqjan C. J.
790
SUPREME COURT REPORTS
[1955]
namely, those falling under section 5(1) and those falling
under section 5 ( 4) of the Act.
In accordance with the provisions of section 5 (I) of
the
Act
the
Central Government on
the
31st of
December, J947, referred to the Investigation
Commiss10n the cases of the four petitioners for investigation
and report. It is alleged
by each
of these petitioners
that no action was taken by the
Commission on these
references during the original period of its life or even
during the extended perioo provided by the
Amendment Act of 1948. If a report had been submitted m
these cases during the original period of the life of the
Commission, the problems that now anse would not
have arisen, because
the
Act being a pre-Constitution
Act was good law before the
Constitution and acts done
· thereunder before the
commencement
of the Constitution could not be impugned on the basis of the provis10ns of Part III of the
Constitution which came into
force on the 26th
January, 1950. Those provisions had
no retrospective operation
and
could not affect the
validity of this law or the completed proceedings taken
thereunder.
Be that as it may, it appears that nothing
happened in these cases till January, 1952, when it 1s
allc;15ed an official
of the
Commission
summoned the
petitioners for a preliminary
discussion
which
took
place in
February, 1952, and since then the petitioners
have from time to time been called upon to produce a
number of statements and books
of
account, but the
investigation has not proceeded beyond the preliminary
stages and the Commission itself
has
admittedly not
commenced any proceedings in these
cases,
though
a
period of nearly
seven
years has
elapsed smce the
references were made, with the result
that subsequent
events have intervened and, in our opinion, have made
these references to the Commission abortive.
As already stated, the
Constitution of India came
into force on the 26th
January, 1950, and the preConstitution laws had then to stand the test for their
validity on the provisions of Part III of the Constitution.
Article 14 of this Part guarantees to all persons
the right of equality before the law and equal protection
of the laws within the territory of India. This article not
•
-
-
S.C.R.
SUPREME COURT REPORTS
791
Qnly guarantees equal protection as regards substantive
laws but procedural laws also come within its ambit.
The implication
of the
article
is
that all litigants
similarly situated are entitled to
avail themselves of
the same procedural rights £o:
relief: a?-d. fo: defence
with like protection and without discnmmanon. The
procedural provisions of Act XXX of 1947 had therefore to stand the challenge of article 14 and could only
be upheld provided they withstoood tl1at challenge. The
·question was canvassed in this Court in April, 1954, in
Suraj Mal Mohta v. Sri A. V. Visvanatha Sastri (supra).
What happened in that case was that the Investigation
'Commission, while dealing with the
case of another
assessee referred to it under section 5 ( 1) of the Act,
reported to the
Central
Government that Suraj Mal
Mohta and other members of the family had evaded
income-tax and their
cases should
be
referred to it
under the
provisions of sub-section (4) of section 5.
The reference was
accordingly
made
with the result
that Suraj Mal
Mohta applied to this Court under
article 32 for an appropriate writ restraining the
Commission from taking any action against him under the
provisions of
Act XXX of
1947. It was there contended that the
provisions of sections 5(1), 5(4), 6, 7
:and 8 of the Act had become void after the coming into
force
of the
Constitution, being
discriminatory
in
·character, and that these
provisions
contravened the
guarantee of article 14 of the
Constitution. This Court
upheld this
contention
and
granted an appropriate
·writ
to
Suraj
Mal
Mohta.
It there expressed the
·Qpinion that
sub-section ( 4) of section 5, on its plain
reading, was not limited to cases of persons who, to a
substantial extent, had
evaded
taxation but that it
·dealt with all those persons whose cases fell within the
:ambit of section 34 of the Indian Income-tax Act, and
that being so, there was no justification for discriminating them in matters of procedure from those dealt with
11mder the
Indian Income-tax Act, and thus sub-section
( 4) of section 5 was hit by article 14 of the
Constitution
:and was void and unenforceable. The result
of this
1decision was that the Commission was restrained
from
.dealing with Mohta's case. The provisions of section 5(1)
1954
Shree Meenakshi
Mills Ltd.
v.
Sri A. V. Visvanatha Sastri
and Another.
Mahajan C. J.
1954
Skrte Meenakshi
Mills Ltd.
v.
Sri A. V. Visvanatha Sastri
and Another.
Mahajan C. J.
792
SUPREME COURT REPORTS
[1955)
of the
Act W!'re also attacked
in that
case
as contravening article 14 of the Constitution, but the Court
refrained
from
expressing
any
opnuon about their
constitutionality
as
that question
had
no relevancy
then. The consequence
of that
decision
was that a
certain provision of Act
XXX of 1947 was declared
void and unenforceable to the extent of its repugnancy
to the provisions of Part III of the
Constitution under
article 13(1)
thereof.
Its validity
however
during
the pre-constitution period was beyond q>1estion.
