Dewan Bahadur Seth Gopal Das Mohta Vs.
The Union of India & ANR [1954] INSC 97 (21 October 1954)
MAHAJAN, MEHAR CHAND (CJ) DAS, SUDHI RANJAN
HASAN, GHULAM BHAGWATI, NATWARLAL H.
AIYYAR, T.L. VENKATARAMA
CITATION: 1955 AIR 1 1955 SCR (1) 773
CITATOR INFO :
R 1955 SC 257 (2) R 1959 SC 149 (16,30,51,52)
HO 1961 SC1457 (6)
ACT:
Constitution of India, Art. 32-Taxation on
Income (Investigation Commission) Act, 1947 (XXX of 1947) s. 5(1)Investigation
and Report by Commission in respect of profits made by assessee and tax payable
by him-Mutual settlement between assessee and Government-Petition under Art. 32Whether
competent.
HEADNOTE:
The petitioner, a business man, was alleged
to have made huge profits during the years of War and the Central Government
acting under s. 5(1) of the Taxation on Income (Investigation Commission) Act,
1947 (XXX of 1947) referred his case to the Investigation Commission for
investigation and report. During the pendency of the investigation the
petitioner's application for settlement under the provisions of s. 8-A of Act
XXX of 1947 was accepted by the Central Government and in pursuance thereof the
tax was made payable by installments and the claim for evaded income-tax was
thus finally settled be mutual agreement. When the installments in the sum of
Rs. 4 lacs odd still remained due the petitioner preferred the present petition
under Art. 32 of the Constitution alleging that the entire proceedings under
Act XXX of 1947, were illegal, ultra vires, void and unconstitutional, that the
Income-tax authorities were not competent to recover the amount. due from him
and that ss.
5, 6, 7 and 8 of the Act were ultra vires as
they infringed Arts. 14, 19(1) (f) and 31 of the Constitution.
Held, that the petition under Art. 32 was not
competent as whatever had already been paid or whatever was still recoverable
from the petitioner was being recovered. on the basis of the 99 774 settlement
between him and the Government. Article 32 is not intended for relief against
the voluntary actions of a person.
Suraj Mall Mohta Co. v. A. V. Visvanatha
Sastri (A.I.R. 1954 B.C. 545) referred to.
ORIGINAL JURISDICTION: Petition No. 315 of
1954. Petition under article 32 of the Constitution for enforcement of Fundamental
Rights.
H.J. Umrigar, Narain Andley, J. B. Dadachanji
and Rajinder Narain for the petitioner.
M. C. Setalvad, Attorney-General for India,
and C. K. Daphtary, Solicitor-General for India (G. N. Joshi, Porusa Mehta and
P. G. Gokle, with them) for the respondents.
1954. October 2 1. The Judgment of the Court
was delivered by MEHR CHAND MAHAJAN C.J.-The petitioner in this matter is a
resident of Akola in the State of Madhya Pradesh and carries on business in
various lines, i.e., oil mills, banking, money lending, etc. It is alleged that
during the war years he made huge profits but evaded payment of tax.
In the year 1948 the Central Government,
acting under section 5(1) of the Taxation on Income (Investigation Commission)
Act, 1947, referred his case to the Investigation Commission for investigation
and report, in respect of the profits made by him during the period commencing
with 1st of January, 1939, and ending on 31st of December, 1947. The
Commission, after investigation, reported on the 28th of February, 1951, that
the income of the petitioner concealed and withheld from taxation was in the
sum of Rs. 27,25,363 and the tax payable by him amounted to Rs. 18,44,949.
