# Kishan !Al and Anotht1 v. iBJianwar Lal - **Citation:** [1955] 1 S.C.R. 448 - **Court:** Supreme Court of India - **Decided:** 1953-08-28 - **Bench:** Mehr Chand Mahajan C.J, s. R. DAS, VIVIAN BosE, Bhagwa11, Venkatarama Ayyar - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kishan-al-and-anotht1-v-ibjianwar-lal-399 - **Pages:** 19 ## Headnote Taxation on l11r.rnne (Investigation Cotnmission) Act (XXX of 1947) ss. 5(1), 5( 4)~Extent aad range different-S. 5( 4) and s. 34 of Indian Income-tax Act (XI of 1922)-Deal tvith same class of persons-Properties and characteristics the san1e-Procedure under the ttvo Acts diffi:rent-Section 5( 4)-lf1hether ultra vires Art. 14 of the Constitution. -+ Sub~section ( 4) of section 5 of the Taxation on Income (Investigation Com1nission) Act, 1947, does not deal 'vith the same class of persons as are said to have been grouped together in subsection ( l) of ~section 5 of the Act as persons \Vho to a substantial extent eyaded payment of taxation on income. On a plain reading of the section it is clear that sub-section ( 4) of section 5 is not limited only to persons \\'ho made extraordinary profits and to all persons who 1nay have evaded payment of taxation on income irrespective of \Vhethcr the evaded profits are substantial or insubstantial and therefore the scope of sub-section ( 4) of section 5 .A. is different from the scope of sub-section ( 1) of section 5 both in extent and range .. Sub-section ( 4) of section 5 of the Act, obviously deals \Vi th the same class of persons who fall within the arnbit of section 34 of the Indian Incotne-tax Act an 14 of the Constitution and is thus void and unenforceable. ORIGINAL JuRisDICTION : Petition No. 196 of 1954. Under article 32 of the Constitution of India for the enforcement of fundamental rights. P. R. Das and K. P. Khaitan, (B. Sen, A. K. Mukherjea and B. P. Maheswari, with them) for the petitioner. C. K. Daphtary, Solicitor-General for India, (Porus A. Mehta and P. G. Gokhale, with him) for the respondents. 1954. May 28. The Judgment of the Court was delivered by MEHR CHAND MAHAJAN C.J.-The prin~ipal q~es tion canvassed in this case is whether certam sections of the Taxation on Income (Investigation Commission) Act, 1947, i.e., Act XXX of 1947, have become void from the date of the commencement of the Constitution of India by reason of article 14 of the Constitution. The petitioner, Suraj Mall Mohta & Co. Ltd., is a company registered under the Indian Companies Act. Suraj Mall Mohta is also the managing· director -0£ another company Messrs. Jute and Gunny Brokers Ltd. A reference had been made by the Central Government under the provisions of section 5 ( 1) of the Act before 1954 Suraj Mall Mahliz and Ca. v • A. V. Visvanatha. Sastri and Anal he~. ' 1954 Surqj Mall Mohta and Co. v. A. V. Visvanatha · Sastri and Another~ Mehr Chand Mahajan C. J. 450 SUPREME C ## Text _Characters 0–39,993 of 43,749. This is a partial read: ask again with offset=39993 for what follows._ 1954 Kishan !Al and Anotht1 v. iBJianwar Lal. Mr1/du:~ita J. •954 Atay 28. 448 SUPREME COURT REPORTS [19551 of the notification. The result is that we set aside the judgments of the Courts below and send the. case back to the Original Court of Jodhpur in order that it may be tried on all the other issues raised in the suit after giving opportunity to the parties to adduce such evidence as they want ,to adduce. The plaintiffs appellants will have their costs up to this stage. Further costs will abide the resu It. Order accordingly. SURAJ MALL MORTA AND CO. ti. A. V. VISVANA THA SASTRI AND ANOTHER. [MEHR CHAND MAHAJAN C.J., s. R. DAS, VIVIAN BosE, BHAGWA11 and VENKATARAMA AYYAR JJ.] Taxation on l11r.rnne (Investigation Cotnmission) Act (XXX of 1947) ss. 5(1), 5( 4)~Extent aad range different-S. 5( 4) and s. 34 of Indian Income-tax Act (XI of 1922)-Deal tvith same class of persons-Properties and characteristics the san1e-Procedure under the ttvo Acts diffi:rent-Section 5( 4)-lf1hether ultra vires Art. 14 of the Constitution. -+ Sub~section ( 4) of section 5 of the Taxation on Income (Investigation Com1nission) Act, 1947, does not deal 'vith the same class of persons as are said to have been grouped together in subsection ( l) of ~section 5 of the Act as persons \Vho to a substantial extent eyaded payment of taxation on income. On a plain reading of the section it is clear that sub-section ( 4) of section 5 is not limited only to persons \\'ho made extraordinary profits and to all persons who 1nay have evaded payment of taxation on income irrespective of \Vhethcr the evaded profits are substantial or insubstantial and therefore the scope of sub-section ( 4) of section 5 .A. is different from the scope of sub-section ( 1) of section 5 both in extent and range .. Sub-section ( 4) of section 5 of the Act, obviously deals \Vi th the same class of persons who fall within the arnbit of section 34 of the Indian Incotne-tax Act an 14 of the Constitution and is thus void and unenforceable. ORIGINAL JuRisDICTION : Petition No. 196 of 1954. Under article 32 of the Constitution of India for the enforcement of fundamental rights. P. R. Das and K. P. Khaitan, (B. Sen, A. K. Mukherjea and B. P. Maheswari, with them) for the petitioner. C. K. Daphtary, Solicitor-General for India, (Porus A. Mehta and P. G. Gokhale, with him) for the respondents. 