Law:

Section:

Section 5(4) of the Taxation of Income (Investigation Commission) Act, 1947 - Reference to Commission for investigation - Whether section 5(4), in so far as procedure prescribed thereby was substantially prejudicial to assessee than procedure prescribed under Indian Income-tax Act, being a piece of discriminatory legislation, offended against provisions of article 14 of Constitution and was, thus, void and unenforceable - Held, yes HELD The powers vested in the Commission and the procedure prescribed by the impugned Act were more comprehensive and drastic than those contained in the Indian Income-tax Act. The impugned statute was good law till the coming into force of the Constitution. When India became a Soverign Democratic Republic on 26-1-1950, the validity of all laws had to be tested on the touch-stone of the new Constitution. The scope of section 5(4) is, different from the scope of section 5(1), both in its extent and range. It is not necessarily limited to profits made within any particular period and brings within its range all persons, whether traders, businessmen, professional people, whoever they may be, who may have at any time evaded payment of taxation on income for whatever cause. That being the true scope or construction of sub-section (4), it obviously deals with the same class of persons who fall within the ambit of section 34 of the Indian Income-tax Act, 1922 and are dealt with in sub-section (1) of that section and whose income can be caught by proceeding under that section. It is well settled that in its application to legal proceedings Article 14 of the Constitution assures to everyone the same rules of evidence and modes of procedure. It is also well settled that this principle does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstance, in the same position. The State can by classification determine who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject, but the classification permissible must be based on some real and substantial distinction bearing a just and reasonable relation to the objects sought to…

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