Prompt:
Appeal No. 1940 of 1967.
Appeal by special leave from the judgment and order dated April 17, 27, 1967 of the Gujarat High Court in Civil Revision Application 328 of 1967.
section T. Desai and I. N. Shroff for the appellants.
M. P. Amin, P. M. Amin, P. N. Dua and J. B. Dadachanji, for respondent No. 1.
R. P. Kapur, for respondents Nos. 2 and 3.
The Judgment of the Court was delivered by Shah, J.
By insistence upon procedural wrangling in a com paratively simple suit pending in the Court of Small Causes at Ahmedabad the parties have effectively prevented all progress in the suit during the last six years.
A building in the town of Ahmedabad used as a cinematograph theatre belonged originally to Messrs. Popatlal Punjabhai.
estate of the owners and on August 19, 1954, the receivers ,estate of the owners and on August 19, 1954, The receivers granted a lease of the theatre on certain terms and conditions to two persons, Raval and Faraqui.
By an agreement dated November 27, 1954, between Raval and Faraqui on the one hand and Messrs. Filmistan Distributors (India) Private Ltd. hereinafter called "Filmistan on the other hand, right to exhibit cinematograph films was granted to the latter on certain terms and conditions.
"Filmistan" instituted suit No. 149 of 1960 in the Court of the Civil Judge (Senior Division) at Ahmedabad against Raval and Faraqui and two other persons claiming a declaration that it 437 was entitled pursuant to the agreement dated November 27, 1954, to exhibit motion pictures in the theatre.
By an order dated December 1, 1960 the suit was disposed of as compromised.
It was inter alia agreed that Raval and Faraqui were bound and liable to allow Filmistan to exercise its "exhibition rights" in the theatre; that Raval and Faraqui, their servants and agents were not to have any right to exhibit any picture in contravention of the terms and conditions of the agreement dated November 27, 1954; and that Raval and Faraqui shall "execute and register" an agreement in writing incorporating the said agreement with the variation as to rental.
Pursuant to this agreement, a fresh agreement was executed on December 1, 1960.
On September 1, 1963, Filmistan filed suit No. 1465 of 1963 in the Court of Small Causes at Ahmedabad, inter alia, for a declaration that as sub lessee or as lessee under law it was entitled to obtain and remain in possession of the theatre and to exhibit cinematograph films and to hold "entertainment performances" etc.
in the theatre, and that one Shabeer Hussain Khan Tejabwala had no right, title or interest in the theatre, that the defendants in the suit be ordered to hand over vacant and peaceful possession of the theatre, and the defendants, their servants and agents be restrained by an injunction from interfering directly or indirectly with its rights to obtain and remain in possession of the theatre or any part thereof and to exercise its right of exhibiting "motion pictures" and entertainment performances etc.
This suit was filed against the receivers in insolvency of the owners of the theatre, against Raval and Faraqui, against Tejabwala and also against Baldevdas Shivlal who claimed to be the owner of the theatre.
The suit was based on the claim by Filmistan as lessees or sub lessees of the theatre and was exclusively triable by the Court of Small Causes by virtue of section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
Three sets of written statements were filed against the claim made by Filmistan, but no reference need be made thereto, since at this stage in deciding appeal the merits of the pleas raised by the defendants are not relevant.
After issues were raised on June 20, 1966, the plaint was amended and additional written statements were filed by the Defendants.
The learned Judge was then requested to frame three additional issues in view of the amended pleadings : the issues were: 1.
Whether in view of the said consent decree in suit No. 149 of 1960 defendants Nos. 5 and 6 are debarred on principles of res judicata from agitating the question that the said document dated November 27, 1954 as confirmed by their letter dated January 31, L13 Sup.
CI/69 17 438 1955 and further confirmed by document dated December 1, 1960 is not a lease? 12.
Whether in view of the said consent decree, defendants 5 and 6 are estopped from contending and leading any evidence and putting questions in crossexamination of plaintiffs witnesses to show that the said document dated November 27, 1954 as confirmed by their letter dated January 31, 1955 and further confirmed by document dated December 1, 1960 is not a lease ? 13.
Whether in respect of the terms of the said consent decree as also of the said document dated November 27, 1954, as confirmed by their letter dated January 31, 1955 and further confirmed by document dated December 1, 1960 defendants Nos. 5 and 6 are debarred from leading any evidence of the, plaintiffs witnesses in view of section 92 of the Evidence Act ?" In drawing up the additional issues not much care was apparently exercised : whether a party is entitled to lead evidence or to put questions in cross examination of the plaintiff 's witnesses cannot form the subject matter of an issue.
Filmistan then applied to the Court of Small Causes for an order that issues Nos. 11, 12 & 13 be tried as preliminary issues.
The learned Judge observed that the issues were not purely of law, that in any event the case or any part thereof was not likely to be disposed of on these issues, and that ordinarily in "appealable cases" the Court should, as far as possible, decide all the issues together and that piecemeal trial might result in protracting the litigation.
He also observed that the issues were not of law going to the root of the case and were on that account not capable of being decided without recording evidence.
A revision application against that order was dismissed in limine by the High Court of Gujarat.
When the case reached hearing and the evidence of a representative of Filmistan was.
being recorded, counsel for the defendants asked in cross examination the question whether the "agreement between the plaintiff and defendant Nos. 5 and 6 was a commercial transaction and was not a lease ?" The question was objected to by counsel appearing for Filmistan.
Thereafter elaborate arguments were advanced and the Trial Judge passed an order disallowing the objection.
The objection to the question raised by Filmistan was not that it related to a matter to be decided by the Court and on which the opinion of witnesses was irrelevant.
The objection was raised as 439 an attempt to reopen the previous decision given by the Trial Judge refusing to try issues Nos. 11, 12 & 13 as preliminary issues.
Counsel for Filmistan contended that an enquiry into the nature of the legal relationship arising out of the agreement dated December 1, 1960 "was barred by the principle of res judicata and estoppel under the provisions of section 92 of the Evidence Act", since the question was already concluded by the consent decree in suit No. 149 of 1960.
The Trial Judge observed that he had carefully gone through the consent decree and the registered agreement dated December 1, 1960, and he found that the consent decree had not decided that the transaction between the parties of the year 1954 was in the nature of a lease; that in the plaint in the earlier suit it was not even averred that the rights granted were in the nature of leasehold rights; that suit No. 149 of 1960 was for declaration of the rights of Filmistan to exhibit motion pictures, in the theatre under the agreement dated November 27, 1954, and for an injunction restraining the defendants from violating the said rights of Filmistan under the agreement; and that the agreement dated December 1, 1960 was "not plain enough to exclude the oral evidence of the surrounding circumstances and conduct of the parties to explain its terms and language".
Accordingly he held that the question asked in cross examination of the witnesses for Filmistan intended to secure disclosure of the surrounding circumstances and conduct of the parties in order to show in what manner the language of the document was related to the existing facts, could not be excluded.
The Court also rejected the contention that there was any bar of estoppel, and held that evidence as to the true nature of the transaction was not inadmissible by virtue of section 92 of the Evidence Act.
Filmistan feeling dissatisfied with the order invoked the revisional jurisdiction of the High Court of Gujarat under section 115 of ' the Code of Civil Procedure.
The revision petition was entertained and elaborate arguments were advanced at the Bar.
The High Court referred to a number of authorities and observed that the correctness of the findings of the Trial Court on issues Nos. 12 and 13 may not be examined in exercise of the powers under section 115 of the Code of Civil Procedure.
The Court proceeded to, observe : "The question then arises for consideration whether in fact the subordinate Court has decided the question of res judicata", and that "it is true that the jurisdiction of the Court of mall Causes to decide disputes between a tenant and his landlord and falling within the purview of section 28 of the Bombay Rent Control Act is derived from section 28 of the said Act, but at the same time if an issue is in fact barred by res judicata, then the Court has no 440 jurisdiction on principles of res judicata to go into that question or to decide that question over again to the extent to which the Court, viz., the trial court in the instant case, proposed to go into that question and allow the whole question, that was closed once for all by consent decree of December 1, 1960, to be reopened, it is proposing to exercise the jurisdiction which is not vested in it by law.
It is not open to any Court of law to try an issue over again or reopen the same if an earlier decision operates as res judicata.
Once the jurisdiction of the Court has been taken away, any proposal to reopen the question closed by the earlier decision would be exercise of jurisdiction which is not vested in the Court by law and to that extent the decision would become revisable, even if it is the decision as to the res judicata of an issue", and concluded "It is not open to me in revision at this stage to express any opinion about the rights and contentions of the parties with reference to the agreement of December 1, 1960.
