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TMI Blog1959 (5) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(1) of the Taxation on Income (Investigation Commission) Act, 1947. By these notices, the petitioner was directed to furnish to the Income-tax Investigation Commission certain information and to comply with certain requirements mentioned therein. The petitioner, under the impression that the Commission had authority and jurisdiction to proceed with the investigation of the petitioner's case, supplied most of the information sought and complied with the various requisitions. the Income-tax Investigation Commission did not, however, proceed to the stage of framing any charges against the petitioner or giving a bearing to him and was wound up before the proceedings could be completed. Thereafter, on December 29, 1954, the petitioner received seven notices purporting to be issued under section 34(1A) of the Act from the Income-tax Officer, District I(ii), Kanpur, opposite party No. 1, calling upon him to submit returns of his total income assessable to tax for the seven assessment years mentioned above. The notice contained a mention that, in case the petitioner failed to file the returns as required, he was liable to ex parte assessment under section 23(4) of the Act and also to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt with under section 34(1) of the Act, and (2) that the proceedings which were being taken by the Income-tax 'Officer were of a judicial or quasi- judicial nature and the Income-tax Officer was a person who had a bias because he or the Central Board of Revenue, under whom he was employed, was interested as a party in these proceedings. These are the two points that mainly need consideration by us. In considering the first point, which has been raised before us, section 34, which has to be interpreted by us, must be read as it stood in the year 1954, when these seven impugned notices were issued to the petitioner. In section 34(1), the relevant provision is that which relates to clause (a) and which, after omitting the parts relevant to clause (b) reads as follows: "34. (1) If-- (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under-assessed, or asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of March, 1946; and (ii) that the income, profits or gains 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.......has expired in respect thereof, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, 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 or reassess the income, profits or gains of the assessee for all or any of the years referred to in clauses (i), and thereupon the provisions of this Act (excepting those contained in clauses(i) and (iii) of the proviso to sub-section(i) and in sub-sections (2) and (3) of this section) shall, so far as may be, apply accordingly: Provided that the Income-tax Officer shall not issue a notice under this sub-section unless he has recorded his reasons for doing so, and the Central Board of Revenue is satisfied on such reasons recorded that it is a fit case for the issue of such notice: Provided further that no such notice shall be issued after the 31st day of March, 1956," ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be, apply accordingly as if the notice were a notice issued under sub-section (2) of section 22 of the Act. This section thus contains a fiction of law which has been introduced for the purpose of making the procedure laid down in section 23 of the Act applicable to the proceedings for assessment, reassessment or recomputation taken by the Income-tax Officer, in pursuance of a notice issued under section 34(i)(a). The fiction of law is introduced by using the words "as if the notice were a notice issued under that sub-section" Clearly, the effect of this fiction of law is that even though a notice under section 34(1)(a) is different from a notice under sub-section. (2) of section 22 of the Act, the Income-tax Officer, in taking proceedings for assessment, reassessment or recomputation, has to comply with the provisions of the Act which apply when he takes proceedings for assessment in pursuance of a notice under sub-section (2) of section 22 of the Act. The further submission of learned counsel was that in section 34(1A) not such fiction of law has been introduced by the Legislature. In this provisions of law, the circumstances under which a notice can be issued are sl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted by reference to the circumstances in which this provision was introduced by the Legislature in 1954. Just before this provision was introduced, the Supreme Court gave its decision in the case of Suraj Mall Mohta and Co. v. A.V. Viswanatha Sastri [1954] 26 I.T.R. 1. In that decision, the Supreme Court declared the provisions of section 5(4) of the Taxation on Income (Investigation Commission) Act (30 of 1947) ultra vires article 14 of the Constitution. One of the main considerations for the Supreme Court in declaring that provision of law ultra vires was that the procedure applicable to a person proceeded against under that provision of law was materially and substantially different from the procedure applicable to a person similarly situated who could be proceeded against under section 34 of the Income-tax Act. It was urged that section 34(1A) was introduced in the Act for the purpose of taking proceedings against those very persons who could be proceeded against under section 5(1) or 5(4) of the Taxation on Income (Investigation Commission) Act, 1947, because section 5(4) of that Act was declared ultra vires by the Supreme Court and it was apprehended that section 5(1) of tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power to assess the income, profits and gains of an assessee which had escaped assessment, it seems to me that there would have been no necessity for mentioning the fiction of law that the provisions of the Act would apply as if the notice issued under this provision of law were a notice issued under sub-section(2) of section 22 of the Act. The Legislature having once laid down the procedure for