TMI Blog1955 (12) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... s or category of substantial evaders of income-tax could have complained against the same. Section 5(1) of the Travancore Act XIV of 1124 which has to be read for this purpose in juxtaposition with section 47 of the Travancore Act XXIII of 1121 cannot be held to be discriminatory and violative of the fundamental right guaranteed under article 14 of the Constitution. The proceedings which took place in the course of investigation by the Commission up to the 26th January, 1950, were valid and so also were the proceedings during the course of investigation which took place after the inauguration of the Constitution on the 26th January, 1950, under which the petitioner, as a citizen of our Sovereign Democratic Republic acquired inter alia guarantee of the fundamental right under article 14 of the Constitution. Appeal dismissed. - C.A. 21 OF 1954 - - - Dated:- 20-12-1955 - Judge(s) : BHAGWATI., DAS., JAGANNADHADAS., SINHA., VIVIAN BOSE JUDGMENT The judgment of the Court was delivered by BHAGWATI, J.--These two appeals with certificates under article 133 of the Constitution are directed against a judgment of the High Court of Travancore-Cochin in a writ petition file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Cochin Administration and Application of Laws Ordinance, 1124 (Ordinance I was enacted later as Act VI of 1125), all existing laws of Travancore were to continue in force till altered, amended or repealed by competent-authority. The existing law of Travancore was defined to mean any law in force in the State of Travancore immediately prior to the 1st July, 1949. On the 26th July, 1949, a notification was published in the Travancore-Cochin Government Gazette whereby, in exercise of the powers conferred by section 1(3) of the Travancore Taxation on Income (Investigation Commission) Act XIV of 1124 as continued in force by the United State of Travancore and Cochin Administration and Application of Laws Ordinance, 11 24 (I of 1124), the Government appointed the 7th Karkadakom, 1124 (22nd July, 1949), to be the date on which the said Act was to have come into force. On the 26th November, 1949, the Government of the United State of Travancore and Cochin issued orders under section 5(1) of the Travancore Act XIV of 1124 referring the cases of the petitioner for the years 1942 and 1943 for investigation by the Travancore Income-tax Investigation Commission. These orders had spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing Act XXXI-II of 1950, was passed by Parliament extending to Travancore-Cochin the Taxation on Income (Investigation Commission) Act, 1947 (XXX of 1942), and section 3 of that Act provided that the law of Travancore corresponding to the Taxation on Income (Investigation Commission) Act, 1947 (XXX of 1947), shall continue to remain in force with the following modifications, viz., (a) that all cases referred to or pending before the State Commission (by whatever name called) in respect of matters relating to taxation on income other than agricultural income shall stand transferred to the Central Commission for disposal ; and (b) that the State law shall, so far as may be, apply to determine the procedure that may be followed and powers that may be exercised by the Central Commission in the disposal of cases transferred under clause (a). The Travancore Commission had been appointed in the first instance to act up to the last day of Karkadakom, 1125 (16th August, 1950). Neither the Travancore Commission nor the Indian Commission to which the pending cases before the Travancore Commission were transferred as aforesaid made any report on these cases of the petitioner befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the latter replied by his letter dated the 13th March, 1952, stating that he proposed to consider income for the full investigation period, viz., from 1940 to the last completed assessment year. The petitioner thereupon filed on the 6th May, 1952, a writ petition in the High Court of Travancore-Cochin, being O. P. No. 41 of 1952 against respondent 1 as also the Indian Income-tax Investigation Commission, hereinafter called respondent 2, for a writ of prohibition or any other appropriate wait or direction prohibiting the respondents from holding any enquiry into the cases registered as Evasion Cases Nos. 1 and 2 of 1125 on the file of the Income-tax Investigation Commission of Travancore or from holding any investigation into the income of the petitioner from 1940 to the last completed assessment year or for any other period. Respondent 1 filed a counter-affidavit in which it was inter alia submitted : " that the Commission by these proceedings is not trying to clutch at non-existent jurisdiction. They are fully prepared to shape their proceedings in accordance with the directions of this Hon'ble Court." This affidavit was stated to have been filed as the answer of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with the directions of the Court. The learned Advocate-General of Travancore-Cochin, however, urged before the High Court that the Court was not competent to entertain the petition in view of the fact that respondent 2 was not amenable to its jurisdiction and the argument was that as respondent 2 functioned outside the State of Travancore-Cochin and respondent 1 was a mere subordinate of respondent 2, it was beyond the competence of the High Court to grant the prayer embodied in the petition. The High Court overruled the objection observing that respondent 1 was resident with in the State of Travancore-Cochin, his office was situated at Trivandrum, all his communications to the petitioner had emanated from