But the only thing that can be said is that so far as the agreement of November 27, 1954, is con cerned, it must be held, in view of the consent decree of December 1, 1960, that that document of November 27, 1954, created a lease. .
The consent decree must be held to create a bar of res judicata as far as the question of document of November 27, 1954, creatin g a lease is, concerned.
The learned Judge will not proceed with the trial".
By section 115 of the Code of Civil Procedure the High Court is invested with power to call for the record of any case decided by any Court subordinate to such High Court and in which no appeal lies thereo, if such subordinate court appears (a) to have exercised a jurisdiction not vested in it by law, or (b) to have failed to exercise a jurisdiction so vested, or (c) to have acted in the exercise of its jurisdiction illegally or with material irregularity, and to make such order in the case as it thinks fit.
Exercise of the power is broadly subject to three important conditions (1) that the decision is of a Court subordinate to the High Court; (2) that there is a case which has been decided by the subordinate Court; and (3) that the subordinate Court has exercised jurisdiction not vested in it by law or to have failed to exercise a jurisdiction so vested, or to have acted in the exercise of its jurisdiction illegally or with material irregularity.
441 In the present case the Court of Small Causes had only decided that a question seeking information about the true legal relationship arising out of the document could be permitted to 'be put to the witnesses for Filmistan.
The Court gave no finding expressly or by implication on the issue of res judicata or any other issue.
In the view of the Trial Court the question whether the legal relationship arising out of the agreement dated December 1, 1960 was in the nature of a lease or of other character had to be decided at the trial and the previous judgment being a judgment by consent , 'could not operate as res judicata", for, it was not a decision of the Court, and that the consent decree in suit No. 149 of 1960 had not decided that the agreement dated March 27, 1954, was of the nature of a lease, and that in the plaint in that suit it was not even averred that it was a lease.
The Trial Judge in overruling the objection did not decide any issues at the stage of recording evidence : he was not called upon to decide any issues at that stage.
The observations made by him obviously relate to the arguments advanced at the Bar and can in no sense be regarded even indirectly as a decision on any of the issues.
But the High Court has recorded a finding that the agreement dated November 27, 1954, created a lease and that the consent decree operated as res judicata.
A consent decree, accord ing to the decisions of this Court, does not operate as res judicata, because a consent decree is merely the record of a contract between the parties to a suit, to which is superadded the seal of the Court.
A matter in contest in a suit may operate as res judicata only if there is an adjudication by the Court : the terms of section II of the Code leave no scope for a contrary view.
Again it was for the Trial Court in the first instance to decide that question and there after the High Court could, if the matter were brought before it by way of appeal or in exercise of its revisional jurisdiction, have decided that question.
In our judgment, the High Court had no jurisdiction to record any finding on the issue of res judicata in a revision application filed against an order refusing to uphold an objection to certain question asked to a witness under examination.
The true nature of the order brought before the High Court and the dimensions of the dispute covered thereby apparently got blurred and the High Court proceeded to decide matters on which no decision was till then recorded by the Trial Court, and which could not be decided by the High Court until the parties had opportunity to lead evidence thereon.
It may also be observed that by ordering that a question may properly to put to a witness who was being examined, no case was decided by the Trial Court.
The expression "case" is not limited in its import to the entirety of the matter in dispute in an action.
442 This Court observed in Major section section Khanna vs Brig.
F. J. Dillon(1) that the expression "case" is a word of comprehensive import : it includes a civil proceeding and is not restricted by anything contained in section 115 of the Code to the entirety of the proceeding in a civil court.
To interpret the expression "case" as an entire proceeding only and not a part of the proceeding imposes an unwarranted restriction on the exercise of powers of superintendence and may result in certain cases in denying relief to the aggrieved litigant where it is most needed and may result in the perpetration of gross injustice.
But it was not decided in Major section section Khanna 's case(1) that every order of the Court in the course of a suit amounts to a case decided.
A case may be said to be decided, if the Court adjudicates for the purposes of the suit some right or obligation of the parties in controversy; every order in the suit cannot be regarded as a case decided within the meaning of section 115 of the Code of Civil Procedure.
The order passed by the High Court is set aside and the Trial Court is directed to proceed and dispose of the suit.
We trust that the suit will be taken up early for hearing and disposed of expeditiously.
We recommend that the form of the issues Nos. 11, 12 and 13 will be rectified by the learned Trial Judge.
Filmistan will pay the costs of the appeal in this Court and in the High Court.
G.C. Appeal allowed.

Response:
R and F who held a cinema building in Ahmedabad on lease entered on November 27, 1954 into an agreement with respondent No. 1 giving the latter a right to exhibit cinematograph films in the said building.
Later respondent No. 1 filed 'suit No. 149 of 1960 to assert his right to exhibit films in the building.
The suit resulted in a compromise decree.
In pursuance of the compromise a further agreement dated December 1, 1960 was executed between the parties.
However in 1963 respondent No. 1 again filed a suit claiming as a sub lessee or as lessee a right to exhibit films in the said building and praying that the defendants be restrained from interfering with that right.
The suit was filed under section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 in the Court of Small Causes.
In this suit respondent No. 1 asked the court to try additional issues Nos. 11, 12 and 13 as preliminary issues.
In issue No. 11 the question raised was whether the consent decree in the earlier suit operated as res judicata so that R & F could not question that the agreements between them and respondent No. 1 constituted a lease.
Issue No. 12 raised the question whether in view of the consent decree R & F were estopped from leading evidence and asking questions in cross examination to show that the said agreements did not constitute a lease.
Issue No. 13 raised the question whether section 92 of the Indian Evidence Act debarred R & F from leading evidence to the effect that the documents in question did not constitute a lease.
The Trial Court refused to try these as preliminary issues and its order was upheld by the High Court.
At the hearing of the case when the counsel for the defendants sought to ask a witness for respondent No. 1 whether the agreement dated November 27, 1954 was a commercial transaction and not a lease respondent No. 1 objected to the question.
The objection was disallowed by the trial court.
In revision under section 115 of the Code of Civil Procedure the High Court did not interfere with the trial court 's order in respect of issues Nos. 12 and 13.
In respect of issue No. 11, the High Court held that the agreement dated November 27, 1954 must in view of the consent decree in suit No. 149 of 1960 be held to be a lease, and that the consent decree created a bar of res judicata in respect of the issue whether the said agreement created a lease.
The defendants appellants appealed to this Court.
HELD : (i) The High Court had no jurisdiction to record any finding on the issue of res judicata in a revision application filed against an order refusing to uphold an objection to certain question asked to a witness under examination.
The Court erred in proceeding to decide matters on which no decision was till then recorded by the trial court and which could not be decided by the High Court until the parties had opportunity of leading evidence thereon.
(ii) By ordering that a question may properly be put to a witness who was examined, no case was decided by the Trial Court within the meaning of section 115 of the Code of Civil Procedure.
The expression 'case ' is not limited in its import to the entirety of the matter in dispute in a proceeding.
Such an interpretation may result in certain cases in denying relief to the aggrieved litigant where it is most needed.
But equally, it is not every order of the court in the course of a suit that amounts to a case decided.
A case may be said to be decided only if the court adjudicates, for the purpose of the suit, some right or obligation of the parties in controversy.
[441H 442C] Major section section Khanna vs Brig.
F. J, Dillon, [1964] 4 S.C.R. 409, referred to.
(iii) A consent decree, according to the decisions of this Court, does not operate as res judicata, because a consent decree is merely the record of a contract between the parties to, a suit, to which is superadded the seal of the court.
A matter in contest in a suit may operate as res judicata only if there is an adjudication by the court : the terms of section 1 1 of the Code leave no scope for a contrary view.
[441E]


Prompt:
Appeal No. 949 of 1966.
Appeal by special leave from the judgment and order dated September 11, 1964 of the Madras High Court in Tax Case No. 181 of 1962.
M. C. Chagla and B. R. Agarwala, for the appellant.
section T. Desai, R. N. Sachthey and B. D. Sharma, for the respondent.
[The appeal was originally heard by J. C. Shah, Ag.
C.J., V. Ramaswami and A. N. Grover, JJ.
The case was twice re manded to the Tribunal.
The first Order of the Court remanding the case to the Tribunal was delivered by] Shah, Ag. C. J. M/s Amarchand Sobhachand 'a firm registered under the Indian Income tax Act, 1922, carried on business at Madras in drugs, chemicals, mercury, camphor and silk yam and as money lenders.