assessment of income, profits or gains need only have laid down in section 34(1)(a) that the provisions of the Act shall, so far as may be, apply accordingly. The mere use of this language would have been enough to attract the applicability of the provision of section 23 to the proceedings for assessment taken under section 34(1)(a) of the Act. Section 34(1)(a), however, envisages proceedings of two other types, viz., proceedings for reassessment of income, profits or gains, and proceedings for recomputation of loss or depreciation allowance. A proceedings for recomputation of loss or depreciation allowance could also be held to be governed by the provisions of section 23 of the Act because computation or recomputation would only be an intermediate step in making the assessment. Reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceded by the word "thereupon". The use of this word indicates that the provisions of the Act would become applicable when, after the issue of a notice under section 34(1A) of the Act, the Income-tax Officer proceeds to assess or reassess the income, profits or gains of the assessee. In section 34(1)(a) of the Act, the Legislature had, after introducing the fiction of law, clearly indicated how the provisions of the Act were to apply even to a proceeding for reassessment though in terms those provisions were applicable only to a proceeding for assessment and made no mention of a proceeding for reassessment. In section 34(1A) of the Act, the Income-tax Officer was again directed, after issue of a notice, to proceed to "assess or reassess" the income, profits or gains of an assessee and, when it was laid down that to such a proceeding by the Income-tax Officer, the provision of the Act shall apply accordingly it could only mean that the principles laid down in section 34(1) of the Act would also apply and, as a result of the application of those provisions, the procedure laid down in section 23 of the Act would be applicable with the necessary consequence that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 34(1A) of the Act, the provisions of the latter section will have to be read by themselves. They only empower the Income-tax Officer to proceed to assess or reassess the income, profits or gains of an assessee but nowhere lay down that he has also to determine the sum payable as income-tax by the assessee on the basis of such assessment or reassessment. Under sub-section (3) and (4) of section 23 of the Act, the Income-tax Officer is not only empowered to assess the total income of an assessee but also the sum payable by him on the basis of such assessment. Sub-section (5) of section 23 of the Act empowers the Income-tax Officer to assess the total income of a firm and then lays down how the tax on the basis of the income of the firm is to be determined and by whom it is to be paid. In the case of a registered firm, after the income, profits or gains of the firm have been assessed, the income-tax payable by the firm is not determined and, instead, the share in the income, profits or gains of the firm of each partner of the firm is included in his total income and, on the basis of the total income of each partner so assessed, the sum payable as income-tax by each partner is dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer would not in such reassessment be entitled to include in the total income of each partner the share of that partner in the income of the firm so reassessed. He would be compelled in such a case either to stop at the stage of reassessment of the income, profits or gains of the firm and not determine the sum payable at all or, in the alternative, he would have to determine the sum payable on the basis of the income of the firm, reassessed by him and declare that that sum will be payable by the firm. In the former case, the provisions of section 34(1A) of the Act would be totally nullified as reassessment of the firm without determination of the tax payable would be infructuous. If the latter alternative has to be adopted, an anomalous position would arise because, at the time of the initial assessment of the income of the firm, there would be no determination of the tax payable by the firm and on the other hand, the effect of that assessment of the firm would have been given in the assessment of each partner by including his share of the firm's income in his total income and by determining the sum payable by him on that basis, while at the time of reassessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs under section 34(1) of the Act are clearly governed by the provisions of sections 23,31,33 and 66 of the Act and, consequently, these provisions of the Act have also to be given effect to in proceedings under section 34(1A) of the Act. It also appears to me that on the correct principles of interpretation of statutes, the interpretation, which I have indicated above, will be correct and justified rather than the interpretation sought to be put by learned counsel for the petitioner. One well-recognised principle is that, thought a sense of the possible injustice of an interpretation ought not to induce judges to do violence to well-settled rules of construction, whenever the languages of the Legislative admits of two constructions, the courts act upon the view that the Legislature could not have intended to bring about obvious injustice, so that the courts should accept that possible interpretation which would lead to proper justice. In the present case, if I were to accept the interpretation sought to be put on section 34(1A) of the Act on behalf of petitioner, it would mean that the Legislature intended to do injustice to persons proceeded against under this provisions of law, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s canvassed before the Supreme court in Shree Meenakshi Mills' case [1954] 26 I.T.R. 713, 718 was: "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 the Act XXX of 1947, the provisions of section 5(1) of Act XXX of 1947, assuming they were based on a rational classification, have no become void and unenforceable, as being discriminatory in character?" The