TaxTMI 
TaxTMI 
1964 (2) TMI 6
X X X X Extracts X X X X
X X X X Extracts X X X X
....was provided to the Government. Rule 17 of the Tax Rules further provided that the power of making rules was vested in the Government and such power shall, except on the first occasion of exercise thereof, be subject to the condition of previous publication. Rule 18 provided that rules made under section 17 shall be published in the State Gazette and thereafter shall have the force of law. Rule 19 provided that the Member-in-charge of Commerce and Industry Department shall have power to make subsidiary rules not inconsistent with the Tax Rules. On May 28, 1948, the Holkar State merged to form the State of Madhya Bharat. On July 19, 1948, the State of Madhya Bharat acceded to India. Ordinance No. 1 of 1948 was promulgated by the Rajpramukh of the new State of Madhya Bharat to provide for the peace and good government of the State. This Ordinance was superseded by Act 1 of 1948 which came into force on December 13, 1948. Section 4 of the Act provided for the continuance of the existing laws of any covenanting States or of any State which merged in the State of Madhya Bharat until repealed or amended under the provisions of the Act. Section 5 of the Act provided that the Government ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he purpose of levy, assessment and collection of income-tax and super-tax in respect of any period not included in the previous year for the purpose of assessment under the Indian Income-tax Act, 1922 (XI of 1922), for the year ending on March 31, 1951, or for any subsequent year or, as the case may be, the levy, assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before March 31, 1949. The effect of this was that the Tax Rules came to be repealed from after the accounting year ending on March 31, 1949, and assessment could only be made under the Tax Rules up to the end of the accounting period ending on or before March 31, 1949. A further provision was also made in the Finance Act, 1950, that any reference in any such law to an officer, authority, tribunal or court shall be construed as a reference to the corresponding officer, authority, tribunal or court appointed or constituted under the Income-tax Act. The result of this provision was that even the assessments for the years previous to the accounting year ending on March 31, 1949, could only be made by the corresponding authorities under the Income-tax Act, and the appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sions in the Finance Act by which such assessments should thereafter have been made by the corresponding authorities under the Indian Income-tax Act, and that is why the Validating Act had to be passed. The appellant challenged the validity of the assessments made against it under the Tax Rules by a writ petition filed in the Madhya Bharat High Court in 1955, on the following grounds : (1) The amendments of the Tax Rules on December 28, 1949, were invalid as such amendments could not be made under rule 17 of the Tax Rules, as was purported to be done. (2) Even if the amendments made on December 28, 1949, were good they could not have retrospective effect and could not take away the vested right of appeal. (3) As after the Finance Act, 1950, assessments were made by the old officers appointed under the Tax Rules and not by the corresponding officers under the Indian Income-tax Act, the assessments were invalid and the Validating Act could not validate them (firstly) because the Validating Act itself was discriminatory and was hit by article 14 and (secondly) because in any case it did not apply to the present assessments. The High Court repelled all the contentions raised ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ite of the wrong words used in the opening part of the notification of December 28, 1949. It is well settled that merely a wrong reference to the power under which certain actions are taken by Government would not per se vitiate the actions done if they can be justified under some other power under which the Government could lawfully do these acts. It is quite clear that the Government had the power under section 5(1) and (3) of Act 1 of 1948 to amend the Tax Rules, for that was a law in force in one of the merged States. The only mistake that the Government made was that in the opening part of the notification section 5 of the Act was not referred to and the notification did not specify that the Government was making a regulation under Act 1 of 1948. But that in our opinion would make no difference to the validity of the amendments, if the amendments could be validly made under section 5 of Act 1 of 1948. It is not disputed that the amendments could be validly made under section 5 of Act 1 of 1948. We are therefore of opinion that the mere mistake in the opening part of the notification in reciting the wrong source of power does not affect the validity of the amendments made. It i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be made, it seems to us that even if the new rule cannot be read as an express provision taking away the right of second appeal on facts, it must in the circumstances be held that it does take away that right by necessary intendment. The new rule provided for a second appeal like the old rule but confined it to a question of law. The necessary implication of the new rule, therefore, was that though a second appeal will continue to lie as before its scope was cut down only to questions of law. We are, therefore, of opinion that though the right of second appeal on facts is taken away by the new rule 13 inserted in the Tax Rules, such right is taken away by legislation by necessary intendment. In the circumstances we are of opinion that the right of second appeal after the amendment must be confined in all cases by necessary intendment to questions of law only. The contention under this head also fails. Re. (3). Coming now to the last point with respect to the Validating Act, we have not been able to understand how the Validating Act can be said to be discriminatory in nature. A Validating Act is passed only when certain things have been done which require validation. This is exa....