1954 (10) TMI 5 - SC - Income Tax

Equality Before Law: amended tax provision assimilates the class into ordinary assessment, barring continuation of special investigatory procedure.

Amendment of the ordinary income-tax provision assimilated the previously separately treated class into the regular assessment regime by specifying the ... Article 14 - classification - discriminatory procedure - overlap of statutory fields - implied repeal by subsequent legislationArticle 14 - classification - overlap of statutory fields - discriminatory procedure - Whether, after the insertion of the new sub section in Section 34 of the Indian Income tax Act by the Indian Income tax (Amendment) Act, 1954, proceedings under Section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947, can be continued against the petitioners. - HELD THAT: - The Court held that the amended sub section in Section 34 brings within the ordinary Income tax procedure the same class of persons who were previously said to form a distinct class under Section 5(1) of the 1947 Act. The amendment makes definite what was previously expressed as persons who had 'to a substantial extent' evaded tax by prescribing the relevant period and a monetary threshold, thereby removing the distinctive characteristics which could have justified differential treatment. Two separate and incompatible procedures cannot operate on the same field: where the amended Section 34 now covers the territory previously occupied by Section 5(1), continuation of the special and more drastic procedure prescribed by the 1947 Act amounts to unjustified discrimination under Article 14. The Crown's arguments that the class was finally determined by the date for reference or that ongoing proceedings are immune from the amendment were rejected: temporal limitation of reference did not furnish a rational nexus for differential procedure, and proceedings pending but not completed do not justify continuing a discriminatory procedure after the amendment has equalised the class. Consequently, the protective classification which might have saved Section 5(1) from the mischief of Article 14 has been eliminated by the later statute and Section 5(1) can no longer be invoked to subject the petitioners to the special procedure of the 1947 Act.Proceedings under Section 5(1) of Act XXX of 1947 cannot be continued against the petitioners after the insertion of the new sub section in Section 34 of the Income tax Act; the Investigation Commission is prohibited from proceeding further against them under the 1947 Act.Final Conclusion: The Court directed that a writ issue restraining the Investigation Commission from proceeding further with the petitioners' cases under the Taxation on Income (Investigation Commission) Act, 1947, on the ground that the amended Section 34 of the Income tax Act now covers the same class and continuation of the 1947 Act's discriminatory procedure would violate Article 14; no order as to costs was made. Issues: Whether, after the coming into force of the Indian Income-tax (Amendment) Act, 1954 (which inserted a new sub-section in Section 34 of the Income-tax Act covering the same class of persons), the provisions of Section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947 can continue to be applied so as to permit the Commission to proceed against the petitioners under the special procedure of Act XXX of 1947.Analysis: The amended Section 34 brings within the ordinary Income-tax assessment procedure the class of persons previously dealt with under Section 5(1) of Act XXX of 1947 by specifying the relevant period and a monetary threshold, thereby removing the distinctive characteristics that were relied upon to justify differential procedural treatment. Where two enactments operate on the same field and the later statute covers the same class of persons and procedures, the basis for continuing a special, more prejudicial procedure under the earlier enactment is removed. Proceedings under the special procedure of the earlier Act, if continued after the amendment eliminates the distinguishing classification, become discriminatory in the sense prohibited by Article 14 and cannot be continued against persons who now fall within the scope of the amended ordinary law.Conclusion: The petitioners are entitled to relief; proceedings before the Investigation Commission under Section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947 cannot be continued against them in view of the enactment of the Indian Income-tax (Amendment) Act, 1954 which brings the same class of persons within amended Section 34 of the Income-tax Act, and an appropriate writ prohibiting further proceedings under Act XXX of 1947 should be issued in their favour.