Supreme Court took notice of the fact that the Parliament had, by amending section 34 of the Indian Income-tax Act, 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 provided in the Income-tax Act. The amendment in section 34, of which the Supreme Court took notice, was the introduction of section 34(1A) of the Act. Referring to the persons who could, after the introduction of section 34(1A), be dealt with either under section 34 of the Act or under section 5(1) of Act XXX of 1947, their Lordships remarked: "All these persons can now well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd will also have the privileges conferred by section 37 of the Act. It was only on the basis of the acceptance of this position that their Lordships came to the view that persons proceeded against under section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947, were being dealt with by a discriminatory and drastic procedure as compared with persons who could be dealt with section 34 of the Act, as amended. It would thus appear that, in this case, their Lordships of the Supreme Court proceeded on an interpretation of section 34(1A) of the Act which is the same as the interpretation which I have arrived at earlier in this case, so that, to a certain extent, the interpretation put by me is supported by the views of the Supreme court. The submission by learned counsel for the petitioner that section 34(1A) of the Act is ultra vires article 14 of the constitution on the ground that it was discriminatory in the matter of procedure, right of appeal and benefit of section 37 of the Act as compared with section 34(1) of the Act, therefore, fails. The second aspect, on which section 34(1A) of the Act was challenged as ultra vires article 14 of the constitution by learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakh of rupees or more, and the purpose of introducing this provision was to subject their escaped income to tax. It is not possible to accept the contention that even such assessees can legitimately claim that why should be allowed to escape payment of tax on the ground of limitation like others who had not made war profits and whose escaped incomes did not amount to one lakh of rupees or more and who may escape after the expiry of the period of limitation of four years or eight years as the case may be. Removal of restriction of limitation in the case of such special class of evaders clearly has a nexus with the purpose for which this provision of law was introduced, so that the discrimination brought about by section 34(1A) of the Act is not such as to render it void on the ground of violating the provisions of article 14 of the constitution. In this connection, learned counsel for the petitioner relied on the views expressed by their Lordships of the Supreme court in the case of Suraj Mall Mohta and Co. v. A.V. Visvanatha Sastri [1954] 26 I.T.R. 1, where their Lordships pointed out that, under the provisions of section 34 of the Income-tax Act, investigation into escaped income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat provision of law. Thus class of person dealt with under section 34(1)(a) of the Act is also comprised within the larger class dealt with under section 34(1)(b) of the Act and, in respect of that class, the period of limitation for taking proceedings has been enlarged from four years to eight years. On the same principle, the Legislature considered it advisable that persons belonging to a still narrower class satisfying the requirements of section 34(1A) of the Act may be dealt with without any restriction about limitation. Such enlargement of limitation for particular classes of persons, while keeping the procedure applicable to the proceedings and the rights of such persons the same, is a discrimination which is fully justified by the purpose for which such provisions of law are introduced. In these circumstances, the contention of learned counsel for the petitioner that section 34(1)(a) of the Act is ultra vires article 14 of the Constitution as being discriminatory in the matter of limitation for proceedings being taken against an assessee also fails and must be rejected. The second ground, on which proceedings for reassessment under section 34(1A) of the Act have been chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mself treated as a party when the order of assessment is taken up in appeal to the Appellate Assistant Commissioner or the Income-tax Appellate Tribunal. It was urged that, on the principles laid down by the Supreme court in Nageswara Rao, v. Andhra Pradesh State Road Transport Corporation*, it was against the principles of natural justice for the income-tax Officer to be entrusted with decisions in judicial proceedings and his decisions are, therefore, invalid. In the case of Nageswara Rao v. Andhra Pradesh State Road Transport Corporation [1959] Supp1. (1) S.C.R. 319, their Lordships were dealing with decisions under section 68D(2) given by the State Government on objection filed under section 68D(1) of the Motor Vehicles Act, as amended by the Motor Vehicles (Hyderabad Amendment) Act, 1956, against a scheme published under section 68C of that Act. In section 68D(2), it was laid down that the State Government may, after considering the objections and after giving an opportunity to the objector or his representative and the representatives of the State Transport undertaking to be heard in the matter, if they so desire, approve or modify the scheme. Rules were framed by the State G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proceedings when he was only carrying out his statutory duties of making an assessment or reassessment in accordance with the provisions of the Act. There is, however, the fact that, when an order is passed by the Income- tax officer and it is taken up in first appeal to the Appellate Assistant Commissioner or in second appeal to the Income-tax Appellate Tribunal, the Income-tax Officer who passed the order for assessment or reassessment, is treated as a party to the appeal. In these circumstances, the question that the Income-tax Officer is a person with a bias or not