Law:

Section:

Section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947 read with section 147 of the Income-tax Act, 1961 [Corresponding to section 34 of the Indian Income-tax Act, 1922] - Reference to Commission for Investigation - Proceedings taken by Investigation Commission against petitioners under discriminatory procedure of Act of 1947 had not been completed and were pending when Indian Income-tax (Amendment) Act, 1954 came into force - Whether there was no justification for continuing those proceedings against petitioners under impugned Act when other persons of their class and having same common characteristics could be dealt with by ITO under provisions of Amended Act - Held, yes FACTS In accordance with section 5(1), the Central Government referred to the Investigation Commission the cases of the four petitioners for investigation and report. It was alleged that no action was taken by the Commission on these references during the original period of life of the Commission or even during the extended period provided by the Amendment Act of 1948. Nothing happened in these cases till January, 1952, with the result that subsequent event intervened namely Constitution of India which came into force on 26-1-1950. In the instant writ petitions, the provisions of the Amendment Act of 1947 was challenged and the question arose to be considered was as to whether, after the coming into force of the Indian Income-tax (Amendment) Act, 1954, which operated on the same field as section 5(1) of Act of 1947, the provisions of section 5(1) of Act of 1947, assuming they were based on a rational classification, had not become void and unenforceable, as being discriminatory in character. HELD The procedure prescribed by the Act of 1947 for making the investigation under its provisions is of a summary and drastic nature. It constituted a departure from the ordinary law of procedure and in certain important aspects was detrimental to the persons subjected to it. The class of persons alleged to have been dealt with by section 5(1) was comprised of those unsocial elements in society who during recent years prior to the passing of the Act had made substantial profits and…

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