within the State and the activities complained about were activities confined to the State. It was of the opinion that the prayer in the petition was, in essence, a prayer to paralyse the hands of respondent 1 and thus prevent the mischief and that, by his residence and the location of his office within the State, respondent 1 was clearly amenable to the jurisdiction of the Court under article 226 of the Constitution. It was further of opinion that the writ against respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be exercised 'throughout the territories in relation to which it exercises jurisdiction', that is to say, the writs issued by the court cannot run beyond the territories subject to its jurisdiction. Secondly, the person or authority to whom the High Court is empowered to issue such writs must be 'within those territories', which clearly implies that they must be amenable to its jurisdiction either by residence or location within those territories. " The learned Chief Justice then traced the origin and development of the power to issue prerogative writs as a special remedy in England and observed at page 1151 : " These writs were thus specifically directed to the persons or authorities against whom redress was sought and were made returnable in the court issuing them and, in case of disobedience, were enforceable by attachment for contempt. These characteristics of the special form of remedy rendered it necessary for its effective use that the persons or authorities to whom the court was asked to issue these writs should be within the limits of its territorial jurisdiction. " The mere functioning of the tribunal or authority permanently located and normally carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner that, in the affidavit filed by the respondents, both the respondents had submitted that they were fully prepared to shape their proceedings in accordance with the directions of the Court. This, it was submitted, was a voluntary submission to the jurisdiction of the High Court investing the High Court with jurisdiction to issue the appropriate writ against respondent 2. We need not, however, express any opinion on this point because no writ was in fact issued by the High Court against respondent 2 nor was any appeal filed by the petitioner against that part of the decision of the High Court. The real question, however, is whether a writ could issue against respondent 1 who is, it was submitted, a mere arm of respondent 2 and a writ against whom would be equivalent to a writ issued by the High Court against respondent 2 which it had no jurisdiction to do. An authorised official derives his appointment from the Commission under section 6 of the Travancore Act XIV of 1124. Section 6(4) of the Act provides that if in the course of any investigation conducted by the Commission it appears to the Commission to be necessary to examine any accounts or documents or to interrog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant functions to discharge and is not merely a mouth-piece of the Commission or a conduit-pipe transmitting the orders or the directions of the Commission. He is no doubt under the general control and supervision of the Commission but he performs the various functions assigned to him on his own initiative and in the exercise of his discretion. If, therefore, he does anything in the discharge of his functions as authorised official which is not authorised by law or is violative of the fundamental rights of the petitioner, he would be amenable to the jurisdiction of the High Court under article 226. Even though this is the Prima facie position, it was urged that he is acting under the directions of the Commission as its authorised agent and as such no writ can issue against him, because the principal who directs the activities and not the agent would be liable for the same. This contention is unsound. There can be no agency in the matter of the commission of a wrong. The wrongdoer would certainly be liable to be dealt with as the party directly responsible for his wrongful action. The relationship between principal and agent would only be relevant for the purpose of determining w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in law, it would not lie in the mouth of the Commission to urge that the High Court could not issue a writ of prohibition against its agent, the authorised official, who had his residence or permanent location within the territories merely because it would be indirectly prohibited from perpetrating a wrong within the territories. The principal could, in no event, urge that his agent should be allowed to function for him within the territories in a manner which was not warranted by law or had no justification in law. It is expected that once this Court has declared the law the Investigation Commission would comply with it and not place its agent in the wrong by directing him to act contrary to the law so declared. Our attention was drawn by the learned Attorney-General in this connection to three recent decisions of the High Courts of Allahabad, Nagpur and Pepsu which, according to him, supported his contention, viz., Azmat Ullah v. Custodian, Evacuee Property, U. P., Lucknow, Burhanpur National Textile Workers Union, Burhanpur v. Labour Appellate Tribunal of India at Bombay and Others, and Joginder Singh Waryam Singh v. Director, Rural Rehabilitation, Pepsu, Patiala, and Othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but also the other years from 1940 to the last completed assessment year. The decision of this question turns on a construction of the terms of the references made by the Government of the United State of Travancore and Cochin under section 