is not free from doubt but it appears to me that it is not necessary in this case to express any final opinion on this point because, even if it be held that the Income-tax Officer is a person with a bias, I am not prepared to accept the submission of learned counsel for the petitioner that orders of assessment or reassessment passed by him would be invalid. The case of Nageswara Rao v. Andhra Pradesh State Road Transport Corporation [1959] Supp1. (1) S.C.R. 319, which came up before the Supreme Court, was one where there was only one right of hearing under the law and, under the rules and orders made by the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y with by a specific provision having been made in a statute by the Legislature. This was held by their Lordships of the Supreme Court in Gopalan v. State of Madras [1950] S.C.R. 88, where their Lordships ' decision was expressed in the following words: "There is considerable authority for the statement that the courts are not at liberty to declare an Act void because in their opinion it is opposed to a spirit supposed to pervade the constitution but not expressed in words. Where the fundamental law has not limited, either in terms or by necessary implication, the general power conferred upon the Legislature, we cannot declare a limitation under the notion of having discovered something in the spirit of the constitution which is not even mentioned in the instrument. It is difficult upon any general principles to limit the omnipotence of the sovereign legislative power by judicial interposition, except so far as the express words of a written constitution give that authority. it is also stated, if the words be positive and without ambiguity, there is no authority for a court to vacate or repeal a statute on that ground alone. But it is only in express constitutional provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenged as invalid upon any supposed principles of natural justice. In this respect it departs from the American Constitution under which the Union and the State Legislatures are forbidden to enact laws affecting the life, liberty or property of individuals except in accordance with the due process of law. Due process of law includes principles of natural justice. The doctrine of due process has not been adopted by the Indian Constitution, save in certain cases where its principles have been expressly enacted in the Constitution." In the instant case, the Income-tax of Officer has been entrusted with the power of passing orders of assessment or reassessment by the Act itself which was enacted by the Legislature and, consequently, principles of natural justice cannot be invoked for the purpose of holding that such a provision is void. it was not urged at any stage before us that in entrusting this work to the Income-tax Officer, the Legislature had violated any express provision of the Constitution. This is, in my opinion, the principles ground on which this submission made by learned counsel for the petitioner must be rejected. Out of the remaining points, which were raised i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various points that were canvassed before the Full Bench, I have come to the conclusion that there is no force in these two writ petitions and they are, therefore, dismissed with costs which will include ₹ 400 in each writ petition as fee of learned counsel for the Department. CHATURVEDI, J.--The above petitions were heard by a Division Bench which referred them for disposal by a larger Bench of three judges. I have had the benefit of reading the judgment of Mr. Justice v. Bhargava, with whose conclusions I agree. The learned judge has dealt in detail with all the points canvassed before the Full Bench. I consequently propose to deal with only the more important ones and to give my own reasons for arriving at the conclusion. The petitioners in writ case No. 469 of 1955 are the son and window of the late Shri J.P. Srivastava, and in writ case No. 397 of 1955 only the son is the petitioner. In giving the facts of the case which in all material particulars are the same, I shall refer to the facts of writ case No. 397 of 1955. The petitioner had been duly assessed to income-tax for the assessment year 1940-41 to 1946-47. On or about the 17th May, 1948, he received notices from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34(1A) are denied equality before the law, because they are deprived of the rights of filing appeals and revisions against the assessment order and also deprived of an opportunity of having their cases referred to the High court under section 66 of the Income-tax Act. If the above were the true position, it would be obvious that section 34(1A) would be inconsistent with article 14 of the Constitution, but I think that that is only really the case. In order to appreciate the contentions of Mr. R.S. Pathak, learned counsel for the petitioners, who has argued the case with ability and skill, it is necessary to make a reference to some provisions of the Investigation Commission Act and of the Indian Income-tax Act as also the reasons for the enactment of section 34(1A). The Investigation Commission Act (XXX of 1947), came into force on April 18, 1947. Sections 3 of the Act authorised the Central Government to constitute a Commission called the Income-tax Investigation Commission and section 4 provided for the composition of the Commission. Section 5 of the Act, as subsequently amended, contained four sub-sections. The first sub-section authorised the Central Government to refer to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te could be dealt with by the onerous provisions of the Investigation Commission Act or section 34(1) of the Income-tax Act, at the will of the Investigation Commission and the Central Government. Consequently, section 5(4) of the Investigation Commission Act was held to be inconsistent with article 14 of the Constitution. This decision was given on May 28,1954, and the Central Legislature soon after introduced sub-sections (1A), (1B), (1C), and (1D) in section 34 of the Income-tax Act, These sub-sections came