There were two partners of the firm Mohanlal Sagmal and Seshmal Sobhachand, and Ramniklal and Lakshmichand minors were admitted to the benefits of the partnership, each with 7/32 share in the profits.
The appellants had for a long time business relations with a firm styled "Bhojaji Sobhachand" carrying on business at Bombay as importers of yam and also as agents and adathias.
Sobhachand, one of the partners of Bhojaji Sobhachand with 16% share in the profit and loss is the father of Seshmal, Ramniklal and Lakshmichand, partners of the appellants.
In the books of account of the appellants which were main tained according to the mercantile, system there was a current sarafi account in respect of their transactions with the Bombay firm in which were credited the funds transmitted from Bombay in respect of their business transactions.
Entries relating to interest were posted till the end of Samvat Year 2006 in the account on the amount due at the foot of the account.
The following is a table showing the balances at the end of the Samvat years 2003 Amount Interest At the end of the Samvat Year 2003 Cr.16,951 00 2004 Dr.1,02,188 4 5Dr.
2633 9 3 2005 Cr.27,815 0 0Dr.
483 1 9 2006 Cr.11,975 0 0Cr.
1008 7 3 2007 Dr.2,02,823 12 3 2008 Dr.2,68,385 1 3 In the assessment for income tax of the appellants for the assessment year 1952 53 relevant to the account year Samvat 417 2007 all item of Rs. 2,03,147 8 O in the, account of the, Bombay was disallowed by the Income tax Officer, but in appeal the amount was allowed.
in the return of income for the assessment year 1953 54 the appellants claimed allowance for Rs. 2,68,385/ due from the Bombay firm at the foot of their running account as a bad debt written off as irrecoverable.
The Income tax Officer disallowed their claim holding that : "these transactions were mere accommodations which can have no bearing to the regular business carried on by the assessee.
" The Appellate Assistant Commissioner agreed with the Income tax Officer.
He held that the debt .
did not arise, in the course of the appellants ' business as chemists and druggists nor in the course of their money lending business.
The Income tax Appellate Tribunal accordingly confirmed the order of the Appellate Assistant Commissioner.
The assessee firm then applied to the Tribunal to refer the following question to the High Court of Madras "Whether on the facts and in the circumstances of the case the disallowance of the bad debt of Rs. 2,68,385 is right in law ?" The Tribunal rejected the application, but pursuant to an order made by the High Court of, Madras under section 66(2) submitted a statement of the case on the following question "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the debt of Rs. 2,68,385/ was not one incurred in the course of money lending business of the assessee ?" In the opinion of the High Court the debt of Rs. 2,68,385/ due to the appellants was not a bad and doubtful debt in its money lending business not a debt representing loss sustained in the other business.
The question referred was, therefore, answered in the affirmative and against the appellants.
Section 10(2) (xi) of the Indian Income tax Act, 1922, as in force at the relevant time provided : "(2) Such profits or gains shall be computed after making the following allowances, namely : (xi) When the assessee 's accounts in respect of any part of his business, profession or vocation are not kept on the cash basis, such sum, in respect of bad and doubtful debts, due to the assessee in 807SupCI/71 418 respect of that part of his business, profession or vocation, and in the case of an assessee carrying on a banking or money lending business, such sum in respect of loans made in the ordinary course of such business as the Income tax Officer may estimate to be irrecoverable but not exceeding the amount actually written off as irrecoverable in the books of the assessee, Provided. . . . . " Clause (xi) was in two parts.
A bad and doubtful debt due to the taxpayer, written off as irrecoverable in the books of account was properly allowable in computing the taxable profits from business, profession or vocation, where accounts were not kept on the cash basis, if the debt was in respect of a loan made in the course of the taxpayer 's business as a banker or money lender, or when the taxpayer was carrying on any other business the debt was in respect of that other business.
debt written off relying upon both the branches of section 10 (2) (xi) and by the application under section 66(1) of the Income tax Act a question covering both the branches of the section was also sought to be raised.
But the question on which the Tribunal was called upon to state the case was in form imprecise and in import somewhat vague.
A bad and doubtful debt due to an assessee in respect of banking or money lending business is allowable under section 10(2) (xi) if it is in respect of loans made in the ordinary course of such business.
A bad and doubtful debt in respect of a business other than banking or money lending is allowable even if it is not in respect of loan : but a debt due in the course of the business of a money lending is not allowable unless it is, in respect of loans made in the ordinary course of his business.
We are of the view that the question should have been referred in the form suggested by the appellants in their application under section 66(1) with appropriate variations.
In the interest of justice, we direct that the question be reframed as follows : "Whether on the facts and in the circumstances of the case the Tribunal erred in disallowing the debt of Rs. 2,68,385/ written off by the assessee in their books of account as irrecoverable.
" The two branches of the question as reframed then are (1) Whether the debt or any part thereof is in respect of loans made 419 in the ordinary course of money lending business of the appellants; and (2) whether the debt or any part thereof is in respect of the other business of the appellants.
We are of the view that before the question may be answered, it is necessary to call for a supplementary statement of the case from the Tribunal.
The Tribunal 's order is very brief : it gives no reasons in support of the conclusions.
The argument based on the first part of section 10(2) (xi) that the debts were due in respect of the business of the appellants other than money lending was not considered at all, and the Tribunal disposed of the second part of the case by merely observing that it was an "accommodation" account to enable the Bombay firm to tide over the "financial crisis" threatening it in Samvat Year 2007, and that the trans actions in the account were totally unconnected with the normal business of the appellants.
An "accommodation" advance is a neutral expression : it may be of the nature of a loan advanced in the ordinary course of business by a money lender; it may be an advance the money lending or other business of the assessee but not in the nature of a loan; or it may be wholly unrelated to the business of the tax payer.
The statement submitted by the Tribunal is also inadequate.
It contains only a summary of the business relations between.
the appellants and the Bombay firm, a statement as to the amounts due at the end of each year at the foot of the account, the interest if any charged and a summary of the orders made by the Income tax Officer, the Appellate Assistant Commissioner and the Tribunal.
The statement of the case does not analyse the evidence and throws no light upon the two branches of the argument raised before the Tribunal and which, in our view, arose out of the question on which they were required to submit a statement of the case.
Counsel for the Revenue, however, contended that there are three important circumstances which appear from the order of the Appellate Assistant Commissioner and the Income tax Officer from which it may be inferred that the advances made by the appellants to the Bombay firm were not in respect of loans in the ordinary course of the business of the appellants, nor in respect of their other business.
Counsel said that (1) Sobhagchand Amarchand partner of the Bombay firm is the father of Seshmal one of the partners of the appellants and of the minors Ramniklal and Lakshmichand who are admitted to the benefits of partnership; (2) that large amounts of money were advanced shortly before the Bombay firm closed its business; and (3) that there was a consistant practice for paying or receiving interest on the 420 amounts due at the, foot of the account, but no interest was charged by the appellants in respect of the dues at the foot of the account at the end of Samvat Years 2007 and 2008.
But the Tribunal has not raised any inference from these circumstances and has merely observed that charging of interest cannot make it a money lending account.
We, therefore, direct that the Income tax Appellate Tribunal do submit a supplementary statement of the case on the, question reframed, on both the branches of section 10(2)(xi) of the Indian Income tax Act, 1922.
The Tribunal will give opportunity to both the parties of being heard, but will restrict themselves to the ,evidence on the record.
The supplementary statement to be submitted within three months from the date the papers reach the Tribunal.
[After receipt of the supplementary statement of case from the Tribunal the appeal was heard by J. C. Shah, K. section Hegde and A. N. Grover, JJ.
The order of the Court was delivered by] Shah, J.
By our order dated July 29, 1969 we called for the light of the two branches of section 10(2) (xi) of the Indian In come tax Act, 1922.
We have now received a statement of case from the Tribunal.
The Tribunal has set out in great detail the arguments advanced before it by the assessee and by the Revenue but it has not set out the facts found by it from the evidence on the record in the light of the arguments advanced.
The statement of case is intended to be a finding on facts and not a catalogue of the arguments advanced at the Bar.
Since the Tribunal has not found the facts we are constrained to send back the case again to the Tribunal for submitting to this Court a supplementary statement on facts found by the Tribunal.
The Tribunal will submit the statement within three months from the date on which the papers reach the Tribunal.
[After receipt of the second supplementary statement of case from the Tribunal the appeal was finally heard by J. C. Shah, C.J., K. section Hegde and A. N. Grover, JJ.