5(1) of the Travancore Act XIV of 1124. A report dated the 17th November, 1949, had been made by the Board of Revenue in regard to the income-tax assessment of the petitioner for the years 1119 and 1120 (M.E.) and two orders were passed on the 26th November, 1949, by the Government on the strength of that report. The first of these orders related to taxation on the petitioner's income for 1119 and the second related to the taxation on his income for 1120. The return of income for the year ending the 31st December, 1942, was the subject-matter of the first order and after setting out the materials in the order the Government stated that they had prima facie reasons for believing that the petitioner had to a substantial extent evaded payment of tax in his income for 1119 and they considered that this was a fit case for reference to the Income-tax Investigation Commission under section 5(1) of the Act. The second order referred to the petitioner's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bly suspected to have evaded the tax and, therefore, the whole case of the petitioner for all the years referred to in section 8(2) of the Act was the subject-matter of the investigation which had been entrusted to the Commission. We are unable to accept this contention. Under section 5(1) the Government could refer any case or points in a case. There is nothing in that sub-section which requires that a " case " referred thereunder must cover the entire period mentioned in section 8(2). Indeed, the Government might have reason to believe that an assessee evaded the tax only in, say, two years and not in others and in such a case the Government could only refer the case for investigation of evasion during those two years only but could not refer any case for other years as to which they had no reasonable belief. Therefore, in such a situation the reference must be limited to the particular years in which the evasion was believed to have taken place. It makes no difference whether one calls the matter referred a " case " or " points in a case ". It follows, therefore, that, in order to ascertain whether, in a given case, the reference covers the entire period or only a shorter per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invalid to the extent that it authorised investigation otherwise than in accordance with the Travancore law ; (5) Assuming all the foregoing points were held against the petitioner section 5(1) of the Travancore Act XIV of 1124 was in any event unconstitutional and void as being inconsistent with article 14 of the Constitution. Re. (1) : The Travancore Act XIV of 1124 was passed by the Travancore Legislature on the 7th March, 1 949. It was, however, under section 1(3), to come into force on such date as the Travancore Government might by notification in the Government Gazette appoint. No such notification was issued by the Travancore Government up to the 1st July, 1949, when the Travancore State and the Cochin State integrated into the United State of Travancore and Cochin. On the 1st July, 1949, the United State of Travancore and Cochin promulgated Ordinance I of 1124 whereby all existing laws of Travancore were continued in force till altered, amended or repealed by competent authority and the " existing law of Travancore " was therein defined to mean any law in force in the State of Travancore immediately prior to the 1st July, 1949. It was only on the 26th July, 1949, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under that very section ? There must be some law authorising the Government to bring the Act into force. Where is that law to be found unless it were in section 1(3) ? In answer, Shri Nambiyar referred us to the principle embodied in section 37 of the English Interpretation Act which corresponds to section 22 of our General Clauses Act. That section does not help the petitioner at all. All that it does is to authorise the making of rules or bye-laws and the issuing of orders between the passing and the commencement of the enactment but the last sentence of the section clearly says that " rules, bye-laws or orders so made or issued shall not take effect till the commencement of the Act or Regulation." Suppose Shri Nambiyar is right in saying that the Government could issue a notification under section 1(3) by virtue of the principle embodied in section 22 of the General Clauses Act, it will not take his argument an inch forward, for that notification, by reason of the last sentence of section 22 quoted above, will not take effect till the commencement of the Act. It will bring about a stalemate. it is, therefore, clear that a notification bringing an Act into force is not conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the notification itself is not retrospective. It only brings the Act into operation on and from an earlier date. In any case it was in terms authorised to issue the notification bringing the Act into force on any date subsequent to the passing of the Act and that is all that the Government did. In this view of the matter, the further argument advanced by the learned Attorney-General and which found favour with the Court below, namely, that the notification was at any rate good to bring the Act into operation as on and from the date of its issue need not be considered. There is no substance in this contention also. Re. (3) : It was urged that, even if the Travancore Act XIV of 1124 was in force on the 1st July, 1949, and was validly brought into operation from the 22nd July, 1949, the terms of section 8(2) of the Act could not apply to or override the assessment orders of the petitioner for the years 1942 and 1943 which were concluded by the Chief Revenue Authority of