into force with effect from July 17, 1954. In the meantime Sri Meenakshi Mills Ltd., had filed petitions in the Supreme Court under article 32 of the Constitution and on the above sub-sections having been introduced, the Mills prayed for and obtained permission to amend the petition by challenging the constitutionality of sub-section (1) of sections 5 of the Investigation Commission Act on the additional ground that sub-section (1) of section 5 and the added sub-section in section 34 of the Income-tax Act dealt with the same class of persons, and consequently, section 5(1) of the Investigation Commission Act had become inconsistent with article 14 of the Constitution. Their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Investigation Commission Act, was not the same class of persons as fell within section 47(1) of the other Travancore Act, which mainly corresponded to section 34(1) of the Indian Income-tax Act. After narrating the above history of the legislation, I may now come to the relevant portion of the impugned sub-section, namely section 34(1A) of the Indian Income-tax Act. This sub-section provides that if the Income-tax Officer has reasons to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year in respect of which the relevant previous year falls within the period beginning on September 1, 1939, and ending on the 31st March, 1946, and that such income, profits or gains are likely to amount to one lakh of rupees or more, the Income-tax Officer may, notwithstanding that the period of limitation provided in clauses (a) and (b) of sub-section (1) of section 34 has expired, 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 or reassess the income, profits or gains of the assessee for all or any of the years referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l have to go to section 23 of the Income-tax Act. Sub-section (1) of that section requires the Income-tax Officer to the first asses the total income of the assessee and then to determine the sum payable by him. Determination of tax follows the assessment of income. The same is the position with respect to sub-section (3). Sub-section (4), which provides for what is called best judgment assessment, again says that the Income-tax Officer: "shall make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment..........." Under sub-section (5) the total income of the firm is assessed and in the case of an unregistered firm the income-tax payable by the firm itself is to be determined. It will thus appear that section 23 makes a clear distinction between assessment of income and determination of tax. The impugned sub-section (1A) authorities the Income-tax Officer only "to assess or reassess the income, profits or gains of the assessee" and confers no power on that Officer to determine the tax. For determination of tax the Income-tax Officer will have to go to section 23. It consequently follows that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meanings given to it by the Shorter Oxford English Dictionary is "to put into practical operation". The other meaning on which Mr. Pathak relies is "to bring it into contact with facts". I think the first meaning is the more appropriate one, but even the second meaning relied upon by Mr. Pathak does not alter the position. The word "provisions" means "each of the classes or division of a legal or formal statement or such statement itself; or a class of such statement which makes express stipulation or condition". Here again the first meaning has to be applied to the word "provisions" and this meaning does not in any way help the petitioner. The word "accordingly" is said to mean "harmoniously, properly, suitably, correspondingly or in accordance with legal premises." In Stroud's Judicial Dictionary it is said to mean "agreeably" or "correspondingly". Mr. R.S. Pathak's argument is that the word "accordingly" means "correspondingly" and that the impugned sub- section corresponds to section 23 in the matter of determination of tax. I find myself unable to accept hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission Act. This intention, I think, can be clearly gathered from the language of the impugned sub-section. Mr. Pathak referred to the cases of Smt. Hira Devi v. District Board, Shahjahanpur [1952] S.C.R. 1122., and Nalinakhya Bysack v. Shyam Sunder Haldar [1953] S.C.R. 533 In the first case it was laid down that it was the duty of the court to try and harmonise the various provisions of an Act passed by the Legislature, but that it was certainly not its duty to stretch the words used by the Legislature to fill in gaps or omissions in the provisions of the Act. In the second case it was held that if there was some defect in the phraseology used by the Legislature, the court could not avoid the Legislature's defective phrasing of an Act or add or amend or, by consturction, make up deficiencies which were left in the Act. From what I have stated above I think I am not doing anything in interpreting the impugned sub-section which has been prohibited in the case cited above. On the other hand, the cases of Bengal Immunity Co. Ltd. v. State of Bihar [1955] 2 S.C.R. 603 and Gordhandas Purshottamdas v. Eastern Cotton Co. [1959] S.C.R. 346. are authorities for the proposition tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esses and they have no jurisdiction to assess income or to determine tax thereon. In support of the point the learned counsel referred only to a recent decision of the supreme Court reported in the case of Nageswara Rao. v. Andhra Pradesh State Road Transport Corporation [1959] Supp1. (1) S.C.R. 319. The above case arose out of proceedings taken under the Indian Motor Vehicles Act. There was also a local Act known as Andhra Pradesh Road Transport Corporations Act. The Act provided for the procedure for approval of a scheme for running the State transport service. The State transport undertaking was authorised to prepare a scheme providing for Road Transport service to the exclusion, complete or partial, of other persons. Any persons affected by the scheme could file objections before the Secretary to Government in charge of Transport Department. The Government then fixed a date for hearing objections and then the objections were to be considered and the scheme modified or approved. The objections in this case were filed and they were considered by the Secretary to Government in charge of the Transport Department. He submitted a report to the Minister-in-charge and the Minister the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... think that the decision relied upon by the learned counsel has any application to the facts of these cases. For reasons given above, I would dismiss the writ petitions with costs, which will include ₹ 400 in each writ petition as fee of learned counsel for the Department. UPADHYA, J.