The Judgment of the Court was delivered 'by] Hegde, J.
The appellant firm (which will hereinafter be referred to as the "assessee") carried on business in drugs, chemicals, mercury, camphor and art silk yam as also in money lending, over a number of years.
The accounting year with which we are concerned in this appeal is Samvat year 2008 commencing from October 31, 1951 and ending on Oct. 18, 1952.
The firm 421 consisted of two partners, Mohanlal Baginal and Sashmal Sobha Chand.
Two minors, Ramniklal Sobhachand and Lakshmichand Sobhachand were admitted to the benefits of the partnership.
The assessee had dealings for several years with a firm known as "Bhojaji Sobhachand" (to be hereinafter referred to as the Bombay firm).
Sobhachand Amarchand, a partner of the Bombay firm, is the father of Seshmal, Ramaniklal and Lakshmichand and he was having sixteen percent share in the Bombay firm.
That firm became insolvent in April 1952.
The Bombay firm owed certain amount to the assessee.
In the assessment of income tax of the appellant for the assessment year 1952 53, relevant to the account year Samvat 2008, the assessee claimed a deduction of Rs. 2,68,385/ as bad debt due from the Bombay firm, incurred by that firm in the course of business transactions.
The Incometax Officer disallowed that claim holding that "these transactions were mere accommodations which can have no bearing to the regular business carried on by the assessee.
In, appeal the Appellate Assistant Commissioner agreed with the Income tax Officer.
He held that the debt did not arise in the course of the assessee 's business as Chemists and Druggists nor in the course of their money lending business.
On a further appeal taken by, the assessee to the Income tax Appellate Tribunal, the tribunal confirmed the order of the Appellate Assistant Commissioner. 'The assessee thereafter applied to the tribunal under section 66(1) of the Indian Income tax Act, 1922 to submit a statement of the case with the question "whether on the facts and in the circumstances of the case the disallowance of the bad debt of Rs. 2,68,385/ is right in law" to the High Court of Madras for its opinion.
The tribunal rejected that application but pursuant to an order of the High Court under section 66(2), the tribunal submitted a statement of the case on the following question "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the debt of Rs. 2,68,385/ was not one incurred in the course of money lending business of the assessee." The High Court opined that the debt in question was not a bad and doubtful debt in the assessee 's money lending business nor a debt representing loss sustained in the other business.
The question referred was, therefore, answered in the affirmative and against the asses see.
Thereafter the present appeal was brought after obtaining special leave from this Court.
At the hearing of the appeal this Court found that the tribunal 's order was very brief and that it gave no reasons in support of its conclusions.
It also found that the statement submitted by the tribunal was in adequate.
This Court took the view that the question framed at 422 the instance of the High Court did not bring out the real question arising for decision.
It accordingly .
reframed the question as follows "Whether on the facts and in the circumstances of the case the Appellate Tribunal erred in disallowing a sum of Rs. 2,68,385/ written off by the assessee in their books of accounts as irrecoverable ?" By its order dated July 29, 1969 this Court called upon the Tribunal to submit a supplementary statement of case on the reframed question.
The tribunal accordingly submitted a fresh statement of the case on the question referred.
But that statement merely catalogued the arguments advanced at the bar.
The tribunal did not give any findings on the points arising for decision.
Hence by its order dated April 7, 1970, this Court directed the tribunal to submit a further statement.
The tribunal has accordingly submitted a further statement.
The facts found by the tribunal are found in paragraphs 11 ;and 12 of the statement.
They read : " 11.
We have taken into consideration the available materials and the rival submissions.
The only facts in favour of the assessee are that incidental charges are debited to the Bombay firm in respect of some of the remittances and there is a flow of moneys to the Bombay firm up to 10 3 1952 when the last of the remittances was sent to it before the firm collapsed in about April 1952.
On the other hand, the narrations in the entries, as they stand, the failure to adjust interest in the account of the Bombay firm at the stage at which it became a debtor in Samvat year 2007, the manner in which the partner of the appellant firm tried to explain the position in March, 1954 and the stand of the firm itself at all earlier stages support the case of the Department." "12.
Having considered all the circumstances of the case, we are of the opinion that the sums in question were not sent to the Bombay firm as loans made in the ordinary course of the money lending business of the assessee nor in respect of any other business of the assessee.
As this is the finding with regard to the whole of the amount of Rs. 2,68,385/ there is no question of ,#locating any portion thereof as between the business of money lending or for any other purpose as preferred to para 7 above.
" 423 It is true as contended by the learned Counsel for the asstssee that the conclusions reached by the tribunal are not supported by proper discussion of the material before it.
It is also true that the tribunal after catalogueing the arguments advanced at the bar, has come to certain abrupt conclusions, but all the tame it cannot be denied that the findings reached by the tribunal are findings of fact and those findings are supported by the evidence on record.
The tribunal has found that the monies sent by the assessee to the Bombay firm were not loans made in the ordinary course of its money lending business, nor in respect of any other business of the assessee.
This finding covers the entire amount sought to be deducted.
In view of this finding, which is binding on this Court, our answer to the question reframed has to be in the negative and in favour of the Department.
The appeal fails and is dismissed.
No costs.
G.C. Appeal dismissed.

Response:
The appellants we 're a registered partnership firm engaged in money lending business as well as business in certain chemical goods, and silk yarn.
Another firm had a current account with the appellants between the samvat years 2003 and 2008.
At the end of the latter year the said account had a debit balance of Rs. 268385 1 3.
In the return of income for the assessment year 1953 54 the appellants claimed allowance for the said sum of Rs. 268385 as a bad debt written off as irrecoverable.
The claim was disallowed by the authorities under the Income tax Act, 1922.
The Tribunal referred to the High Court under section 66(2) of the Income tax Act, 192Z the question whether on the facts and circumstances of the case the Tribunal 's finding that the sum in question did not relate to the appellants money lending business was correct.
The High Court answered the question in the affirmative against the appellants.
This Court in appeal by special leave re framed the question to be answered by the Tribunal so as to cover not only the money lending business of the appellants but also the business in chemicals etc.
The Court directed the Tribunal to submit a supplementary statement of case.
The supplementary statement of case submitted by the Tribunal was however found unsatisfactory in as much as it contained a summary of arguments on both sides but no findings on the,facts of the case.
Hence supplementary statement on 'facts was called for.
The findings given by the Tribunal were against the appellants.
On the contention that the conclusion reached by the Tribunal was not supported by proper discussion of the materials before it, HELD : The findings reached by the Tribunal were findings of fact and those findings were supported by the evidence on record.
The Tribunal had found that the loans were not made in the course of money lending business of the assessee nor in respect of any other business of the assessee.
This finding covered the entire amount sought to be deducted.
In view of this finding which was binding on this Court, the answer to the question re framed had to be in favour of the department.
[423 B] Also held : (i) The Tribunal in submitting its statement,of case must give not only the facts of the case or the arguments of parties but also its own findings on the, facts and evidence.
[410 D] (ii) When the assessee had money lending as well as other business, its claim for a bad debt under section 10 (2) (xi) of the Act must be considered in relation to both the businesses and the question submitted by the Tribunal must cover the claim in both its aspects.
[418 F 419 A] 416


Prompt:
l Misc.
Petitions Nos.
401/and 4012 of 1968.
Applications by respondent No. 1 for revocation of the certificate granted by the Madras High Court on 15th October, 1968 under article 133(1)(a) & (b) of the Constitution of India.
AND Civil Appeals Nos. 2183 and 2184 of 1968.
Appeals from the judgment and order elated October 9, 1968 of the Madras High Court in O.S.A. No. 25 and 27 of 1968.
M.C. Setalvad.
V.P. Raman, D.N. Mishra, and J.B. Dadachanji, for the appellant.
section Mohan Kumaramangalam.
M.K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for respondent No. 1.
Rameshwar Nath and Mahinder Narain, for respondent No. 2.
The Judgment of the Court was delivered by Shah, J.
M/s. Tarapore & Company hereinafter called the plaintiffs applied in Suit No. 118 of 1967 for an interim injunction restraining the Bank of India Ltd. the first defendant in the suit from taking any steps in pursuance of a letter of credit opened in favour of M/s. V/O Tractors Export, Moscow, the second defendant.
Ramamurthi, J., by order dated April 12, 1968, granted an interim injunction restraining encashment of the letters of credit pending disposal of the suit.
In appeals under the Letters Patent preferred by the second defendant,.
the High Court of Madras set aside that order.
