Pre-Constitution tax recovery and settled liability: Article 14 cannot retrospectively invalidate completed proceedings, and no fresh assessment was required.

Pre-Constitution settlement, demand notice and recovery steps under the income-tax investigation scheme could not be invalidated under Article 14 because the Constitution does not operate retrospectively to unsettle proceedings already completed. Section 8A(2) was construed as a recovery provision enforcing a concluded settlement by applying the income-tax recovery machinery, not as requiring a fresh assessment before recovery. The provision authorised collection in accordance with the 1922 Act procedures once the liability had been settled. The Article 14 challenge therefore failed, and no fresh assessment was necessary before recovery.

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Issues: (i) Whether the demand notice and recovery proceedings, having been completed before the Constitution came into force, could be challenged as violating Article 14 of the Constitution of India; (ii) Whether section 8A(2) of the Taxation on Income (Investigation Commission) Act, 1947 required a fresh assessment before recovery could be made.

Issue (i): Whether the demand notice and recovery proceedings, having been completed before the Constitution came into force, could be challenged as violating Article 14 of the Constitution of India.

Analysis: The relevant settlement, the order under section 8A(2), and the notice of demand were all concluded before the Constitution came into force. The petitioner's later receipt claim was not accepted on the record. The Constitution does not operate retrospectively so as to invalidate proceedings already completed before its commencement. The earlier decisions relied on concerned discriminatory procedures continuing after the Constitution came into force and were therefore distinguishable.

Conclusion: The Article 14 challenge failed, and the pre-Constitution proceedings could not be invalidated.

Issue (ii): Whether section 8A(2) of the Taxation on Income (Investigation Commission) Act, 1947 required a fresh assessment before recovery could be made.

Analysis: Section 8A(2) was construed as a recovery provision for enforcing a concluded settlement. Its language directed the taking of appropriate proceedings under the Indian Income-tax Act, 1922 and made the recovery machinery applicable as if the amount were income-tax or arrears of income-tax. The provision did not contemplate a fresh assessment after acceptance of the settlement; it only authorised recovery in accordance with the income-tax recovery provisions.

Conclusion: No fresh assessment was required before recovery under section 8A(2).

Final Conclusion: The settlement and demand machinery were valid, the recovery proceedings were not unconstitutional, and the petition failed.

Ratio Decidendi: Where a settlement, demand notice, and consequential recovery steps under the income-tax investigation scheme are completed before the Constitution commences, Article 14 cannot retrospectively invalidate them; and a statutory recovery provision framed to enforce a settled tax liability does not imply a fresh assessment unless the text expressly so provides.

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