Article 14 discrimination barred continuation of special tax proceedings where ordinary reassessment remained available.

Proceedings under the special machinery of the Taxation on Income (Investigation Commission) Act, 1947 were found discriminatory where similarly situated assessees could also be proceeded against under amended section 34 of the Income-tax Act, 1922. Because the special procedure treated the Commission's findings as final, allowed no ordinary appeal, and materially curtailed the assessee's rights without a relevant basis for differentiation, its continuation offended Article 14 of the Constitution. The High Court therefore issued a writ of prohibition restraining the Income-tax Officer from continuing the proceedings.

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Issues: Whether proceedings initiated against the petitioners under section 8 of the Taxation on Income (Investigation Commission) Act, 1947, could continue when similarly situated assessees could be proceeded against under the amended section 34 of the Income-tax Act, 1922, and whether such continuation offended Article 14 of the Constitution of India.

Analysis: The petitioners were being proceeded against under the special machinery of the Taxation on Income (Investigation Commission) Act, 1947, after the Commission had recorded findings and submitted its report, while the Income-tax Officer was still treating the matter as one arising from those directions. Under that special procedure, the Commission's findings were to be treated as final, there was no ordinary appeal, and the assessee's rights were materially curtailed. At the same time, persons similarly placed could also be proceeded against under the amended section 34 of the Income-tax Act, 1922, which remained available on the facts of the case. The differential treatment, in the absence of any relevant distinction, amounted to unequal treatment and attracted the principle of Article 14.

Conclusion: The proceedings were held to be hit by Article 14, and a writ of prohibition was issued restraining the Income-tax Officer from continuing with the proceedings.

Final Conclusion: The petition succeeded, and the Court protected the petitioners from continuation of the impugned special-tax proceedings as discriminatory in comparison with the ordinary reassessment route.

Ratio Decidendi: Where persons similarly situated are exposed to two different procedures for the same tax liability, and one procedure materially curtails the assessee's rights without a relevant basis for differentiation, continuation of that special procedure violates Article 14 and may be restrained by writ.

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