Against the orders passed in the two appeals, the plaintiffs applied for certificate under Arts.133(1)(a) and 133(1)(b) of the Constitution.
The High Court observed that an order granting interim injunction "is a final order, as far as this Court is concerned, determining the rights of parties within this lit or proceeding, which is independent though ancillary to the suit", and they were competent to grant the certificate.
By our order dated October 28, 1968, we ordered that the certificate granted by the High Court do stand revoked.
We set out the reasons in support of that order.
Article 133 (1) provides, insofar as it is material: "(1) An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High Court in the territory of India if the High Court certifies (a) that the amount or value of the subject matter of the dispute in the court of first instance and still in dispute on appeal was and is not less than twenty thou sand rupees or such other sum as may be specified in that behalf by Parliament by law; or 701 (b) that the judgment, decree or final order involves directly or indirectly some claim or question respecting property of the like amount or value; or "(c) . . where the. judgment, decree or final order appealed from affirms the decision of the Court immediately below in any case other than a case referred to in sub clause (c), if the High Court further certifies that the appeal involves some substantial question of law.
" The suit filed by the plaintiffs is a civil proceeding, and the suit involves some claim or question respecting property of not less than twenty thousand rupees.
That is a matter not in dispute.
The expression "judgment" in article 133 ( 1 ) in the context in which it occurs means a final adjudication by the Court of the rights of the parties, 'and that an interlocutory judgment even if it decides an issue or issues without finally determining the rights and liabilities of the parties is not a judgment, however cardinal the issue may be.
In the present case not even an issue has been decided, and it is not contended that the order of the High Court amounts to a judgment or 'a decree.
The expression "final order" it has been held by a long course of authorities, occurring in section 205 of the Government of India Act, 1935, section 109 of the Code of Civil Procedure and article 133(1) of the Constitution means a final decision on the rights of the parties in dispute in a suit or proceeding; if the rights of the parties in dispute in the suit or proceeding remain to be tried, after the order, the order is not final.
In Ramchand Manjimal vs Goverdhandas Vishindas RatanChand(1), it was held by the Judicial Committee that an order of the Judicial Commissioner of Sind vacating an order of stay granted under section 19 o,f the Indian Arbitration Act, 1899, and refusing to stay a proceeding was not a final order within the meaning of section 109(a) of the Code of Civil Procedure.
Viscount Cave referred to Salaman vs Warner(2); Bozson Altrincham Urban District Council(a) and Issacs vs Salbstein(4) and observed: "The effect of those and other judgments is that an order is final if it finally disposes of the rights of the parties.
The orders now under appeal do not finally dispose of those rights, but leave them to be determined by the Courts in the ordinary way.
" In Abdul Rahman vs
D.K. Cassim & Sons(5) the Judicial Committee observed that the expression "final order" within the meaning of section 109(a) of the Code of Civil Procedure, 1908, is an (1) L.R. 47 I.A. 124.
(2) (3) (4) (5) L.R. 60 I.A. 76.
C.I./69 12 702 order which finally disposes of the rights of the parties in relation to the whole suit.
In Abdul Rahman 's case(1) a suit was instituted by D.K. Cassim and Sons claiming damages against the appellant Abdul Rahman.
Soon after the suit was instituted the plaintiff firm was adjudicated insolvent and the official assignee was impleaded as an additional plaintiff.
The official assignee declined to proceed with the suit, and the suit was dismissed by the trial court.
In appeal it was held by the High Court of Calcutta that the cause of action was personal to the insolvents and did not vest in the assignee, and accordingly they set aside the decree and remanded the suit for trial.
Against that order an appeal was preferred to the Judicial Committee which was held not maintainable.
Kuppusami Rao vs The King(2) The Federal Court held that the expression "final order" in section 205 (1 ) of the Government of India Act, 1935, means an order which finally determines the points in dispute and brings the case to an end.
The test of finality, according to the court, is whether the order finally disposes of the rights of the parties, and not whether the order decides an important point or even a vital issue in the case.
Mukherjea, J., in interpreting the expression "judgment, decree or final order" in section 205 of the Government of India Act, 1935, in Mohammad Amin Brothers Ltd. and others vs Dominion India and others ( 3 ) observed: "The expression "final order" has been used in contradistinction to what is known as "interlocutory order" . .
If the decision on an issue puts an end to the suit, the order will undoubtedly be a final one, but if the suit is still left alive and has got to be tried in the ordinary way, no finality could attach to the order." In Mohammad Amin Brothers ' case(3) an issue was decided by the trial court in a petition for winding up of a Company as to the maintainability of a claim for recovery of income tax dues.
In appeal the High Court overruled the objection raised by the Company about the maintainability of the claim, and finding that a bona fide dispute was pending before the Income tax authorities relating to a substantial part of the debt on which the application for winding up was made and that the solvency of the Company could not be determined before that dispute was decided, set aside the order of the Trial Judge and remanded the case to him.
The Federal Court held that the order appealed against was not a "final order".
In Sardar Syedna Taher Saifuddin Saheb vs The State of Bombay(4) a suit was filed for a declaration that the order of ex (1) L.R. 60LA.
76 (2) (3) (4) 703 communication passed by the appellant religious head of a community was invalid.
During the pendency of the suit them Bombay Prevention of Ex communication Act 42 of 1949 was enacted and one of the issues raised in the suit was whether the order of ex communication was invalid.
This issue was tried as a preliminary issue and as it raised the question of the vires of the Bombay prevention 'of Ex communication Act, 1949, the State of Bombay was impleaded as a party defendant in the suit.
The trial court decided the issue against the appellant and the order was confirmed in appeal by the High Court of Bombay.
Against the order deciding the issue, an appeal was preferred to this Court with certificate granted by the High Court under article 132 and article 133 of the Constitution, and it was held that the appeal was not maintainable since the decision on the issue did not finally dispose of the dispute between the parties.
In Srinivasa Prasad Singh vs Kesho Prasad Singh(1) an order deciding that circumstances had not been established such as would justify an order for stay of execution of a decree under appeal was not a 'final order" and was on that account not appealable to the judicial Committee.
Similarly in Druva Coal Company vs Benaras Bank(2) it was held that an order by the High Court reversing the order of the Court of First Instance granting a temporary injunction was not a final order within the meaning of section 109 of the Code of Civil Procedure.
There is, therefore, 'abundant authority in support of the view that an order is final within the meaning of article 133 of the Constitution, under section 109 Code of Civil Procedure or section 205 of the Government of India Act, 1935, if it amounts to final decision on the rights of the parties in dispute in the suit or proceeding; if after the order is made, the suit or proceeding still remains to be tried, and the rights in disputes have to be determined, the order is interlocutory.
Counsel for the appellant strongly relied upon a recent judgment of this Court in Mohanlal Maganlal Thakkar vs State of Gujarat(3) and contended that the view expressed in the earlier cases is superseded.
In Mohanlal Thakkar 's case(a) after an enquiry under section 476 Code of Criminal Procedure, 1898, a Magistrate ordered that a complaint be filed against a person in respect of offences under sections 205, 467 and 468 read with section 114 I.P. Code.
In appeal the Additional Sessions Judge held that the complaint was competent only in respect of the offence under section 205 read with section 114.
The High Court dismissed a revision application against the order of the Court of Session.
Certificate was there (1) 13 C.L.J. 681.
(2) (3) ; 704 after issued by the High Court under article 134(1)(c) of the Con stitution for leave to appeal against the order.
The competence of the High Court to grant the certificate was challenged at the hearing of the appeal.
This Court held (Bachawat & Mitter JJ., dissenting) that the order passed was a final order within the meaning of article 134(1) (c) since the controversy between the parties when the the complaint in respect of offences under sections 467 and 468 read with section 114 I.P. Code was disposed of by the order of dismissal and the proceeding regarding that question was finally decided It was observed that the finality of that order was not to be judged by co relating it with the controversy in the complaint, viz., when then the appellant had committed the offence charged ,against him therein.
There is nothing in that judgment which supports the contention that this Court has departed from the principle of the earlier decisions or has suggested a different test for determining the finality of orders.
The Court in that case was concerned merely with an order passed by the High Court which maintained the order of the Additional Sessions Judge that a complaint under section 205 read with section 114 I.P. Code could be filed against the appellant.
The order of the High Court finally disposed of the proceeding in the Magistrate 's court relating to the expediency of instituting criminal proceedings against the appellant.
It was thereafter for the court trying the complaint to decide whether the offence complained of was committed by the appellant.