During the pendency of the investigation the
petitioner applied for settlement under the provisions of section 8-A of Act
XXX of 1947. This application was forwarded along with the report by the
Commission to the Central Government. In the settlement application the
applicant proposed that he was prepared to pay the sum of RE;. 18,44,949 as
under:
775 On or before 25-6-1951--Rs. 3,44,949 On
or before 25-3-1952-Rs. 5,00,000 On or before 25-3-1953--Rs. 5,00,0000 On or
before 25-3-1954--Rs. 5000,000 and that, he be given credit for a sum of Rs,
32,034-4.6 already paid by him, The Central Government accepted this proposal
and the claim for evaded income-tax was thus finally settled by mutual
agreement. The assessee, subsequently, asked for more time to pay these installments
and this was, also granted from time to time.
Commencing from 16th of July, 1951, ,and till
the 10th April, 1954. the petitioner paid a total sum of about Rs. 14,00,000
towards discharge of the liability voluntarily agreed to by him on account of
the tax evaded. A sum of Rs. 4,50,000 still remains due and is payable in installments
up to the 25th of March, 1955. By one of the terms of the settlement the
petitioner undertook not to transfer, mortgage, charge or alienate or encumber
in any manner whatsoever any of his movable or immovable properties, barring
stock-intrade of-the business, except with the permission of the Commissioner
of Income-tax and except for the purpose of the payment of the tax due under
the settlement.
In June, 1954, after the decision by this
Court of Suraj Mal Mohta v. A. V. Visvanatha Sastri and Another(1), the
petitioner preferred this petition under the provisions of article 32 of the
Constitution alleging that he had been advised that the entire proceedings
under the Act which had resulted in the imposition upon him of a liability of
Rs.
18,44,949 and in the payment already made of
an aggregate amount of Rs. 13,99,175 were wholly illegal, ultra vires, void and
unconstitutional and that the Income-tax authorities were not legally entitled
to recover the amount of Rs. 4,50,000 from him. In the grounds of the petition
it was stated that sections 5, 6, 7 and 8 of Act XXX of 1947 were invalid and
ultra vires in so far as they contravene the provisions of articles 14, 19(1)
(f) and 31 of the Constitution and that under the Act (1) A.I.R. 1954 S.C. 545.
776 there was no reasonable or equitable
basic for classification, and that the Act gave to the execrative unrestrained
and absolute right to pick and choose and to differentiate between the same
class of taxpayers. It was also alleged that the procedure prescribed by the
Act for discovering concealed profits was substantially different and was more
prejudicial to the assessees than the procedure prescribed under the Indian
Income-tax Act by section 34. In the concluding paragraph of the petition it was
prayed that an appropriate writ or direction be issued quashing the entire
proceedings, and all orders passed under the Act by the Central Government and
the respondent Commission, and restraining them from taking any proceedings
whatsoever under the Act against the petitioner. It was further prayed that a
direction be issued for restoration to the petitioner of a sum of Rs.
13,99,715-10-6 with interest at 6 per cent and that the respondents be further
restrained from taking any action against the petitioner for the recovery of
the sum of Rs. 4,50,000 with interest.
In our judgment this petition is wholly
misconceived.
Whatever tax the petitioner has already paid,
or whatever is still recoverable from him, is being recovered on the basis of
the settlement proposed by him and accepted by the Central Government. Because
of his request for a settlement no assessment was made against him by following
the whole of the procedure of the Income-tax Act. In this situation unless and
until the petitioner can establish that his consent was improperly procured and
that he is not bound thereby he cannot complain that any of his fundamental
rights has been contravened for which he can claim relief under article 32 of
the Constitution. Article 32 of the Constitution is not intended for relief
against the I voluntary actions of a person. His remedy, if any, lies in other
appropriate proceedings.
The learned counsel for the petitioner
contended that apparently the application for a settlement seems to have been
made under the pressure of circumstances and in view of the coercive machinery
of Act XXX of 1947 and the settlement arrived in such circumstances 777 was not
binding and could not, be enforced. Whatever be the merits of such a
contention, it obviously cannot be raised in an application made under the
provisions of article 32 of the Constitution. The forum for investigating such
allegations is elsewhere.
The result is that this petition fails and is
dismissed with costs.
Petition dismissed.
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