Discriminatory special tax procedure cannot continue once the same assessees are brought under the ordinary income-tax law.

Continued use of the special procedure under Section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947 became unconstitutional once Section 34(1-A) of the Indian Income-tax Act, 1922 brought the same class of assessees within the ordinary income-tax procedure. The Court held that the special treatment could survive only if the affected persons formed a distinct class justifying differential procedure; that basis disappeared after the amendment. Because pending proceedings had not been completed when the constitutional challenge arose, resort to the harsher special process for the same class of assessees was discriminatory and offended Article 14. Relief was granted to the assessees.

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Issues: Whether proceedings under Section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947 could continue after the insertion of Section 34(1-A) in the Indian Income-tax Act, 1922, when the amended provision covered the same class of assessees and the special procedure under the impugned Act became discriminatory under Article 14 of the Constitution of India.

Analysis: The special procedure under Section 5(1) of the Investigation Commission Act could be sustained only if the persons covered by it formed a distinct class justifying differential treatment. After the amendment of Section 34, the same class of persons, namely assessees who had substantially evaded tax during the relevant period, became amenable to proceedings under the ordinary income-tax law. The earlier basis for treating them differently therefore disappeared. Once the ordinary law and the special law operated on the same field against the same class, continued resort to the harsher procedure of the impugned Act amounted to discriminatory treatment prohibited by Article 14. The pending proceedings had not been completed before the constitutional challenge arose, so the discriminatory character of the procedure could be invoked against their continuance.

Conclusion: The continuance of proceedings under Section 5(1) of the Investigation Commission Act was unconstitutional and could not be sustained; relief was granted in favour of the assessees.

Ratio Decidendi: When a special procedure applies to a class of persons, but the legislature later brings the same class within the ordinary procedural law, continued resort to the special and more onerous procedure for pending matters becomes discriminatory and offends Article 14 of the Constitution of India.

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