Unconstitutional tax investigation cannot support settlement, and article 14 protection against discrimination cannot be waived.

A settlement recorded under section 8A of the Taxation on Income (Investigation Commission) Act, 1947 was treated as inseparable from an investigation under section 5(1) that had already been found discriminatory and unconstitutional. Because the settlement and recovery proceedings rested on that invalid investigative foundation, they could not be sustained. The article 14 protection was also held incapable of waiver: equality before law is a constitutional mandate directed to the State, and consent given under an unconstitutional procedure does not validate discriminatory action. The settlement was therefore unenforceable, the waiver plea failed, and enforcement based on the settlement was quashed.

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Issues: (i) whether a settlement recorded under section 8A of the Taxation on Income (Investigation Commission) Act, 1947 could survive when the investigation under section 5(1) was held to be discriminatory and unconstitutional; (ii) whether the assessee could be held to have waived the protection of article 14 of the Constitution of India.

Issue (i): whether a settlement recorded under section 8A of the Taxation on Income (Investigation Commission) Act, 1947 could survive when the investigation under section 5(1) was held to be discriminatory and unconstitutional.

Analysis: The settlement procedure under section 8A was treated as part of the same investigation machinery and not as an independent or severable jurisdiction. The case had been referred under section 5(1), and the Commission continued to act under the discriminatory procedure after the Constitution came into force. The report leading to settlement was thus the product of a procedure already held to offend article 14. Once the substantive foundation of the reference and investigation was unconstitutional, the superstructure of the settlement and the consequential recovery proceedings could not be sustained.

Conclusion: The settlement under section 8A was invalid and unenforceable.

Issue (ii): whether the assessee could be held to have waived the protection of article 14 of the Constitution of India.

Analysis: Article 14 was treated as a constitutional mandate to the State, securing equality before law and equal protection of laws. The Court held that such a mandate, founded in public policy and directed to the State, cannot be relinquished by a citizen so as to validate discriminatory State action. The materials did not establish an intentional and informed relinquishment of a known constitutional protection, and in any event the right under article 14 was not one that could be waived. Consent given under the pressure of an unconstitutional procedure did not confer validity on the proceedings.

Conclusion: The protection of article 14 could not be waived and the plea of waiver failed.

Final Conclusion: The impugned order and the recovery proceedings based on the settlement were quashed, and the assessee obtained complete relief against enforcement of the settlement.

Ratio Decidendi: A settlement reached through a procedure that is itself unconstitutional cannot be sustained, and the equality guarantee in article 14, being a constitutional command addressed to the State, cannot be waived by the individual affected by it.

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