--These two petitions under section article 226 of the constitution raise the question as to whether section 34(1A) of the Indian Income-tax Act is void as offending against article 14 of the Constitution. The petitioners pray for the issue of appropriate writs to quash the notices issued under that section. Though several grounds were raised in the petition learned counsel for the petitioners, without giving up the other grounds, pressed in main for our consideration two grounds for challenging the notices and proceedings under section 34(1A) of the Income-tax Act: (1) that section 34(1A) of the Act offended article 14 of the Constitution as it denied equality before the law and provided a discriminatory procedure which could be followed by the Income-tax Officer in the case of persons selected by him of such treatment, and (2) that the proceedings being of a judicial or quasi-judicial nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the case may be, four years specified in sub-section (1) has expired in respect thereof, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-sections (2) of section 22, and may proceed to assess or reassess the income, profits or gains of the assessee for all or any of the year referred to in clause (i), and thereupon the provisions of this Act (excepting those contained in clauses (i) and (iii) of the proviso to sub-section (1) and in sub-sections (2) and (3) of this section) shall, so far as may be, apply accordingly: Provided that the Income-tax Officer shall not issue a notice under this sub-section unless he has recorded his reasons for doing so, and the Central Board of Revenue is satisfied on such reasons recorded that it is a fit case for the issue of such notice: Provided further that no such notice shall be issued after 31st day of March, 1956." In order to proceed under this provision of the statute the Income- tax Officer should have reason to believe (i) that income, profits or gains chargeable to income-tax that have escaped a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prescribed form of their total income etc. Section 22(2) says that if the Income- tax Officer is of opinion that any person has income of such an amount as renders him liable to income-tax the officer may serve a notice upon him requiring him to furnish, within a certain period, a return in the prescribed form setting forth his total income during the previous year, Section 22(3) enables the assessee to file a return even after the period allowed to him under section 22(2) has expired at any time before the assessment. Section 22(4) empowers the Income-tax Officers to call for the production of certain accounts etc. Section 22(5) provides how certain information mentioned in that section has to be given in the returns to be filed under sub-sections (1) and (2). After calling for the return the Income-tax Officer has to proceed to make the assessment. In case a return is filed it is open to him to accept it correct and complete and make an assessment under section 23(1). If the Income-tax Officer is not satisfied with the return he may give the assessee an opportunity to produce evidence in support of his return under section 23(2). The next sub-section 23(3) lays down how the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(1) that the notice to be issued under that section was to be deemed to be a notice under section 22(2) section 23(2) would not be applicable at all. The Income-tax Officer is bound to give an opportunity to the assessee to produce evidence in support of his return only if the return is filed under section 22. By reason of the fiction mentioned above, the notice issued under section 34(1) is to be deemed to be a notice under section 22(2) and therefore the Income-tax Officer before making an assessment has to issue notice under section 23(2) of the Act asking the assessee to prove his return. After this opportunity has been given and date fixed for the purpose the Income-tax Officer may proceed to make an assessment under section 23(3) in the case of a notice issued under section 34(1) as in the case of a notice issued under section 22(2) itself. Section 34(1) lays down that "provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section." This makes section 23 applicable to cases under section 34(1) also for all the provisions of this Act are to apply as if the notice issued under section 34(1) were a noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appen when a change takes place in the constitution of a firm says: "Where at the time of making as assessment under section 23, it is found that a change has occurred in the constitution of a firm or that a firm has been newly constituted, the assessment shall be made on the firm as constituted at the time of making the assessment." There is no reference to a change that may be found at the time of making an assessment under section 34. I do not think it can be urged that this omission to refer to section 34 is unintentional or without any significance. In section 24B, sub-section (2), deals with the procedure in case a person dies before he is assessed there is specific reference both to section 22 as well as to section 34. This provision is as follows: "24B. (2) Where a person dies before the publication of the notice referred to in sub-section (1) of section 22 or before he is served with a notice under sub-section (2) of section 22 