Travancore. Section 8(2) of the Act provided that, after considering the report of the Commission, the Government shall, by an order in writing, direct that such proceedings as they think fit under the vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich might be passed by the Government under section 8(2) of the Act. This contention of the petitioner also, therefore, does not avail him. Re. (4): The Indian States Finance Enquiry Committee 1948-49 made two interim reports. It recommended in the first interim report that subject to certain limitations indicated therein which were designed to secure legal " continuity " of pending proceedings and " finality and validity " of completed proceedings under the pre-existing State legislation, the whole body of State legislation, relating to " federal " subjects should be repealed and the corresponding body of Central legislation extended proprio vigore to the States with effect from the prescribed date or as and when the administration of particular " federal " subjects was assumed by the Centre. All matters and proceedings, pending under or arising out of pre-existing States Acts should be disposed of under those Acts by, so far as may be, the " corresponding authorities " under the corresponding Indian Acts. The income, profits and gains accruing and arising in States of all periods which were " previous years " of the States' assessment years 1949-50 or earlier should be assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Chief Revenue Authority, Travancore, in cases of the petitioner for the years 1942 and 1943. In regard to the first question, it was urged by Shri Naimbiyar that the life of the Travancore Commission having come to an end on the 16th August, 1950, respondent 2 also, which was its successor and to which the pending cases of the petitioner were transferred, could not function beyond 16th August, 1950. Parliament, however, passed, on the 26th August, 1951, Act XLIV of 1951, amending Act XXXIII of 1950 whereby it provided with retrospective effect that, in the disposal of cases transferred to respondent 2, it shall have and exercise the same powers as it has and exercises in the investigation of cases transferred to it under Act XXX of 1947 and shall be entitled to act for the same term as under sub-section (3) of section 4 of that Act thus extending the life of respondent 2 beyond 16th August, 1950. This, it was submitted, Parliament was not competent to do by reason of the terms of the agreement dated the 25th February, 1950, the effect of the enactment of Act XLIV of 1951 being to amend the law of the Travancore State which was to govern the investigation of pending cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the meaning of the term as used in section 8(2) of the Travancore Act XIV of 1124 read with section 10 of that Act which continued in force the provisions of the Travancore Act VIII of 1096 so far as it was necessary for the purpose of the Act. There also Act XLIV of 1951 did not make any changes in the existing Travancore law which was to govern the investigation of the pending cases by respondent 2. This contention of the petitioner, therefore, is equally untenable. Re. (5) : This contention urged by Shri Nambiyar questions the vires of section 5(1) of the Travancore Act XIV of 1124. This section provides : " Section 5(1) : Our Government may at any time before the last day of Makaram, 1125, refer to the Commission for investigation and report any case or points in a case in which our Government have prima facie reasons for believing that a person has to a substantial extent evaded payment of taxation on income, together with such material as may be available in support of such belief, and may at any time before the last day of Meenam, 1125, apply to the Commission for the withdrawal of any case or points in a case thus referred, and if the Commission approves of the with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 34(1) : If in consequence of definite information which has come into his possession the Income-tax Officer discovers that income, profits or gains chargeable to income-tax have escaped assessment in any year, or have been under-assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act the Income-tax Officer may, in any case in which he has reason to believe that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or, in the case of 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 re-assess such income, profits or gains, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section : ........... " Section 34 of the Indian Income-tax Act was amended by Act XLVIII of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned legislation having regard to the background and the surrounding circumstances so far as it may be necessary to do so in order to arrive at a conclusion whether it infringes the fundamental right in question. Section 5(1) of Act XXX of 1947 (which is in pari materia with section 5(1) of the Travancore Act XIV of 1124) was impugned in the case of Suraj Mall Mohta Co. v. A. V. Visvanatha Sastri and Another. The references for investigation in that case had been made in pursuance of a report made by the Commission to the Central Government under the provisions of section 5(4) of the Act requesting that the case of the petitioner along with other cases may be referred to the Commission for investigation. The contention urged on behalf of the petitioner was that the provisions of sections 5(1), 5(4), 6, 7 and 8 of Act XXX of 1947 had become void being discriminatory in character after the coming into force of the Constitution. The attack made against the provisions of section 5(1) of the Act was two-fold : " (1) That the section was not based on any valid classification; the word 'substantial', being vague and uncertain and having no fixed meaning, could furnish no b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aracteristics between persons who had been discovered as evaders of income-tax during an investigation conducted under section 5(1) of the Act and those who had been discovered by the Income-tax Officer to have evaded payment of income-tax. Both those kinds of persons had common properties and had common characteristics and therefore required equal treatment. The Court thus held that both section 34(1) of the Indian Income-tax Act and sub-section (4) of section 5 of the impugned Act dealt with persons who had similar characteristics and similar properties, the common characteristics being that they were persons who had not truly disclosed their income and had evaded payment of taxation on income. The Court then considered whether the procedure prescribed by Act XXX of 1947 for discovering the concealed profits of those who had evaded payment of taxation on their income was substantially different and prejudicial to the assessees than the procedure prescribed in the Indian Income-tax Act. After comparing the provisions of section 8 of Act XXX of 1947 and those of sections 31, 32 and 33 of the Indian income-tax Act, this Court came to the conclusion that there was material and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad evaded payment of tax in other words, what was seemingly indefinite within the meaning of the word " substantial " had been made definite and clear by enacting that no evasion below a sum of one lakh was within the meaning of that expression. The other criticism was that section 5(1) did not necessarily deal with the persons, who, during the war, had made huge profits and evaded payment of tax on them. Section 34(1-A) remedied this defect also. It clearly stated that it would operate on income made between the 1st September, 1939, and 31st March, 1946, tax on which had been evaded. Section 5(1) was again attacked in the case of Shree Meenakshi Mills Ltd. v. Sri A. V. Visvanatha Sastri and Another. This was a petition under article 32 of the Constitution filed on the 16th July, 1954, after the decision in Suraj Mall Mohta's case had been pronounced. Section 5(1) of the Act was attacked on the very same grounds which were mentioned in the judgment in Suraj Mall Mohta's case', but had not been dealt with by this Court it being considered sufficient to strike down section 5(4) of the Act without expressing any opinion on the vires of section 5(1). Even in this case, section 5(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were the subject-matter of a direct challenge therein. The ratio of these decisions is, however, helpful in the determination of the question that arises directly before us, viz., whether section 5(1) of the Act is discriminatory in its character and thus violative of the fundamental right guaranteed under article 14 of the Constitution. In both these cases this Court was of the opinion that the procedure for investigation prescribed by Act XXX of 1947 (corresponding with the Travancore Act XIV of 1124) was of a summary and drastic nature and constituted a departure from the ordinary law of procedure and in certain aspects was detrimental to persons subjected to it as compared with the procedure prescribed by the corresponding provisions of the Indian Income-tax Act (corresponding to the Travancore Act XXIII of 1121) and was as such discriminatory. The provisions of sections 5(4) and 5(1) of the Act were compared respectively with the provisions of section 34(1) and section 34(1-A) of the Indian Income-tax Act and, on a comparison of these provisions, this Court came to the conclusion that the classes of persons who were said to have been classified for special treatment by those r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omes section 8(2) which authorises the Government after perusal of the report of the Commission to direct proceedings to be taken against the person to whose case the report relates in respect of the income of any period commencing after the 16th August, 1939. This provision clearly evinces that the intention of the legislative authority is to catch the income evaded from after the 16th August, 1939. Section 5(1) also provides that the reference thereunder of a case must be made at any time before the 16th February, 1950. From these sections it will appear that the object of this law was to uncover the evasion of tax on income made after the 16th August, 1939, and before the 16th February, 1950, about the existence of which evasion the Government had Prima facie reason to believe. The question at once arises as to why it was that the legislative authority took the view that there were possible cases of tax evasion. It has been said that although the statement of the objects and reasons appended to a bill is not admissible as an aid to the construction of the Act as passed, yet it may be referred to only for the limited purpose of ascertaining the conditions prevailing at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " One of the primary meanings of the word is equivalent to considerable, solid, or big. It is in this sense that we speak of a substantial fortune, a substantial meal I a substantial man, a substantial argument or ground of defence. Applying the word in this sense, it must be left to the discretion of the judge of fact to decide as best he can according to the circumstances in each case ............... ", and it has been described at page 2902 of Stroud's Judicial Dictionary to be " equivalent to considerable, solid or big. " Even