What this Court said in its judgment in Suraj Mal
Mohta v. Sri A. V. Visvanatha Sastri (supra) has perhaps
resulted m the filing of these petitions
which were
presented to this
Court on the 16th of July, 1954, after
the decision in that case had been pronounced. In the
petitions, as originally drafted, the provisions of section.
5 ( 1) of Act XXX of 1947 were impugned on the ground
that they contravened the guarantee of equal
protection of the laws enacted in article 14 of the
Constitution and for
that reason the
Commission
had nojurisdiction to deal with the cases of the petitioners by
applying the discriminatory and
drastic procedure
of
the impugned Act. It was alleged that the petitioners
belonged to the same class, of persons as were dealt
with under the ordinary law enacted in section 34 of the·
Indian Income-tax
Act. Before these petitions could
come to a hearing and a day after they were presented
to this Court, the
Indian
Income-tax (Amendment)
Ordinance VIII of
1954
was
promulgated
by
the·
President and this was subsequently made into an Act
on the 25th of
September, 1954. The Indian
Income-.
tax
(Amendment)
Act, XXXIII
of
1954,
though
assented to by the President on the 25th of September,.
1954, came into force with effect from the 17th of July,
1954. The provisions of this Act furnished an additional ground of attack to the petitioners on the·
continuance of proceedings by the Commission in these·
cases under the prov1s10ns of Act XXX of 1947. An
application was therefore made seeking permission to.
urge additional grounds. This was not opposed by the
learned Attorney-General
and
was allowed.
In the
additional
grounds it was
urged that the relevant:
-
•
....
-
S.C.R.
SUPREME COURT REPORTS
793
sections of Act XXX of 1947, which affected the petitioners, had been impliedly repealed by
the amended
Act of 1954 and ceased to have any legal force and that
the Commission could no longer proceed under those
prov1S1ons
against
the
petitioners.
It was further
contended that the amended section 34 of the Indian
Income-tax
Act was comprehensive in its scope, and
all persons that were dealt with under section 5 ( 1) of
Act XXX of 1947 had been brought within its ambit,
and that being so, there was no basis left for giving
them discriminatory or special treatment different from
those similarly situated, and who were to be dealt with
under section
34
of the Indian Income-tax
Act as
amended.
It was said
that assuming
but
without
admitting that section 5(1)
of Act XXX of 1947 was
based on a rational classification
and was not hit by
article 14 of the
Constitution because of that circumstance, it had now, because of the amendment in section
34 of the Income-tax Act, become void, as the classification which saved it from the mischief of article 14 if
at all, had become ineffective, its distinctive
characteristics having disappeared, and that the persons falling
within the class defined in section 5 (1) now
belong to
the same class as is dealt with by section 34 as amended.
Two questions were thus canvassed before us :
(1) Whether section 5(1)
of
Act
XXX of 1947
infringes article 14 of the
Constitution inasmuch as it
is not based on a rational classification ?
(2) Whether, after
the coming into force of the
Indian
Income-tax
(Amendment)
Act, 1954, which
operates on the same field as section 5(1) of Act XXX
of 1947, the provisions of section 5(1) of Act XXX of
1947, assuming they were based on a rational classification, have not
become
void
and
unenforceable, as
being discriminatory in character ?
In our opinion, for the purpose of deciding these
petitions, it is not necessary to express any opm10n on
the first
question because we think the second contention is well founded and is sufficient to
determine the
case in favour of the petitioners.
The provisions of section 5 ( 1)
of Act XXX of 1947
could only
be supported, if at all for a differential
1954
Skree Memakshi
Mills Ltd.
v.
Sri A. V. Visv,,..
natha Sastri
and Another.
Mahqjan C. J.
1954
Sbree Meenakshi
Mills Ltd.
v.
Sri .A. V. Visoanatha Sastri
and Anotha'.
Mahajan C. J.
794
SUPREME COURT REPORTS
[19551
treatment of persons dealt with in that section in
matters of procedure, on the ground that these persons
constituted a separate class, and the classification was
rational.
Parliament has, however, by amending section 34 of the Indian
Income-tax
Act,
now provided
that cases of those
very
persons who
originally fell
within the ambit of section 5(1) of
Act XXX of 1947,
and who it was alleged
formed a distinct class, can be
dealt with under the amended section 34 and under
the procedure p~ovided in the Income-tax
Act.
Both
categories of persons, namely, those who came within
the scope of section 5 ( 1) as well as those
who
came
within the ambit of section 34, now form one class. In
other words, substantial
tax-dodgers or war profiteers
who
were
alleged
to
have formed a definite class
according to the contention of the learned AttorneyGeneral under section 5(1),
and whose
cases needed
special treatment at
the
hands
of the
Investigation
Commi;sion.
now
clearly
fall within
the
ambit of
amended section 34 of the
Indian
Income-tax Act.