1954. May 28. The Judgment of the Court was delivered by MEHR CHAND MAHAJAN C.J.-The prin~ipal q~es tion canvassed in this case is whether certam sections of the Taxation on Income (Investigation Commission) Act, 1947, i.e., Act XXX of 1947, have become void from the date of the commencement of the Constitution of India by reason of article 14 of the Constitution. The petitioner, Suraj Mall Mohta & Co. Ltd., is a company registered under the Indian Companies Act. Suraj Mall Mohta is also the managing· director -0£ another company Messrs. Jute and Gunny Brokers Ltd. A reference had been made by the Central Government under the provisions of section 5 ( 1) of the Act before 1954 Suraj Mall Mahliz and Ca. v • A. V. Visvanatha. Sastri and Anal he~. ' 1954 Surqj Mall Mohta and Co. v. A. V. Visvanatha · Sastri and Another~ Mehr Chand Mahajan C. J. 450 SUPREME COURT REPORTS [1955) 1st September, 1948, of the case of Messrs. Jute and Gunny )3rokers Ltd. to the Investigation Commission appointed under Act XXX of 1947. During the investigation of that case which was numbered 831/30 in the records of the Commission, and during the investigation of some other cases similarly referred to the Commission, it was said to have been discovered that the petitioner company had made secret profits which it 'had not disclosed and had thus evaded taxation. On the 28th August, 1953, a report to this effect was made by the Commission to the Central Government under the provisions of section 5 ( 4) of the Act requesting . that the case of the petitioner along with the cases of Suraj Mall Mohta and other members of his family may be referred to the Commission for investigation. . On the 9th September, 1953, the Central Government referred these cases to the Investigation Commission under the provisions of section 5( 4) of the Act and these were numbered 831/64-69 on the records of the Commission. On the 15th of September, 1953, the Commission notified the petitioners that their cases had been referred for investigation and they were called upon to furnish certain material, as detailed tn Annexure "B" of the petition, to the Commission. On the 12th April, 1954, the present petition under article 32 of the Constitution was filed for the issue of appropriate writs restraining the Commission from taking any action against the petitioner under the provisions of Act XXX of 1947, on the ground that the provisions of sections 5(1), 5(4), 6, 7 and 8 of Act XXX of 1947, had become void, being discriminatory in character after the coming into force of the Constitution of India. In order to appreciate the respective contentions raised and canvassed before us on behalf of the petitioner company and the State, it is necessary to set ·out some of the relevant provisions of the Act. The object of die Act as stated in its Preamble was to ascertain whether the actual incidence of taxation on income in recent years had been in accordance with - + - j ' - SUPREME COURT REPORTS 451 prov1S1ons of law and whether the procedure for assessment and recovery of tax was adequate to prevent evas10n th~reof. Section 3 authorizes the Central Government to constitute a Commission, to be called the Income-tax Investigation Commission, its duty being (a) to investigate and report to the Central Government on all matters relating to taxation on mcome, with particular reference to the extent to which the existing law relating to, and. procedure for, the assessment and collection of such taxation is adequate to prevent the evasion thereof ; (b) to investigate in accordance with the provisions of this Act any case or points m a case referred to it under section 5. The composition of the Commission is set out in section 4. Section 5 of the Act reads as follows :- "5 ( 1 )-The Central Government may at any time before the first day of September, 1948, refer to the Commission for investigation and report any case or points in a case in which the Central Government has prim a f acie reasons for believing that a person has to a substantial