1964 (4) TMI 126 - HC - Income Tax

Summary

Issues Involved:
1. Validity of notices issued under section 22(4) of the Indian Income-tax Act.
2. Retrospective application of procedural amendments.
3. Alleged violation of Article 14 of the Constitution due to retrospective application.

Detailed Analysis:

1. Validity of Notices Issued under Section 22(4):

The primary issue was whether the notices dated 12th October 1953 and 21st December 1953 issued under section 22(4) were valid. The Income-tax Officer had issued these notices requiring the assessee to furnish accounts, documents, and information. The assessee failed to comply fully, leading to a best judgment assessment under section 23(4). The assessee's application to set aside this assessment was rejected. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld the validity of the notices, stating that the amendment to section 22(4) was procedural and thus applicable to all pending assessments. The High Court agreed, stating that the provisions of sections 22(4) and 23 are machinery sections for tax computation and are procedural in nature.

2. Retrospective Application of Procedural Amendments:

The assessee argued that section 22(4) was not merely procedural and thus could not be applied retrospectively. The amendment, effective from 1st April 1952, allowed the Income-tax Officer to require additional particulars and information. The court held that procedural provisions generally apply retrospectively unless explicitly stated otherwise. The amendment was deemed procedural, aiming to aid in the correct determination of tax liability, and thus applicable to all pending assessments. The court clarified that the reference to 1st April 1952 meant that notices issued after this date, even if for earlier assessment years, were valid under the amended section.

3. Alleged Violation of Article 14 of the Constitution:

The assessee contended that applying the amendment retrospectively would be discriminatory, violating Article 14 of the Constitution. The argument was that assessees for the same assessment year could be treated differently based on whether their assessments were completed before or after the amendment. The court rejected this argument, stating that procedural laws must conform to constitutional limitations but applying a procedural change to pending cases does not constitute discrimination. The court emphasized that the class of persons similarly situated for the operation of section 22(4) included all those whose assessments were pending at the time of the amendment. The procedural change applied uniformly to this class, thus not violating Article 14.

Conclusion:

The High Court concluded that the notices issued under section 22(4) were valid, the procedural amendment was applicable to all pending assessments, and there was no violation of Article 14. The question referred to the court was answered in the affirmative, and the assessee was ordered to pay the costs of the department.