That being so, the only basis for giving them differential treatment,
namely,
that
they formed a
distinct
class by themselves, has completely
disappeared,
with
the result
that continuance of discriminatory treatment
to them comes within the mischief of article 14 of the
Constitution and has thus to be relieved against.
All
these persons can now well ask the question, why are
we now being dealt with by
the discriminatory and
drastic
procedure
of
Act
XXX of 1947
when those
similarly situated as ourselves can be dealt with by the
Income-tax
Officer
under the amended
provisions of
section 34 of the Act. Even if we once bore a distinctive label that distinction
no longer
subsists and the
label now borne by
us is the same as is borre by
persons who can be dealt with under
section 34 of the
Act as amended ; in other words, there is nothing uncommon either
in properties
or
in
characteristics
between us and those evaders of income-tax
who
are
to be discovered by the Income-tax Officer under the
provisions of amended section 34.
In our
judgment,
no satisfactory answer can be returned to this query
because the field on which amended section 34 op~rates
-
•
-
.,
#
-
S.C.R.
SUPREME COURT REPORTS
795
now includes the
strip of territory which
previously
was occupied by section 5(1) of Act XXX of 1947 and
two substantially different laws of procedure, one being
more prejudicial to the assessee than the other, cannot
be allowed to operate on the same field in view of the
guarantee of article 14 of the Constitution.
The learned Attorney-General attempted to combat
this
contention on a two-fold ground : (I) That the
class of persons dealt with under section 5(1) of Act
XXX of 1947 was not only the class of substantial taxdodgers but it
was
a class of
persons
whose cases
the
Central
Government, by 1st of September, 1948,
had referred to the Commission
and
that class had
thus become determined finally on that date, and that
that class
of persons could
be dealt
with
by the
Investigation Commission under the drastic procedure
of Act XXX of 1947, while section
34 of
the Indian
Income-tax
Act as amended empowered the
Incometax
Officer to deal with cases other than those whose
cases had
been
referred under section 5 ( 1) to the
Investigation
Commission : (2) That in any case the
proceedings having
started before the
Commission in
pursuance of the
reference under
section 5 ( 1) of Act
XXX of 1947 those
proceedings cannot be affected
by
the amendment, it having no retrospective operation.
Both these contentions, in our opinion, are not well
founded.
As regards the
first
contention canvassed
by the
learned Attorney-General it seems to us that it cannot
stand scrutiny.
The class of persons allege.cl to have
been dealt with by section 5(1) of the impugned
Act
was comprised of those unsocial elements in society
who during recent years prior to the passing of the Act
had made
substantial profits and had evaded payment
of tax on those profits and whose
cases were referred
to the Investigation
Commission before 1st September,
1948. Assuming that evasion of tax to a substantial
amount could form a basis of classification at all for
imposing a drastic procedure on that class, the inclusion
of only such of them whose cases had been referred
before 1st September, 1948, into a class for being dealt
with by the drastic procedure, leaving other tax evaders
1954
Shru Meenaksht
Mills Ltd.
v.
Sri A. V. Visva-.
natha Sastri
and Another.
Mahqjan C. J.
1954
Sfirtt Munakshi
Mills Ltd.
v.
)' ·j A. V. Visvaa
natka Sastri
md Another.
~ll W.jan C. ].
7%
SUPREME COURT REPORTS
[1955]
to be dealt with under the ordinary law will be a clear
discrimination
for
the reference of the case within a
particular time has no special or rational nexus with
the necessity for drastic procedure.
Further it seems
that this very class of persons is now included within
the ambit of the amended section 34 of Act XXXIII
of 1954. The draftsman of this section has apparently
attempted to remedy whatever defects in the classification made under section 5(1) of Act XXX of 1947
had
been pointed out during the discussion in Suraj
Mal M ohta' s case in this
Court.
The preamble of the
Act states that the
Act is intended
to
provide for
assessment
or
re-assessment
of
persons
who to a
substantial extent had evaded payment of tax during a
certain period and for
matters
connected
therewith.
The language employed here
bears
close
likeness to
that employed in
section 5(1)
of the impugned
Act.
The
Act has inserted the
following
sub-section in
section 34 of the
Indian Income-tax Act :
"(1-A) If, in the case of any assessee, the Incometax Officer has reason to believe-
(i) that
income, profits or
gains
chargeable to
income-tax have escaped
assessment
for
any year m
respect of which the relevant previous year falls wholly
or partly within the period beginning on the 1st day
of September, 1939; and ending on the 31st day of
March, 1946 ; and
(ii) that the income, profits or gain which have so
·escaped assessment for any such year or years amount
or are likely to amount to one lakh of rupees or more ;
he may, notwithstanding that the period of eight years
or, as the
case
may be, four years specified in subsection ( 1) has expired in respect thereof, serve on the
assessee ........ a notice
containing all
or any of the
requirements which may be included in a notice under
sub-section (2) of section 22, and may proceed to assess
<>r reassess the income, profits or gains of the assessee
for all or any of the years referred to in clause ( 1) and
thereupon the provisions of this Act ...... shall, so far
as may be, apply accordingly ...... "
It was argued in M ohta' s case as well as in these
petitions that the classification made in section 5 ( 1) of
..