extent evaded payment of taxation on mcome, together with such material as may be available m support of such belief, and may at any time before the 1st day of September, 1948, apply to the Commission for the withdrawal of any case or points in a case thus referred ........... . (2) .. -.............................. . (3) No reference made by the Central Government under sub-section (1), at any time before the first day of September, 1948, shall be called 111 question, nor shall the sufficiency of the material on which such a reference has been made be investigated in any manner by any Court. ( 4) If in the course of investigation into any case or points m a case referred to it under sub-section ( 1), the Commission has reason to believe- ( a) that some person other than the person whose case is being investigated has evaded payment of taxation on income, or (b) that some points other than those referred to it by the Central Government in respect of any case 1954 Suraj Mall Mohta and Co. v. A. V. Visoanatha Sastri and An•ther. Mehr Chand Mahajan C. J. , 1954 Suraj Mall Mohla and Co. v. A. V. Visvanatha Sastri awl A11uther. MehrC/ltllld Mahajan C. J. 452 SUPREME COURT REPORTS [1955] also require investigation, it may make a report to the Central Government stating its reasons for such belief and, on receipt of such report; the Central Government shall, notwithstanding anything . contained in subsection (1), forthwith refer to the Commission for investigation the case of such other person or such additional points as may be indicated in that report." The powers possessed by the Commission while conducting an investigation are provided for in section 6 which is in these terms : "6(1)-The Commission shall have power to reqmre any person or banking or other company to prepare and furnish on or before a specified date written statements of accounts and affairs verified in such manner as may be prescribed by the Commission and, if so required by the Commission, also duly verified by a qualified auditor, giving information on such points or matters as 111 the opinion of the Commission may, directly or indirectly, be useful for, or relevant to, any case referred to it, and any person or banking or other company so required shall be bound, notwithstanding any law to the contrary, to' comply with such requirement. (2) The Commission shall also have power to administer oaths, and shall have all the powers of a civil ,court under the Code of Civil Procedure, 1908, for the purposes . of taking evidence .on oath, enforcing the attendance of witnesses and of persons whose cases are being investigated, compelling the production of documents and issuing comm1ss10ns for the examination of witnesses. (3) If in the course of any investigation it appears to the Commission to be necessary to examine any accounts or documents or to interrogate any person or obtain any statements from ~ny person, the Commiss10n may authorize any mcome-tax authority not below the rank of Income-tax Officer in that behalf .... ( 4) The authorized official shall subject to the . ,i. direction of the Commission have the same powers as; the Commission under sub-sections (1) and (2), andl ' - - • • • • - , • S.C.R. SUPREME COURT REPORTS 453 any person having charge or custody of accounts or documents required to be examined shall notwithstanding anything in any law to the contrary be bound to produce them ...... ,, ...... . (5) If any person whose case or the points ip whose case is or are being investigated by the Commission refuses or fails to attend in person in compliance with a notice in that behalf duly served upon him or to give any evidence or to answer questions or to produce documents or to prepare and furnish statements when called upon to do so, the Commission may, if satisfied that the refusal or failure was wilful, close the investigation of the case and proceed to draw up its report on the case or on the points to the best of its judgment and may in its discretion also direct that such sum as it may specify in the direction shall be recovered from the person by way of penalty for the refusal or failure, without prejudice to any penalty under the Indian Income-tax Act, 1922 ................. . (6) .......................................... . (7) Where in the opinion of the Commission any person or banking or other company is likely to be in possession of any information or document which may, directly or indirectly, be useful for, or relevant to, any case referred to it or any case likely to he reported by the Commission to the Central Government under the provisions of sub-section ( 4) of section 5, the Commission and subject to the direction of the