or section 34, as the case may be, his executor, administrator or other legal representative shall, on the serving of the notice under sub-section (2) of section 22 or under section 34, as the case may be, comply herewith, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 34 indicates that assessments under sections 23 and 34 were both distinctly in view when these provisions were enacted. It appears therefore from the above that it is not possible to treat a notice issued under section 34(1A) exactly at par with a notice issued under section 34(1) of the Act. The expression "as if the notice were a notice issued under that sub-section" does not find place in the new section 34(1A). The question is whether the omission results in any difference between the two notices and the procedure to be followed on the issue of those two notices. It has been contended that the expression "thereupon the provisions of this Act.......shall, so far as may be, apply, accordingly" is comprehensive enough to make all the other provisions of this Act applicable except those mentioned in clauses (i) and (iii) of proviso to sub-section(1) of section 34 and in sub-sections (2) and (3) of section 34. In the first place it does not appear correct to take the view that in spite of a difference in language the meaning of the two provisions must be taken to be the same. A fiction is intended to be introduced in section 34(1) so that a notice issued und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) says: "23. (1) If the Income-tax Officer is satisfied without requiring the presence of the assessee or the production by him of any evidence that a return made under section 22 is correct and complete, he shall assess the total income of the assessee, and shall determine the sum payable by him on the basis of such return." This evidently relates to a return made under section 22. A return made in response to a notice under section 34(1A) is certainly not a return under section 22 and this provision of the statute, as it stands, is inapplicable. Similarly section 23(2) requires an Income-tax Officer who is not satisfied with the return made under section 22 to give an opportunity to an assessee to produce evidence in support of that return. Again if the return filed under section 34(1A) cannot be treated as a return under section 22, this provision cannot be applied. Section 23(3) refers to subsequent proceedings and section 23(4) again deals with persons in default of notice issued under sections 22 and 23. These provisions therefore do not, as such, apply to proceedings under section 34(1A). It is contended that the procedure prescribed under these provisions is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Indian Income-tax Act, 1922, shall apply with such modifications, if any, as may be prescribed, as if the said provisions were provisions of this Act and referred to excess profits tax instead of to income-tax, and every officer exercising powers under the said provisions in regard to income-tax may exercise the like powers under this Act in regard to excess profits tax in respect of cases assigned to him under sub-section(3) of section 3 as he exercises in relation to income-tax under the said Act." The provisions of the Income-tax Act mentioned in section 21 of the Excess Profits Tax Act were made to apply with such modification, if any, as may be prescribed. There is no such provision in section 34(1A) enabling one to apply the other provisions of the Income- tax Act with such modification as may be necessary. The law only says that the other provisions of the Act may be applied so far as may be only, and if they cannot be applied as they stand they cannot be applied at all. It was argued that among the provisions of the Act made applicable to section 34(1A) is section 34(1) itself along with its fiction and the fiction would thus be available even if the notice is is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the income-tax Act is the charging section. It reads as follows: "3. Where any Central Act enacts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act, in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually. This section lays down that tax shall be charged in respect of the total income of the previous year of an assessee. The determination of the total income, therefore, is a very important thing to be done under the Act. Section 4 which deals with the application of the Act of various kinds of income says how the "total income" is to be ascertained and "total income" has been defined in section 2(15) as meaning the total amount of income, profits and gains computed in the manner laid down in the Act. The determination of the tax payable on the total income is in fact levying a charge of tax, which section 3 require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable but it may refer to the whole procedure laid down in the Act for imposing liability upon the taxpayer." The learned Chief Justice followed the dictum of the Privy Council in Khemchand Ramdas's case [1938] 6 I.T.R. 414, mentioned above. The House of Lords had occasion to consider what "assessment" means under the English Act. In Income Tax Commissioner v. Gibb [1942] 10 I.T.R. (Supp1.) 