TMI Blog1959 (5) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ion) 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 penalty and prosecution. Thereupon, the petitioner se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessed at too low a rate, or have been made the subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, On the language of these two provisions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 slightly different and limited ; but, when a notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 that Act would also be similarly declared ultra vires. In order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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. Reassessment under section 34(1)(a) is, however, different from a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 assessee would be entitled to the benefit of the provisions of sections 31,33,66 and 37 of the Act which right accrues as a result of the applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess 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 determined. In the case of an unregistered firm, the Income-tax Officer is given the option, instead of determining the sum payable by the firm itself, to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 reassessment under section 34(1A) of the Act the registration of the firm would have to be ignored and the sum payable would be determined on the income of the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, while it provided justice only cases of those persons who are proceeded against under section 34(1) of the Act. The interpretation put by me on the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 ask the question, why are we now being dealt with by the discriminatory and drastic procedure of Act XXX of 1947 when those similarly situated as ourselves can be deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 counsel for the petitioner, was that in the case of a person proceeded against under this provisions of law, there was no period of limitation prescribed, whereas a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 or evaded income is limited to a maximum period of eight years, while under the provisions of sub-section (4) of section 5 of the Act XXX of 1947, it is not limited t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 challenged, as mentioned earlier by me, is that proceedings taken by the Income-tax Officer were of a judicial or quasi-judicial nature and the Income-tax Officer was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Government of Andhra Pradesh laying down the procedure for filing of objection and consideration of the scheme. There were also executive orders laying down the manner in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Government of Andhra Pradesh, that hearing was afforded by the secretary of the Transport Department who was held to be person with a bias. There was no further appeal or any fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 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 provisions limiting legislative power and controlling the temporary will of a majority by a permanent and paramount law settled by the deliberate wisdom of the nation that one can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in this petition, only one other point was mentioned by learned counsel for the petitioner before us. That point is raised in ground No. (g) of the writ petition and is to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed 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 the Secretary, Income-tax Investigation Commission, informing the petitioner that his case had been referred to the Income-tax Investigation Commissioner under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived 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 the Commission any case or point in a case in which the Central Government had prima facie reasons for believing that a person had, to a substantial exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation 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 Lordships decided the writ petition on October 21, 1954, and that decision is reported in the case of Shree Meenakshi Mills Ltd. v. A.V. Visvanatha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponded 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 to in clause (i), and thereupon the provisions of this Act, (excepting their contained in clauses (i) and (iii) of the proviso to sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 even where proceedings have been started by a notice under sub-section (1A) of section 34 and assessment of the income has been made thereunder, the determination of the tax will fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 his argument. The word accordingly here means suitably, properly or harmoniously. All the four words, concerning the meaning of which controversy was raised before us, are capable of bearing the meanings which are consistent with the intention of the Legislature. In holding that the impugned sub-section contains the power of determination of tax in itself and that determination of tax does not fall under section 23, I think ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainly 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 that there is a presumption of the constitutionality of an enactment. In the book Interpretation of Statutes by Maxwell there are passages at pages 236, 256, 326 and 352, of the 9th edition, conferring wide powers on the court in the matter of interpretation of statutes. But in interpreting on the present statute it does not appear to be necessary to call in aid any of those powers. In conclusion it may be stated that section 34(1) of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 then approved the scheme. The learned judges held by a majority that the proceedings were a quasi-judicial nature and the Secretary to Government had acted as a judge in his own cause. His decisions was, therefore, void. I think that the facts of the Supreme court case are clearly different from the facts of the case before us. There was a Road Transport Corporation in the State of Andhra Pradesh and the Secretary of the Transport Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax 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 the Income-tax Officer who was an interested party could not be validly empowered to take action and decide such cases. I have had the advantage of reading the opinions expressed by my learned brothers, Bhargava and Chaturvedi, JJ. Though I agree with their decisions relating to the second ground mentioned above I regret I am unable to agree with their views on the first ground. The facts of the case have been set out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 assessment were partly or wholly of the periods falling between September 1, 1939, and March 31, 1946, and (ii) that they amounted to one lakh of rupees or more. If the officer has reason to believe these two things the period of 8 years and 4 years mentioned in section 34(1) are not to be applicable and the Income-tax Officer may issue a notice containing all or any of the requirements of a notice under section 22(2) and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter 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 Income-tax Officer after receiving the evidence tendered under section 23(2) and taking such evidence as he himself may find necessary to require on specified points, shall by an order in writing assess the total income of the assessee and determine the sum payable by him on the basis of such assessment . The next sub-section empowers the Income-tax Officer to make an assessment