though the word " substantial " by itself might not afford a definite measure or yard-stick for including particular individuals within the classification, the background and the circumstances mentioned in the aforesaid affidavit of Gauri Shanker indicate with reasonable certainty the class of persons who are intended to be subjected to this drastic procedure. It does not require much effort to pick out persons who would fall within this group or category of substantial evaders of income-tax and even though a definite amount be not specified in section 5(1) of the Act as constituting a substantial evasion of income-tax the Government, to whom the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e upon a body of administrators or officers to make selective application of the law to certain classes or groups of persons, the statute itself cannot be condemned as a piece of discriminatory legislation. After all 'the law does all that is needed when it does all that it can, indicates a policy ... and seeks to bring within the lines all similarly situated so far as its means allow' (Vide Buck v. Bell). In such cases, the power given to the executive body would import a duty on it to classify the subject-matter of legislation in accordance with, the objective indicated in the statute. The discretion that is conferred on official agencies in such circumstances is not an unguided discretion ; it has to be exercised in conformity with the policy to effectuate which the direction is given and it is in relation to that objective that the propriety of the classification would have to be tested. If the administrative body proceeds to classify persons or things on a basis which has no rational relation to the objective of the legislature, its action can certainly be annulled as offending against the equal protection clause. On the other hand, if the statute itself does not disclose a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date would be treated under the procedure laid down in the Travancore Act XIV of 1124 whereas those whose cases have not been referred by that date would not be subjected to the same treatment even though they fell within the same category. This would bring about a discrimination between the same class of persons some of whom would be subjected to that special treatment and others who would escape the same. Section 5(4) of the Act also would not cure this defect because the cases contemplated therein are either the cases which have been, already referred for investigation to the Commission under section 5(1) of the Act or cases of other persons about whose alleged evasion of income-tax the Commission has gathered information during the course of their investigations. Even if these other persons be thus subjected to the special procedure prescribed in the Act there would remain, outside the jurisdiction of the Commission, numbers of persons whose cases are not covered by section 5(1) or 5(4) but who none the less are comprised within the class of substantial evaders of income-tax. They would have to be dealt with under the ordinary law and presumably under section 47 of the Travanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discovered or referred to the Commission on or before that date although they were otherwise similarly situated. Reliance was placed in support of this position on the following passage from the judgment of Mahajan, C. J., in Shree Meenakshi Mills case, at page 719 : " Assuming that evasion of tax to a substantial amount could form a basis of classification at all for imposing a drastic procedure on that class, the inclusion of only such of them whose cases had been referred before 1st September, 1948, into a class for being dealt with by the drastic procedure, leaving other tax evaders to be dealt with under the ordinary law will be a clear discrimination for the reference of the case within a particular time has no special or rational nexus with the necessity for drastic procedure. " These observations were made to repel the first argument of the learned Attorney-General that the class of substantial evaders who fall within section 5(1) were only those whose cases had been referred within the date fixed. It was pointed out that if the class was so circumscribed then that by itself would make the classification discriminatory by leaving out those substantial evaders whose ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer had reason to believe that-- (a) the assessee had concealed the particulars of his income, or (b) deliberately furnished inaccurate particulars thereof. It is, therefore, abundantly clear that section 47(1) of the Travancore Act XXIII of 1121 was directed only against those persons concerning whom definite information came into the possession of the Income-tax Officer and in consequence of which the Income-Officer discovered that the income of those persons had escaped or been under assessed or assessed at too low a rate or had been the subject of excessive relief. The class of persons envisaged by section 47(1) was a definite class about which there was definite information leading to discovery within 8 years or 4 years as the case may be of definite item or items of income which had escaped assessment. The Travancore Act, XXIII of 1121 was passed on the 9th July, 1946. The action to be taken under it was not confined to escapement from assessment of income made during the war period (September, 1939, to 1946). Action could be taken in respect of income which escaped assessment even before the war and also more than 8 years after the end of the war. Tur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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