Commission any authorized official, may make enquiries in such manner as it or he may deem fit and obtain from such person or banking or other company statements on oath or otherwise on such points or matters as may be specified ; and for the purpose of any such enquiry, the Commission and the authorized official shall have all the powers conferred on them by sub-sections (1), (2), (2A), (3) and (4). (8) All materials gathered by the Commission or the authorised official and materials accompanying the reference under sub-section (1) of section 5 may be brought on record at such stage as the Commission may think fit." 1954 Suraj Mall Mohta and Co. v • A. V'. Visvanath11< Sastri and Anothtr. MehrCh4nd Mahajan G. ]. Suraj Mall Mohta and Co. v. A. V. Visvanatha Sastri and Another. Mt:hrChand Mahajan C.J. 454 SUPREME COURT REPORTS [1955] The procedure to be followed by the Commission is contained in section 7 which provides that subject to the provisions of this Act the Commission shall have power to regulate its own procedure and that the powers of the Commission under sub-sections (1), (2), (3), (7) and (8) of section 6 and sub-sections (2), (4) and ( 6) of this section, i.e., section 7 may be exercised by any member thereof authorised by the Commission m this behalf. Sub-section (2) of section 7 provides as follows:- "7(2)-In making an investigation under clause (b) of section 3, the Commission shall act in accordance with the principles of natural justice, shall follow as far as practicable the principles of the Indian Evidence Act, 1872, and shall give the person whose case is being investigated, a reasonable opportunity of rebutting any evidence adduced against him : and the power of the Commission to compel production of documents shall not be subject to the limitation imposed by section 130 of the Indian Evidence Act, 1872, and the Commission shall be deemed to, be a Court and its proceedings legal proceedings for the purposes of .sections 5 and 6 of the Bankers' Books Evidence Act, 1891." Sub-section (3) of section 7 is in these terms :- "7(3)-Any person whose case is being investigated by the Commission may be represented by a pleader. a registered accountant or an employee duly authorised to act, on his behalf, provided that no person shall be entitled to be present or to be represented in the course of an enquiry under sub-sections (3) and (7) of section 6." The result of these provisions is that when the Commission is collecting the materials from different sources again'st the assessee he is not entitled to be present at those stages and take part in the enquiry, but after the material is ready and is placed on the record then he can be present and has to be given a reasonable opportunity of rebutting any evidence that may . have been .collected against him. Sub-section ( 4) of section 7 which came in for considerable criticism provides as follows :- • • - \ • S.C.R. SUPREME COURT REPORTS 455 "7(4)-No person shall be entitled to inspect, call for, or obtain copies of, any documents, statement or papers or materials furnished to, obtained by or produced before, the Commission or any authorized official in any proceedings under this Act ; but the Commission and after the Commission has ceased to exist such authority as the Central Government may in this behalf appoint, may, in its discretion, allow such inspection and furnish such copies to any person : Provided that, for the purpose of enabling the person whose case or points in whose case is or are being investigated to rebut any evidence brought on the record against him, he shall, on application made in this behalf and on payment of such fees as may be prescribed by rules made under this Act, be furnished with certified copies of documents, st~tements, papers and materials brought on the record by the Commission." Sub-section (5) of section 7 is in these terms :- "7 (5)-Save in cases in which the Commission may exercise its powers under section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898, (a) no suit, prosecution or other legal proceeding shall be instituted against any person in any civil or criminal Court for any evidence given or produced by him in any proceedings before the Commission, and (b) no evidence so given or produced shall be admissible in evidence against such person in any suit,. prosecution or other proceeding before such Court, except with the previous sanction of the Central Government." The last section that .came in for objection is section 8 which is in these terms : "8(1)-Save as otherwise provided in this Act, the materials brought on record shall be considered by all the three members of the Commission sitting together and the report