Anti-evasion acquisition provisions upheld as reasonable property restrictions and validly ancillary to Parliament's taxing power.

Chapter XX-A of the Income-tax Act, 1961 was upheld as a valid anti-evasion measure. The Court held that restrictions on the right to property were reasonable because the provisions were aimed at curbing tax evasion and black money, and they furthered the policy in Articles 39(b) and 39(c) by preventing concentration of wealth and promoting a better distribution of material resources. Applying the pith and substance test, it also held that the acquisition machinery was ancillary to Parliament's taxing power under Entry 82 of List I, so the amendment was within legislative competence. The constitutional challenge therefore failed.

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Issues: (i) Whether Chapter XX-A of the Income-tax Act, 1961, as introduced by the Taxation Laws (Amendment) Act, 1972, infringed the right to acquire, hold and dispose of property and was therefore unconstitutional under Articles 19 and 31 of the Constitution; (ii) Whether Parliament lacked legislative competence to enact Chapter XX-A under Entry 82 of List I of the Seventh Schedule.

Issue (i): Whether Chapter XX-A of the Income-tax Act, 1961, as introduced by the Taxation Laws (Amendment) Act, 1972, infringed the right to acquire, hold and dispose of property and was therefore unconstitutional under Articles 19 and 31 of the Constitution.

Analysis: The provisions were examined in the light of Article 19(1)(f) and the saving clause in Article 19(5), together with Articles 31(2), 31(5)(b)(i) and 31-C. The Court held that the right to property is subject to reasonable restrictions in the interests of the general public, and that legislation intended to curb tax evasion and black money could not be treated as an unreasonable restriction. It further held that the impugned provisions advanced the policy reflected in Article 39(b) and 39(c), because they were designed to prevent concentration of wealth and to secure a better distribution of material resources in the common good.

Conclusion: The challenge under Articles 19 and 31 failed, and Chapter XX-A was held constitutionally valid on that ground.

Issue (ii): Whether Parliament lacked legislative competence to enact Chapter XX-A under Entry 82 of List I of the Seventh Schedule.

Analysis: Applying the pith and substance approach, the Court held that the Income-tax Act is a law within Entry 82 and that the impugned acquisition machinery was ancillary to the power to levy and effectively administer income-tax. The provisions for compulsory acquisition at stated consideration, with an additional amount, were treated as supplementary measures to curb evasion of tax and were not held to be outside the legislative field. The Court therefore rejected the contention that the amendment was beyond Parliament's competence.

Conclusion: Parliament had legislative competence to enact the impugned provisions, and the challenge under Entry 82 failed.

Final Conclusion: The constitutional challenge to Chapter XX-A failed in full, and the writ petition was dismissed.

Ratio Decidendi: Legislation enacted to curb tax evasion and black money may constitute a reasonable restriction on property rights and, when ancillary to a valid taxing entry, may be upheld if it also furthers the directive principles against concentration of wealth and unequal distribution of material resources.

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