The proceeding for filing a complaint under section 476 of the Code of Criminal Procedure was a self contained proceeding and was finally disposed of by the order directing the filing of a complain under section 205 read with section 114 I.P. Code.
The proceeding instituted on the complaint was not part of or incidental to the proceeding for an enquiry whether a complaint should be filed.
The Court in that case expressly approved of the earlier view at p. 736 where after referring to Kuppusami Rao 's case(1) observed: Syedna Taher Saifuddin Saheb 's case(") observed: " . these were cases where the impugned orders were passed in appeals or revisions and since an appeal or a revision in continuation of the original suit or proceeding the test applied was whether the order disposed of the original suit or proceeding.
If it did not, and the suit or proceeding was a live one, yet to be tried, the order was held not to be final.
Different tests have been applied, however, to orders made in proceeding independent of the original or the main proceeding.
" In our judgment an order passed by the High Court in appeal which does not finally dispose of a suit or proceeding and leave the rights and obligations of the parties for determination in the suit or proceeding from which appeal has arisen, is not final within (1) (2) E[1958] S.C.R. 1007.
705 he meaning of article 133(1)(a) and (b).
The order refusing to grant an interim injunction did not determine the rights and obligations of the parties in relation to the matter in dispute in the suit.
We are unable to hold that, because the plaintiff 's suit as a result of the order of the High Court may become infructuous as framed and the plaintiffs may have to seek amendment of the plaint to get effective relief, an order which is essentially an interlocutory order may be deemed final for the purposes of article 133 (1) of the Constitution.
In our judgment, Mohanlal Maganlal ThakKar 's case(1) makes no departure from the earlier judgments of the Judicial Committee, the Federal Court and this Court.
The plaintiffs will pay the costs of the petitioners of the application for revocation of the certificate.
G.C. Certificate revoked.

Response:
M/s Tarapore & Co. who were plaintiffs in a suit applied for an interim injunction restraining the first defendant in the suit from taking any steps in pursuance of a letter of credit opened in favour of the second defendant.
A single judge of the High Court granted an interim injunction restraining encashment of the letters of credit pending disposal of the suit.
In appeals under the Letters Patent preferred by the second dependent, the High Court of Madras set aside that order.
Against the orders passed in the two appeals, the plaintiffs applied for certificate under articles 133(1) (a) and 133(1)(b) of the Constitution.
The High Court observed that an order granting interim injunction "is a final order, as far as this Court is concerned, determining the rights of parties within this his or proceeding, which is independent though ancillary to the suit", and they were competent to grant certificate.
In this Court the defendants applied for revocation of the certificate.
HELD: The certificate must be revoked.
An order passed by the, High Court in appeal which does not finally dispose of a suit or proceeding and leaves the rights and obligations of the parties for determination in the suit or proceeding from which the appeal has arisen, is not final within the meaning of article 133(1)(a) and (h).
The order refusing to grant an interim injunction did not determine the rights and obligations of the parties in relation to the matter in dispute in the suit.
It could not be held that because the plaintiffs suit as a result of the order of the High Court may become infructuous as framed and the plaintiff may have to amend his plaint to obtain effective relief an order which is essentially an interlocutory order may be deemed final for the purpose of article 133(1) of the Constitution.
[704 H] Mohanlal Maganlal Thakkar 's case makes no departure from the earlier judgments of the judicial Committee, the Federal Court and this Court.
Ramchand Manjimal vs Goverdhandas Vishindas Ratanchand, L.R. 47 I.A. 124; Salaman vs Warner, ; Bazson vs Altrincham Urban District Council, [1903] 1 K.B. 547; Isaacs vs Selbstein, , Abdul Rahrnan vs
D.K. Cassim & Sons, L.R. 60 I.A. 76; section Kuppusami Rao vs The King, ; Mohammad Amin Brothers Ltd, and Others vs Dominion of India and Others, ; Sardar Syedna Taher Saifuddin Saheb vs The State of Bombay, ; Srinivasa Prasad Singh vs Kesho Prasad Singh 13 C.L.J. 681 and Druva Coal Company vs Benaras Bank, , referred to.
Mohanlal Maganlal Thakkar vs State of Gujarat.
A.I.R. , explained.


Prompt:
o. 196 of 1954.
Under article 32 of the Constitution of India for the enforcement of fundamental rights.
P. R. Das and K. P. Khaitan, (B. Sen, A. K. Mukherjea and B. P. Maheswari, with them) for the petitioner.
C. K. Daphtary, Solicitor General for lndia, (Porus A. Mehta and P. G. Gokhale, with ', him) for the respondents.
May 28.
The Judgment of the Court was delivered by I MEHR CHAND MAHAJAN C.J.
The principal question canvassed in this case is whether certain sections of the Taxation on Income (Investigation Commission) Act, 1947, i.e., Act XXX of 1947, have become void from the date of the commencement of the Constitution of India by reason of article 14 of the ' Constitution.
The petitioner, Suraj Mall Mohta & Co. Ltd., is a company registered under the Indian Companies Act.
Suraj Mall Mohta is also the managing director of another company Messrs. Jute and Gunny Brokers Ltd. A reference had been made by the Central Government under the provisions of section 5(1) of the Act before 58 450 1st September, 1948, of the case of Messrs. Jute and Gunny Brokers Ltd. to the Investigation Commission appointed under Act XXX of 1947.
During the investigation of that case which was numbered 831/30 in the records of the Commission, and during the investigation of some other cases similarly referred to the Commission, it was said to have been discovered that the petitioner company had made secret profits which it had not disclosed and had thus evaded taxa tion.
On the 28th August, 1953, a report to this effect was made by the Commission to the Central Government under the provisions of section 5(4) of the Act requesting that the case of the petitioner along with the cases of Suraj Mall Mohta and other members of his family may be referred to the Commission for investigation.
On the 9th September, 1953, the Central Government referred these cases to the Investigation Commission under the provisions of section 5(4) of the Act and these were numbered 831/64 69 on the records of the Commission.
On the 15th of September, 1953, the Commission notified the petitioners that their cases had been referred for investigation and they were called upon to furnish certain material, as detailed in Annexure "B" of the petition, to the Commission.
On the 12th April, 1954, the present petition under article 32 of the Constitution was filed for the issue of appropriate writs restraining the Commission from taking any action against the petitioner under the provisions of Act XXX of 1947, on the ground that the provisions of sections 5(1), 5(4),6,7 and 8 of Act XXX of 1947, had become void, being discriminatory in character after the coming into force of the Constitution of India.
In order to appreciate the respective contentions raised and canvassed before us on behalf of the petitioner company and the State, it is necessary to set out some of the relevant provisions of the Act.
The object of the Act as stated in its Preamble was to ascertain whether the actual incidence of taxation on income in recent years had been in accordance with 451 provisions of law and whether the procedure for assessment and recovery of tax, was adequate to prevent evasion thereof.
Section 3 authorizes the Central Government to constitute a Commission, to be called the Income tax Investigation Commission, it,% duty, being (a) to investigate and report to the Central Government on all matters relating to taxation on income, with particular reference to the extent to which the existing law relating to, and procedure for, the assessment and collection of such taxation is adequate to prevent the evasion thereof; (b) to investigate in accordance with the provisions of this Act any case or points in a case referred to it under section 5.
The composition of the Commission is set out in section 4.
Section 5 of the Act reads as follows 5(1) The Central Government may at any time before the first day of September, 1948, refer to the Commission for investigation and report any case or points in a case in which the Central Government has prima facie reasons for believing that a person has to a substantial extent evaded payment of taxation on income, together with such material as may be available in support of such belief, and may at any time before the 1st day of September, 1948, apply to the Commission for the withdrawal of any case or points in a case thus referred. . (2). . . . . . . (3)No reference made by the Central Government under sub section, (1), at any time before the first day of September, 1948, shall be called in question, nor shall the sufficiency of the material on which such a reference has been made be investigated in any manner by any Court.
(4)If in the course of investigation into any case or points in a case referred to it under sub section (1), the Commission has reason to believe (a) that some person other than the person whose case is being investigated has evaded payment of taxation on income, or (b)that some points other than those referred ' to it by the Central Government in respect of any case 452 also require investigation, it may make a report to the Central Government stating its reasons for such belief and, on receipt of such report, the Central Government shall, notwithstanding anything contained in subsection (1), forthwith refer to the Commission for investigation the case of such other person or such additional points as may be indicated in that report.