of the Commission shall be in accordance with the opinion of the majority. (2) After considering the report, the Central Government shall by order in writing direct that such 1954 Sut'aj Mal I Mohta and Co. v. A. V. Visvanatha, Sastri and Another. Mehr Chand Mahajan C. ]. ~954 .Surai Mall Mohla · and Co. v. A. V. Vi.svanatha Sa.rtri and .Another. M1h< Chand Mllh•j•• C. J. 456 SUPREME COURT REPORTS [19551 proceedings as it thinks fit under the Indian Income-- tax Act, 1922, the Excess Profits Tax Act, 1940, or any other law, shall be taken against the person to whose case the report relates in respect of the income of any period commencing after the 31st day of December, 1938 ; and upon such a direction being given, such proceedings may be taken and completed under the appropriate law notwithstanding the restrictions contained in section 34 of the Indian Incometax Act, 1922, or section 15 of the Excess Profits Tax Act, 1940, or any other law and notwithstanding any lapse of time or any decision to a different effect given in the case by any Income-tax authority or Income-tax Appellate Tribunal. (3) ............................. . ( 4) In all assessment or reassessment proceedings taken in pursuance of a direction under sub-section (2), the findings recorded by the Commission on the ease or on the points referred to it shall, subject to the provisions of sub-sections (5) and (6), be final ; but no proceedings taken in pursuance of such direction shall be a bar to the initiation of proceedings under section 34 of the Indian Income-tax Act, 1922. (5) In respect of any order made in the course of proceedings taken in pursuance of a direction issued under sub-section. (2) the provisions of sections 30, 31, 33 and 33-A of the Indian Income-tax Act, 1922, and the corresponding provisions of the Excess Profits Tax Act, 1940, shall not apply so far as matters declared final by sub-section ( 4) are concerned ; but the person concerned may, within 60 days of the date upon which he is served with a copy of such order, by application in the prescribed form accompanied by a fee of Rs. 100 require the appropriate Commissioner of Income-tax to refer to the High Court any question of law arising -Out of such order, and thereupon the provisions of sections 66 and 66-A of the Indian Income-tax Act, 1922, shall as far as may be apply, with the modification that the. reference shall be heard by a Bench of not less than three Judges of the High Court. (6) ............................. . 1 , - S.C.R. SUPREME COURT REPORTS 457 (7). Notwithstanding anything to the contrary con1954 tained in this Act or in any other law for the time being suraj Mall Mohta in force, any evidence in the case admitted before the and Co. Commission or an authorized official shall be admissible A. v. i;~vanatha in evidence in any proceedings directed to be taken Sastri and b ( Another. under su -section 2)." It was not and .could not be denied that the powers vested in the Commission and the procedure prescribed by the impugned Act is more comprehensive and drastic than those contained in the Indian Income-tax Act. · At the time when the impugned statute was passed there could possibly be taken no exception to its contents on the ground of constitutionality of its provisions, and the powers conferred on the Commission and the procedure it was authorized to follow were well within the ambit of the Legislative power of the Central Legislature. The impugned statute admittedly was good law till the coming into force of the Constitution. When India' became a sovereign democratic Republic on 26th January, 1950, the validity of all laws had to be tested on the touchstone. of the new Constitution and all laws made before the coming into force of the Constitmion have to stand the test for their validity on the provisions of Part III of the Constitution. The points that require consideration in the case are whether the provisions of section 5(1), sections 5(4), 6, 7 and 8 or any parts thereof contravene the guarantee of equal protection of the laws and of the..., equality before the law, or whether the impugned provisions of the Act are based on a valid classification which is rational in view of the objects of the Act. A further point is whether section 6(5) of the Act offends against article 20( 3) of the Constitution. Mr. P. R. Das for the petitioner attacked the provisions of section 5(1) of the Act on a two-fold ground : (1) That the section was not based on any valid classification ; the word "substantial" being vague and uncertain and having no fixed meaning, could furnish no basis for any classification at all ; (2) That the Central ' Government was entitled by the