121, the Lord Chancellor (Viscount Simon) observed at page 124: "The word 'assessment' is used in our income-tax code in more than one sense. Sometimes, by 'assessment' is meant the fixing of the sum taken to represent the actual profit for the purpose of charging tax upon it. But in another context the 'assessment' may mean the actual sum in tax which the taxpayer is liable to pay on his profits." The above observations by eminent judges relating to the meaning of the word assessment do appear to support the view that the words "may proceed to assess or reassess the income" in section 34(1A) mean not only to "compute or recompute the income" but also to levy the tax chargeable on such income. Once this meaning is acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure setting out the mode and time of recovery in section 46 becomes available. But the person assessed under section 34(1A) cannot question the assessment by an appeal because a right to appeal is not given to persons who have been served with a notice of demand under section 29. This right is given to persons assessed under section 23 and to other persons affected by certain other orders mentioned in section 30. I can see, therefore, no force in the argument that section 34(1A) will become completely inoperative and meaningless unless the fiction referred to above is adopted in construing it. What the law says is that the other provisions of the Act, "so far as may be," would apply. One of the provisions of section 34(1) is that the notice issued under that sub-section is to be treated as if it were a notice issued under section 22(2). This provisions as a whole is inapplicable to a notice issued under section 34(1A). In my opinion it would not be correct to apply the provisions of section 34(1) only to the extent of making a similar fiction available in respect of a notice issued under section 34(1A) and in holding that the rest of section 34(1) was not applicable. &q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been used by unscrupulous persons and under section 34(1) persons who made heavy profits during the war or during other periods of difficulty for the nation have not been excepted. All such persons may be proceeded against under section 34(1). The introduction of section 34(1A) empowers the Income-tax Officer to pick and choose some of such persons who have made profits during the war period and have escaped assessment or have been underassessed on such profits provided the profits are substantial and the test for this is that such income should not have been less than ₹ 1,00,000. While the same class of persons may be proceeded against under section 34(1) the power given to the Income-tax Officer to proceed against some of the persons of that class under section 34(1A), which does not provide for an appeal or reference as mentioned above, is clearly discrimination, which offends article 14 of the Constitution. The validity of section 34(1A) was challenged on another ground before a Bench of the Madras High Court in Rajendra Mills Ltd. v. Income-tax Officer [1957] 32 I.T.R. 439. But the point now raised by Mr. Pathak in the present case was not raised before that court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted under the Taxation on Income (Investigation Commission) Act, 1947. When it was found by the Supreme Court in several Cases, mentioned by my learned brothers, that the procedure adopted under the Investigation Commission Act was discriminatory and the relevant provisions of the Taxation on Income (Investigation Commission) Act, were void the authorities concerned again found it necessary to ask for some statutory provision under which their object could be achieved in a legal manner, and the Indian Income-tax (Amendment) Act, 1954, was introduced, and section 34(1A), impugned in these applications, was brought on the statute book by this amending Act on the 17th July, 1954. It was contended that to hold that the procedure provided under this amending Act was still discriminatory is to attribute to the Legislature an intention of persisting to prescribe a discriminatory procedure for such assessees notwithstanding the pronouncement of the Supreme Court. It is not necessary to say that the Legislature deliberately flouted, as it were, the opinion expressed by the Supreme Court. It is possible that the attention of the Legislature was confined to the discriminatory character of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer who assessed other persons under the Indian Income-tax Act. But it is not necessary to indulge in surmises or to find reasons for what the Legislature has done when the language of the statute clearly expresses the intention of the Legislature. Certain principles of interpretation were also discussed at the Bar. It was urged that a court should be reluctant to accept an interpretation that leads to the invalidity of a law. I have no hesitation in accepting this principle. But the rule would apply only if there be any doubt relating to the interpretation of the statute. If the language does not admit of any ambiguity no question of applying any such principle of interpretation could arise. The Supreme Court as well as the High Courts in Indian have from time to time found various provisions of different statutes invalid and unconstitutional. They have always had in mind the principle enunciated above but were obliged to declare the statute concerned or its provisions unconstitutional when the language used did not admit of any doubt as to the meaning of the statute. It is only when two or more interpretations are possible that that one leaning to invalidity is to be avoided. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my esteemed brothers. The principles of natural justice could be called in aid only if the provisions of the statute were not available. It is for the Parliament to consider and recognise the principles of natural justice and to embody them, so far as it considers proper, in the statutes enacted. If the Parliament considered it proper that the assessment of tax should be made not by a regular court but by an officer of the Income-tax Department, the Legislature was fully competent to give effect to this view in the law it made. For several reasons administrative tribunals are increasingly coming into vogue. The multifarious duties which a modern state is called upon to undertake make it impracticable that the normal procedure for adjudication of disputes by courts may be resorted to in every case. What tax a person should pay and who should be held liable to pay taxes on different kinds of income, are question of considerable importance and certainly affect the persons concerned much more than a small claim in a court of law. Similarly, questions relating to labour and trade unions and constructions within municipalities, etc., give rise occasionally to very important questions in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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