" The powers possessed by the Commission while conducting an investigation are provided for in section 6 which is in these terms: "6(1) The Commission shall have power to require, any person or banking or other company to prepare and furnish on or before a specified date written statements of accounts and affairs verified in such manner as may be prescribed by the Commission and, if so required by the Commission, also duly verified by a qualified auditor, giving information on such points or matters as in the opinion of the Commission may, directly or indirectly, be useful for, or relevant to, any case referred to it, and any person or banking or other company so required shall be bound, notwithstanding any law to the contrary, to comply with such requirement.
(2)The Commission shall also have power to administer oaths, and shall have all the powers of a civil court under the Code of Civil Procedure, 1908, for the purposes of taking evidence on oath, enforcing the attendance of witnesses and of persons whose cases are being investigated, compelling the production of documents and issuing commissions for the examination of witnesses.
(3)If in the course of any investigation it 'appears to the Commission to be necessary to examine any accounts or documents or to interrogate any person or obtain any statements from any person, the Commission may authorize any income tax authority not below the rank of Income tax Officer in that behalf. (4)The authorized official shall subject to the direction of the Commission have the same powers as the Commission under sub sections (1) and (2), and 453 any person having charge or custody of accounts or documents required to be examined shall not withstanding anything in any law to the contrary be bound to produce them (5)If any person whose case or the points in whose case is or are being investigated by the Commission refuses or fails to attend in person in compliance with a notice in that behalf duly served upon him or to give any evidence or to answer questions or to produce documents or to prepare and furnish statements when called upon to do so, the Commission may, if satisfied that the refusal or failure was wailful, close the investigation of the case and proceed to draw up its report on the case or on the points to the best of its judgment and may in its discretion also direct that such sum as it may specify in the direction shall be recovered from the person by way of penalty for the refusal or failure, without prejudice to any penalty under the Indian Income tax Act, 1922 (6). . . . . . . . . (7)Where in the opinion of the Commission any person or banking or other company is likely to be in possession of any information or document which may, directly or indirectly be useful for, or relevant to, any case referred to it or any case likely to be reported by the Commission to the Central Government under the provisions of sub section (4) of section 5, the Commission and subject to the direction of the Commission any authorized official, may make enquiries in such manner as it or he may deem fit and obtain from such person or banking or other company statements on oath or ' otherwise on such points or matters as may be specified; and for the purpose of any such enquiry, the Commission and the authorized ' official shall have all the powers conferred on them by sub sections (1), (2), (2A), (3) and (4).
(8) All materials gathered by the Commission or the authorised official and materials accompanying the reference under sub section (1) of section 6 may be brought on record at such stage as.
the Commission may think fit.
" 454 The procedure to be followed by the Commission is contained in section 7 which provides that subject to the provisions of this Act the Commission shall have power to regulate its own procedure and that the powers of the Commission under sub sections (1), (2), (3), (7) and (8) of section 6 and sub sections (2), (4) and (6) of this section, i.e. section 7 may be exercised by any member thereof authorised by the Commission in this behalf.
Sub section (2) of section 7 provides as follows " 7(2) In making an investigation under clause (b) of section 3, the Commission shall act in accordance with the principles of natural justice, shall follow as far as practicable the principles of the , and shall give the person whose case is being investigated, a reasonable opportunity of rebutting any evidence adduced against him; and the power of the Commission to compel production of documents shall not be subject to the limitation imposed by section 130 of the , and the Commission shall be deemed to be a Court and its proceedings legal proceedings for the purposes of sections 5 and 6 of the .
" Sub section (3) of section 7 is in these terms: "7(3) Any person whose case is being investigated by the Commission may be represented by a pleader, a registered accountant or an employee duly authorised to act on his behalf, provided that no person shall be entitled to be present or to be represented in the course of an enquiry under subsections (3) and (7) of section 6." The result of these provisions is that when the Commission is collecting the materials from different sources against the assessee he is not entitled to be present at those stages and take part in the enquiry, but after the material is ready and is placed on the record then he can be present and has to be given a reasonable opportunity of rebutting any evidence that may have been collected against him.
Sub section (4) of section 7 which came in for considerable criticism provides as follows: 455 "7(4) No person shall be entitled to inspect, call for, or obtain copies of, any documents, statement or papers or materials furnished to, obtained by or produced before, the, Commission or any authorized official in any proceedings under this Act; but the, Commission and after the Commission has ceased to exist such authority as the Central Government may in this behalf appoint, may, in its discretion, allow such inspection and furnish such copies to any person .
Provided that, for the purpose of enabling the person whose case or points in whose case is or are being investigated to rebut any evidence brought on the record against him, he shall, on application made in this behalf and on payment of such fees as may be prescribed by rules made under this Act, be furnished with certified copies of documents, statements, papers and materials brought on the record by the Commission.
" Sub section (5) of section 7 is in these terms "7(5) Save in cases in which the Commission may exercise its powers under section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898, (a)no suit, prosecution or other legal proceedings shall be instituted against any person in any civil or criminal Court for any evidence given or produced by him in any proceedings before the Commission, and , (b)no evidence so given or produced shall be admissible in evidence against such person in any suit, prosecution or other proceeding before such Court, except with the previous sanction of the Central Government.
" The last section that came in for objection is section 8 which is in these terms: "8(1) Save as otherwise provided in this Act, the materials brought on record shall be considered by all the three members of the Commission sitting together and the report of the Commission shall be in accordance With the opinion of the majority.
(2)After considering the report, the Central Government shall by order in writing direct that such 456 proceedings as it thinks fit under the Indian Income tax Act, 1922, the Excess Profits Tax Act, 1940, or any other law, shall be taken against the person to whose case the report relates in respect of the income of any period commencing after the 31st day of December , 1938; and upon such a direction being given, such proceedings may be taken and completed under the appropriate law notwithstanding the restrictions contained in section 34 of the Indian Income tax Act, 1922, or section 15 of the Excess Profits, Tax Act, 1940, or any other law and notwithstanding any lapse of time or any decision to a different effect given in the case by any Income tax authority or Income tax Appellate Tribunal.
(3) . (4) In all assessment or reassessment proceedings taken in pursuance of a direction under sub section (2), the findings recorded by the Commission on the case or on the points referred to it shall, subject to the provisions of sub sections (5) and (6), be final; but no proceedings taken in pursuance of such direction shall be a bar to the initiation of proceedings under section 34 of the Indian Income tax Act,, 1922.
(5) In respect of any order made in the course of proceedings taken in pursuance of a direction issued under sub section (2) the provisions of sections 30, 31, 33 and 33 A of the Indian Income tax Act, 1922, and the corresponding provisions of the Excess Profits Tax Act 1940, shall not apply so far as matters declared final, by sub section (4) are concerned; but the person concerned may, within 60 days of the date upon which he is served with a copy of such order, by application in the prescribed form accompanied by a fee of Rs. 100 require the appropriate Commissioner of Income tax to refer to the High Court any question of law arising out of such order, and thereupon the provisions of sections 66 and 66 A of the Indian Income tax Act, 1922, shall as far as may be apply, with the modifica tion that the reference shall be heard by a Bench of not less than three Judges of the High Court.
(6) 457 (7) Notwithstanding anything to the contrary contained in this Act or in any other law for the time being in force, any evidence in the case admitted before the Commission or an authorized official shall be admissible in evidence in any proceedings directed to be taken under sub section (2).
" It was not and could not be denied that the powers vested in the Commission and the procedure prescribed by the impugned Act is more comprehensive and drastic than those contained in the Indian Income tax Act.
At the time when the impugned statute was passed there could possibly be taken no exception to its contents on the ground of constitutionality of it 's provisions, and the powers conferred on the Commission and the procedure it was authorized to follow were well within the ambit of the Legislative power of the Central Legislature.
The impugned statute admittedly was good law till the coming into force of the Constitution.
When India became a sovereign democratic Republic on 26th January, 1950, the validity of all laws had to be tested on the touchstone of the new constitution and all laws made before the coming into force of the Constitution have to stand the test for their validity on the provisions of Part III of the Constitution.
The points that require consideration in the case are whether the provisions of section 5(1), sections 5(4), 6, 7 and 8 or any parts thereof contravene the guarantee of equal protection of the laws and of the equality before the law, or whether the impugned provisions of the Act are based on a valid classification which is rational in view of the objects of the Act.
A further point is whether section 6(5)of the Act offends against article 20 (3) of the Constitution.
Mr. P. R. Das for the petitioner attacked the provisions of section 5(1) of the Act on a two fold ground: (1) That the section was not based on any valid classification; the word "substantial" being vague and uncertain and having no fixed meaning, could furnish no basis for any classification at all; (2) That the Central Government was entitled by the, provisions of the section to discriminate between one person and another in the same class and it was authorized to pick and 59 458 choose the cases of persons who fell within the group of those who had substantially evaded taxation.