provisions of the section to discriminate between one person and another in the same class and it was authorized to pick and Mehr Chand Mahaja.1 C. J. 1954 Suraj Mall Molda and Co. v. A. V. Visuanatha Sastri and Another. MthrChand Mahajan C. J. ' 458 SUPREME COURT REPORTS [1955] I . choose the cases of persons who fell within the group of those who had substantial1y evaded taxation. It could, if it chose, send the case of one person to the Commission and show favouritism to another person by not sending his case to the Commission though both of these persons be within the group of those who have evaded the payment of tax to a substantial extent. As regards sub-section ( 4) of section 5 the learned counsel contended that this section had no independent existence and wa< bound to fall with sub-section (1) of section S, if his contention regarding the invalidity of that section prevailed. In the alternative, he contended that assuming that sub-se,ction ( 1) was valid even then sub-section ( 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 of the Indian Income-tax •Act. The learned Solicitor-General combated all these arguments and contended that the Act was based on a broad and rational classification, that it only dealt with a group of persons who had evaded income-tax from the beginning of the war, 1st January, 1939, to the period ending with 1st September, 1948, as a consequence of war controls resulting in black-marketing activities and huge profits. In other words, it was said that the Act only dealt with that group of persons who came within the class of war-profiteers. This was a class by itself and needed special treatment and therefore the law did not offend against the equal protection of the laws clause of the Constitution. It was suggested that persons coming under sub-section ( 4) of section S also belonged to the same class and therefore on the same grounds that section also could not be declared void. It was further said that there was no substantial difference in the procedure prescribed under section 34 of the Indian Income-tax Act and the impugned Act and that in any case the procedure prescribed by the Act was a good substitute for that prescribed by the Indian Income-tax Act. - • S.C.R. SUPREME COURT REPORTS 459 In our judgment, it is not necessary in this case to deal with all the contentions raised by Mr. P. R. Das and combated by the learned Solicitor-General. It will be sufficient for the decision of this case to examine the respective contentions raised about the validity of subsection ( 4) of section 5 of the Act bec:mse the case of the petitioner was referred to the Commission under the provisions of this section and was not referred to the Commission by the Central Government under the provisions of section 5(1) and that being so, an enquiry into the validity of that section is really outside the scope of the present case. On the assumption therefore that section 5 ( 1) of the Act is based on a valid classification and deals with a group of persons who came within the class of war-profiteers which required special treatment and that the classification is rational and that reasonable grounds existed for making distinction between those who fell within that class and others who did not come within it, but without in any way deciding or even expressing any opinion on that question, we proceed to examine the question whether sub-section ( 4) of section 5 under which proceedings had been initiated against the petitioner offends against the guarantee of equal protection of the laws given in article 14 of the Constitution. The first question that requires consideration is whether sub-section ( 4) of section 5 deals with the same class of persons as are said to have been grouped together in sub-section (1) of section 5, as persons who to a substantial extent evaded payment of taxation on income : _in other words, does sub-section ( 4) of section 5 confer on the Commission the power merely to add to· the number of persons included in section 5(1) by the Central Government or does it confer larger power on the Commission. On the phraseology employed in the sub-section it is difficult to read therein the limitations contained in sub-section ( 1) of section 5 as contended for by the learned Solicitor-General. Sub-section (4) which has been set out above in clear and unambiguous terms provided that where the Commission "has reason to believe that some person other than the person whose case is being investigated has evaded payment of taxation on income, ...... it may 11-87 S. C. India/59. 