TMI Blog1955 (4) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... al carried on his investigation for more than a year and a half, during which time he sent a number of requisitions to the petitioners calling for account books, statements and other information. While this investigation was still going on, the petitioners were informed by a letter of the Authorised Official, dated 22nd October, 1951, that the matter was likely to be heard by the Income-tax Investigation Commission sometime early in December, 1951. Later the definite date of hearing was communicated to the petitioners as 18th December, 1951. On 11th December, 1951, the petitioners received a copy of the report of the Authorised Official, which had been submitted by him to the Income-tax Investigation Commission. The petitioners appeared through a counsel before the Commission on 18th December, 1951, at New Delhi, when their request for adjournment had been refused. The case was heard for several days and the proceedings were protracted. Since considerable time was being taken in the case, the petitioners thought that it would be advisable to conclude the proceedings by requesting the Commission to arrive at a settlement and fix the quantum of evaded income at ₹ 16 lacs. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation Commission, New Delhi, the Government of India, Ministry of Finance (Revenue Division), New Delhi, the Central Board of Revenue, New Delhi, and the Income-tax Officer, District II(i), the Mall, Kanpur. In the petition, the prayer is for the issue of three writs. The first is a writ in the nature of mandamus to opposite party No. 2, the Government of India, directing it to withdraw its order dated 7th June, 1952. The second is a writ in the nature of prohibition to the Income-tax Officer, opposite party No. 4, prohibiting him from continuing further proceedings initiated in pursuance of that Government order dated 7th June, 1952. The third is a writ in the nature of certiorari to the Income-tax Investigation Commission, opposite party No. 1, and to the Income-tax Officer, opposite party No. 4, calling for the record of the case and quashing proceedings of the Income-tax Investigation Commission and of the Income-tax Officer, which had been initiated in pursuance of the Government order dated 7th June, 1952. A counter-affidavit was filed on behalf of the opposite parties by Sri V.P. Gupta, who was the Authorised Official, as mentioned above. A rejoinder affidavit has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petition, that the proceedings, which were initiated by opposite party No. 4 against the petitioners by issue of the notices dated the 21st July, 1952, were in pursuance of the directions given by the Government of India under sub-section (2) of section 8 of the Taxation on Income (Investigation Commission) Act. Mr. Pathak, learned counsel for the petitioners, when arguing the case, however, urged that these notices had been issued in pursuance of the directions of the Government of India dated 7th June, 1952, so that the proceedings pending before opposite party No. 4 Were proceedings, which would be governed by the various sub-sections of section 8 of the Taxation on Income (Investigation Commission) Act. We put a question to Mr. Jagdish Swarup, learned counsel for the opposite parties, whether the case of the opposite parties was that those notices, which had been issued by opposite party No. 4, were in pursuance of the Central Government direction dated 7th June, 1952, or their case was that those notices were not issued in pursuance of that direction but were issued for purposes of initiating independent proceedings under section 34, which opposite party No. 4 was compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as initiation of proceedings under section 8 of the Taxation on Income (Investigation Commission) Act by the Income-tax Officer in pursuance of the directions of the Central Government given under sub-section (2) of section 8 of that Act. When considering the validity of these proceedings pending before the Income-tax Officer, Kanpur, we have to take notice the fact that these proceedings had been initiated after findings by the Investigation Commission had been recorded and its report submitted to the Government in accordance with the provisions of sub-section (1) of section 8 of the Taxation on Income (Investigation Commission) Act. Those findings and the report of the Commission cannot be quashed by us by issue of a writ of certiorari, as the Investigation Commission is beyond our jurisdiction, so that, for purposes of dealing with this petition, we have to treat those findings and the report as valid. Further, the order passed by the Central Government under section 8(2), dated 7th June, 1952, must also be treated by us as a valid order, because we cannot, by issue of a writ, quash that order, nor can we treat that order as wholly void and ignore it altogether. On the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to apply, if proceedings had been taken against the petitioners by him under the provisions of section 34 of the Income-tax Act, without reference to the provisions of the Taxation on Income (Investigation Commission) Act. In the proceedings before the Income-tax Officer, therefore, the rights available to the petitioners are seriously curtailed and restricted rights as compared to the rights, which would have been available to the petitioners, if they had been dealt with under section 34 of the Income-tax Act without applying the provisions of the Taxation on Income (Investigation Commission) Act. We have also to take notice of the circumstance that, while proceedings against the petitioners are being taken under section 8 of the Taxation on Income (Investigation Commission) Act, it is still open to the Income-tax Officer to take proceedings against the petitioners under section 34 of the Income-tax Act, as amended by the Income-tax Amendment Act, No. XXXIII of 1954. The petitioners are, therefore, in a position where they can ask the question, which was posed by their Lordships of the Supreme Court in Shree Meenakshi Mills Ltd., Madurai, and Others v. A.V. Visvanatha Sastri [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer, if he complied with the law under which he is acting, would result in bringing about inequality and thus create a breach of article 14 of the Constitution. Consequently this is a fit case where an appropriate writ should be issued to the Income-tax Officer Kanpur, prohibiting him from proceeding further with the cases initiated on the basis of the notices dated 21st July, 1952, against the petitioners and we order accordingly. On behalf of the petitioners it was requested that costs should be ordered in their favour, as they have succeeded in this petition. Learned counsel for the opposite parties urged that costs should be awarded against opposite party No. 4 only, as a writ is being issued to him, and should not be awarded against the other opposite parties Nos. 1, 2 and 3. In this case, we find that opposite party No. 4, the Income-tax Officer, Kanpur, is purporting to exercise jurisdiction, which has to be prohibited, on the basis of the proceedings initiated at the instance of opposite party No. 2, the Government of India, by making a reference to the Investigation Commission under section 5. The prime mover of these proceedings was opposite party No. 2. It is true ..... X X X X Extracts X X X X X X X X Extracts X X X X
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