to the best of his judgment in certain case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 notice issued under section 22(2). Section 23 of the Act, therefore, which is a provision relating to assessment is to apply to a case under section 34(1) and it is not only then that an appeal may be preferred against the assessment under section 30 to the Appellate Assistant Commissioner., Section 30 has no reference to an assessment under section 34(1) and among the persons who may prefer an appeal under section 30 is an assessee objecting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the income- tax Officer may proceed to assess the total income of the deceased person as if such executor, administrator or other legal representative were the assessee. Section 27 has no reference to section 34 and deals with cases where defaults have been committed in respect of a notice under section 22(1) or (2) or (4) or section 23(2) of the Act. When we come to section 28 we again find a reference to section 34. That section says: 28. (1) If the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 under section 34(1) may be treated as if it was issued under section 22(2). Had it been intended that a similar fiction should attach to a notice issued under section 34(1a) there appears to be nothing why the Legislature should have dropped the relevant phrase when enacting section 34(1A). Those provisions of the Act whose application has been expressly excepted may be considered. Clause (iii) of the proviso to sub-section (1) of section 34 provides that the Income-tax Officer shall not iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 based on principles of natural justice and should be followed in cases where the notice has been issued under section 34(1A). It may be that when making an assessment under section 34(1A) the procedure consistent with the principles of natural justice may have to be followed, but this is not the same thing as applying the provisions of the Income-tax Act to such proceedings. The section says that the provisions of the income-tax Act shall apply so far as may be. This, in my opinion, means so far as they m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 issued under section 34(1A). The fiction is restricted to a notice issued under section 34(1) and even if it be assumed that section 34(1) would apply the fiction cannot be torn away from its context and be made applicable to a notice issued under section 34(1A). Besides section 34(1) and 34(1A) are parallel provisions and I am unable to see how the main part of section 34(1) can be applied at all to section 34(1A). The three provisos and the explanation to section 34(1) deal with matters which may be said to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 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 requires to be done. The words assess and assessment have not been defined in the Act, but assessee was defined originally as a person by whom the tax was payable and the assessee now under section 2(2) means a person by whom income-tax or any other sum of money is payable under this Act and includes every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the loss sustained by him or of the amount of refund due to him. Lord Simon in his books on Income Tax, Volume 1, at page 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 accepted, it cannot be said that section 34(1A) would be infructuous or abortive or that the Income-tax Officer would have to stay his hands after determining the total income of the person to be assessed, as section 23 being inapplicable he may not determine the tax payable. The whole object of assessing the total income is to levy the tax. Section 3 says tax shall be charged on the total income . Section 29 says that when any tax is due in consequence of any order passed under or in pursuance of the Act the Income-tax Officer shall serve upon the assessee or other person liable to pay such tax a notice of demand in the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. So far as may be used in section 34(1A) means so far as the provisions as they stand can apply. The expression does not justify any amendment, adjustment or change in the provision sought to be applied so that it may suit the provisions of section 34(1A). In fact the same words so far as may be are used in section 34(1) where the Legislature found it necessary to expressly state that the notice issued is to be treated as a notice under section 22(2). The omission to expressly state this again in section 34(1A) has to be explained. The context shows that the omission was not merely to avoid repetition. Nor can it be said with any justification that express mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven 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. A learned judge of the Calcutta High Court also had an Occasion to consider the validity of section 34(1A) in Lakhi Prasad Shah v. Income-tax Officer, Central Circle Matter No. 14 of 1955 decided on August 12, 1955 (unreported). A copy of the judgment was made available by learned counsel for the Department. In that case also the validity of the section was not challenged on the ground on which it is assailed in the instant cases. These decisions, therefore, do not afford any guidance in the decision of the present applications. It has been argued that section 34(1A) was introduced in the Income-tax Act because the Supreme Court had in its decisions held certain provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the provisions which were declared invalid by the Supreme Court. In any case, it is not possible to attribute to the Legislature the intention of providing the same procedure relating to assessment, appeals and references as has been prescribed for ordinary assessees under the Indian Income-tax Act or for assessees under section 34(1) of the Act, in view of the different language used in section 34 (1A). One of the arguments addressed by learned counsel for the Department was that the Legislature should not be credited with an improper intention to do injustice to persons proceeded against under section 34(1A), while the law provided justice to those cases who are dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Section 34(1A) has also been assailed on the ground that it provides a different period of limitation for this class of persons. As observed by my brother Bhargava, J., in respect of one year at least persons of the same class may be dealt with by the Income-tax Officer under section 34(1) of the Act. It is to my mind discriminatory to allow a larger period of limitation for the assessment of some persons who may be chosen to be dealt with under section 34(1A) even if it be in respect of one year of assessment. On this ground too, the provisions appear to offend article 14 of the Constitution. I must say that I have felt considerable hesitation in expressing my ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 involving considerable sums of money and yet an ordinary court has not been found to be a convenient forum for the settlement of such disputes and a large number of authorities and tribunals have sprung up to deal with these matters. It was competent for the Legislature to lay down that the imposition of the Income-tax payable should be made by an Income-tax Officer who should decide all relevant matters relating to such assessment. It may be noticed that provisions relating to appeals to the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal enable an assessee to get his matter heard by persons other than those who are responsible for the lev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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