1954 Suraj Mall Mohta anc!Co. v. A. V. Visvanatha Sastri and Another. Mehr Chant! Mahajan C. J. 1954 Suraj Mall Mohta and Co. v. A. V. Visvanatha Saslri and Another. Mehr Chand Mahajan C. J. 460 SUPREME COURT REPORTS [1955) make a report to the Central Government." It does not repeat the phraseology used in section 5 ( 1) that some person other than the person whose case is being investigated "have to a substantial extent evaded payment of taxation on income." On no principle of construction of statutes can the words to a "substantial extent" be read in sub-clause (a) of section 5(4). On a plain reading of the section it is clear that the subsection is not limited only to persons who made extraordinary profits and to a substantial extent evaded payment of taxation on income, but applies to all persons who may have evaded payment of taxation on income, irrespective of whether the evaded profits are substantial or insubstantial. In other respects also the phraseology of the section is different from that employed in sub-section ( 1) of section 5. Sub-section ( 1) of section 5 provided that where the Centr:al Government "has prima facie reasons for believing that a person has to a substantial extent evaded payment of taxation on income'', while clause (a) of section 5(4) says that if the Commission "has reason to believe that some person other that the preson whose case is being investigated has evaded payment of taxation on income''. The prima facie belief of the Central Government is substituted by the expression "The Commission has reason to believe''. The scope of the section is thus different from the scope of section 5 ( 1) of the Act, both in its extent and range. It is not necessarily limited to profits made within any particular period and brings within its range all persons, whether traders, businessmen, professional people, whoever they may be, who may have at any time evaded payment of taxation on income for whatever cause. That being the true scope or construction of subsection (4), it obviously deals with the same class of persons who fall within the ambit of section 34 of the Indian Income-tax Act and are dealt with in subsection (1) of that section and whose incq_μie can be caught by proceeding under that section. Assessees who have failed to disclose fully and truly all material facts necessary for the assessment under section 34 can be equated with. persons who are discovered in the - • S.C.R. SUPREME COURT REPORTS 461 ~ course of the investigation conducted under section 5(1) to have evaded payment of income-tax on their incoμies. The result is that some of these persons can be dealt with under the provisions of Act XXX of 1947, at ·the choice of the Commission, though they could also be proceeded with under the provisions of section 34 of the Indian Income-tax Act.- It is not ' ~ possible to hold that all such persons who evade pay- ·. ment of income-tax and do not truly disclose all particulars or material facts necessary for their assessment and against whom a report is made under sub-section ( 4) of section 5 of the impugned Act by' themselves form a class distinct from those who evade payment of income-tax and come within the ambit of section 34 of the 'Indian Income-tax Act. It is well ~settled that in its application to legal pro.ceedings article 14 assures to everyone the same rules of evidence and modes of procedure ; in other words, the same rule must exist for all in similar circumstances. It is also well settled that this principle does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstance, in the same position. The State can by classification .-. determine who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject, but the classification permissible must be based on some real and substantial distinction bearing a just and reasonable relation to the objects sought to be attained and cannot be made arbitrarily and without any substantial basis. Classification means segregation in classes which have a systematic relation, usually found in common proper- .. ties and characteristics. There is nothing uncommon either in properties or in characteristics between persons who are discovered as evaders of income-tax during an investigation conducted under section 5(1) and those who are discovered by the Income-tax Officer to have evaded payment of income-tax. Both these kinds of persons have common properties and have common characteristics and therefore require j. equal treatment. We thus hold that both section 34 $. of the Indian Income-tax Act and sub-section ( 4) of 1954 Suraj Mall M ohta and Co. v. A. V. Visvanatha Sastri and Another. Mehr Chand Mahajan C. J. 1954 Suraj Mall Mofda and Co. v. A. V. Visvanatha Sastri and Another. Mehr Chand Mahajan C. J. ~ 462 SUPREME COURT REPORTS [19551 ,section 5 of the impugned Act