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S.C.R.
SUPREME -COURT REPORTS
797
the impugned
Act was bad because the word "substantial" used therein was a word
which
had no fixed
meaning and was an unsatisfactory medium for carrying the idea of some ascertainable
proportion of
the
whole,
and thus
the classification being vague and
uncertain,
did not save the enactment from the mischief
of article 14 of the
Constitution.
This alleged
defect
stands
cured in the amended section 34 inasmuch as
the
Legislature has clearly indi9ted in the statute what
~t means when it says that the object of the Act is to
catch
persons who to a substantial extent had evaded
payment of tax, in other words, what
was seemingly
indefinite within the meaning of the word "substantial"
has been made definite and clear by enacting that no
evasion below a sum of one lakh is within the meaning
of that expression. Again, the classification of section
5(1) was criticized on the ground that it did not necessarily deal with persons who during the period of war
had made huge profits and evaded payment of tax on
them.
The
amendment made
in
section
34
has
remedied this defect also. The amended section
clearly
states that the amended section will operate on income
made between the 1st
September, 1939, and the 31st
March, 1946,
and tax on which has
been evaded. It
is thus clear that the new sub-section inserted in section
34 by the provisions of Act XXXIII of 1954 is intended
to deal with the class of persons who were said to have
been classified for sp~cial treatment
by section
5(1) of
Act XXX of
1947. The
learned
Attorney-General
frankly
conceded
that
to a certain extent the two
sections overlapped, but he urged that the overlapping
was not complete and that these remained still outside
it whose
cases had
already
been
referred
to
the
Investigation Commission.
We are unable to uphold
this contention in view of the clear language employed
in the amended Act and this contention is therefore
negatived.
The
second
contention raised
by the
learned
Attorney-General is,
in
our opinion, concluded by a
number of earlier decisions of this
Court wherein it has
been held that when
an Act is valid in its entirety
before the date of the
Constitution, the
part
of the
proceedings regulated
by
the
special
procedure and
1954
Shree Meenakshi
Mills Ltd.
v.
Sri A. V. Visva·
natha Sastri
and Anolhn'.
Mahajan C. ].
1954
Shree Munakshi
Mills Ltd.
v.
Sri ..4.. V. Virva~
natha Saslri
and Another.
MahqjanC.J.
798
SUPREME COURT REPORTS
[1955]
taken during pre-Constitution
,reriod
cannot be questioned however
discriminatory It may have
been, but
that if the discriminatory procedure is continued
after
the date of the
Constitution, then a person prejudicially
affected by it can legitimately ask why he is now being
differently treated from others similarly
situate-vide
Kesava Madhava Menon v. The State of Bombay('), and
Lachmandas Kewalram Ahuja and Another v. The State
of Bombay(2). The same propositions were re-stated by
this Court in Syed Quasim Razvi v. State of Hyderabad( 8 ),
and in Habeeb Mohammad v. State of Hyderabad(•). In
the cases of these petitioners, as already
pointed out,
the proceedings
taken by the
Investigation
Commission against them under the discriminatory
procedure
of the impugned Act against them have not been completed and are pending and that being so, no justification remains for continuing these proceedings against
them under the procedure of the impugned Act when
other persons
of th.eir
class
and having
the same
common characteristics
can
be
dealt with by
the
Income-tax Officer under the provisions of the amended
Act and the procedure of the ordinary law of the land.
For the reasons given above we are of the opinion that
assuming the provisions of section 5(1) of Act XXX of
1947 could be saved from the mischief of article 14 of
the
Constitution on the basis of a valid
classification,
that defence is no longer available in support of it after
the introduction of the new sub-section in section 34
of the
Income-tax Act, which sub-section is intended
to deal with the same class of persons dealt with by
section 5 ( 1) of the impugned Act.
The result is that
proceedings before the
·Investigation Commission
can
no longer be continued under the procedure prescribed
by the impugned
Act. We
therefore
direct that an
appropriate writ be
issued
against
the
Commission
prohibiting it from proceeding further with the cases of
these petitioners under the provisions of Act XXX of
1947.
In the peculiar circumstances of
this
case
we
make no order as to costs in these petitions.
(1) [1951l S.C.R. 228.
(2) [1952 s.c.R. 710.
Writ issued.
(3) [1953] S.C.R. 589
(4) [1953].R. 661.
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