It could, if it chose, send the case of one person to the Commission and show favoritism to another person ,,by not sending his case to the Commission though both of these persons be within the group of those who have evaded the payment of tax to a substantial extent.
As regards sub section (4) of section 5, the learned counsel contended that this section had no independent existence and was bound to fall with subsection (1) Of section 5, if his contention regarding the invalidity of that section prevailed.
In the alternative, he I contended that assuming that sub section (1) was valid even then sub section (4) had to be declared void because it gave arbitrary power to the Commission to pick and choose and secondly because the clause was highly discriminatory in character inasmuch as an evasion, whether substantial or insubstantial, came within its ambit as well as within the ambit of section 34 of the Indian Income tax Act.
The learned Solicitor General combated all these arguments and contended that the Act was based on a broad and rational classification, that it only dealt with a group of persons who had evaded income tax from the, beginning of the war, 1st January, 1939, to the period ending with 1st September, 1948, as a consequence of war controls resulting in black marketing activities and huge profits.
In other words, it was said that the Act only dealt with that group of persons who came within the class of war profiteers.
This was a class by itself and needed special treatment and there fore the law did not offend against the equal protection of the laws clause of the Constitution.
It was suggest.
ed that persons coming under sub section (4) of section 5 also belonged to the same class and therefore on the same grounds that section also could not be declared void.
It was further.
said that there was no substantial difference in the procedure prescribed under section 34 of the Indian Income tax Act and the impugned Act and that in any case the procedure prescribed by the Act was a good substitute for that prescribed by the Indian Income tax Act.
459 In our judgment, it is not necessary in this case to deal with all the contentions raised by Mr. P. R. Das and combated by the learned Solicitor General.
It will be sufficient, for the decision of this case to examine the respective contentions raised about the validity of sub section (4) of section 5 of the Act because the case of the petitioner was referred to the Commission under the provisions of this section and was not referred to the Commission by the Central Government under the provisions of section 5(1) and that being so, an enquiry into the validity of that section is really outside the scope of the present case.
On the assumption therefore that sectio n 5(1) of the Act is based on a valid classification and deals with a group of persons who came within the class of war profiteers which required special treatment and that the classification is rational and that reasonable grounds existed for making distinction between those who fell within that class and others who did not come within it, but without in any way deciding or even expressing any opinion on that question, we proceed to examine the question whether sub section (4) of section 5 under which proceedings had been initiated against the petitioner offends against the guarantee of equal protection of the laws given in article 14 of the Constitution.
The first question that requires consideration is whether sub section (4) of section 5 deals with the same class of persons as are said to have been grouped together in subsection (1) of section 5 as persons who to a substantial extent evaded payment of taxation on income: in other words, does sub section (4) of section 5 confer an the Commission the power merely to add to the number of persons included in section 5(1) by, the Central Government or does it confer larger power on the Commission.
On the phraseology employed in the sub section it is difficult to read therein the limitations contained in sub section (1) of section 5 as contended for by the learned Solicitor General.
Sub section (4) which has been set out above in clear and unambiguous terms provided that where the Commission "has reason to believe that some person ther than the person whose case is being investigated has evaded payment of taxation on income. . it may 460 make a report to the Central Government.
" It does,not repeat the phraseology used in section 5(1) that some person other than the person whose case is being investigated "have to a substantial extent evaded payment of taxation on income.
" On no principle of construction of statutes can the words to a "substantial extent" be read in sub clause (a) of section 5(4).
On a plain reading of the section it is clear that the subsection is not limited only to persons who made extraordinary profits and to a substantial extent evaded payment of taxation on income, but applies to all persons who may have evaded payment of taxation on income, irrespective of whether the evaded profits are substantial or insubstantial.
In other respects also the phraseology of the section is different from that employed in sub section (1) of section 5.
Sub section (1) of section 5 provided that where the Central Government "has prima facie reasons for believing that a person has to a substantial extent evaded payment of taxation on income", while clause (a) of section 5(4).
says that if the Commission "has reason to believe that some person other that the preson whose case is being investigated has evaded payment of taxation on income".
The prima facie belief of the Central Government is substituted by the expression "The Commission has reason to believe".
The scope of the section is thus different from the scope of section 5(1) of the Act, 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 subsection (4), it obviously deals with the same class of persons who fall within the ambit of section 34 of the Indian Income tax Act and are dealt with in subsection (1) of that section and whose income can be caught by proceeding under that section.
Assessees who have failed to disclose fully and truly all material facts necessary for the assessment under section 34 can be equated with persons who are discovered in the 461 course of the investigation conducted under section 5(1) to have evaded payment of income tax on their incomes.
The result is that some of these persons can, ' be dealt with under the provisions of Act XXX of 1947, at the choice of the Commission, though they could also be proceeded with under the provisions of section 34 of the Indian Income tax Act.
It is not possible to hold that all such persons who evade payment of income tax and do not truly disclose all particulars or material facts necessary for their assessment and against whom a report is made under sub section (4) of section 5 of the impugned Act by themselves form a class distinct from those who evade payment of income tax and come within the ambit of section 34 of the Indian Income tax Act.
It is well settled that in its application to legal.
proceedings article 14 assures to everyone the same rules of evidence and modes of procedure; in other words, the same rule must exist for all in similar circumstances.
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 be attained and cannot be made arbitrarily and without any substantial basis.
Classification means segregation in classes which have a systematic relation, usually found in common proper ties and characteristics.
There is nothing uncommon either in properties or in characteristics between persons who are discovered as evaders of income tax during an investigation conducted under section 5(1) and those who are discovered by the Income tax Officer to have evaded payment of income tax.
Both these kinds of persons have common properties and have common characteristics and therefore require equal treatment.
We thus hold that both section 34 of the Indian Income tax Act and sub section (4) of 462 section 5 of the impugned Act deal with all persons who have similar characteristics and similar properties, the common characteristics being that they are persons who have not truly disclosed their income and have evaded payment of taxation on income.
The next question that requires determination is whether the procedure prescribed by Act XXX of 1947 for discovering the concealed profits of those who have evaded payment of taxation on their income is substantially different and prejudicial to the assessees than the procedure prescribed in the Indian Income tax Act by section 34.
The learned Solicitor General contended that the procedure prescribed by the impugned Act was a fair and good substitute for the procedure prescribed by the Indian Income tax Act and that there was really no substantial difference between the two procedures.
He urged that justice could be fully done to those persons by following the new procedure and as a matter of fact, it would be more truly done by following the procedure under the impugned Act than following the procedure under the Indian Income tax Act.
This argument, in our opinion, begs the question to be decided in all such cases.
It is clear that if persons dealt with by the impugned Act are deprived of the substantial and valuable privileges which they would otherwise have if they were dealt with under the Indian Income tax Act, in that situation it is no defence to say that the discriminatory procedure also advances the course of justice.
The matter has to be judged from the point of view of the ordinary reasonable man and not from the point of view of the Government.
The ordinary reasonable man would say, when the stakes are heavy and serious charge of evasion of income tax are made against, him, why one person similarly placed should have the advantage substantially of the procedure prescribed by the Indian Income tax Act, while another person similarly situated be deprived of it.
It is from this aspect that the application of article 14 to the facts of this case has to be considered.
The next question for consideration is whether the procedure prescribed by the impugned Act in regard to 463 persons similarly situate with those who are proceeded with under section 34, is substantially different than under the Act, and operates to the prejudice of those persons.
So far as we can see these assessees have been given discriminatory treatment even from those whose cases are referred to under section 5(1) of the Act to the Commission inasmuch as in the case of persons whose cases are referred to under section 5(1) of the Act it is the prima facie, belief of the Government that enables the reference to be made to the Commission and the Commission has after investigation to form an opinion; while in the case of persons coming within the ambit of sub section (4) of section 5 the Commission itself finds and gathers reason to believe that, these persons have evaded income tax and on its report the Government is bound to refer their cases to the same Commission who has.
already arrived at the prima facie conclusion that they have evaded payment of income tax.
The investigator and the judge in this situation are rolled into one.
That is not so in cases coming under section 5(1).
Apart from this circumstance, there are substantial differences between the two procedures, inter alia, in the following matters : 1.
Under the provisions of section 8 of the impugned Act, the findings of fact given by the Commission as to factum and extent of the evasion are final and conclusive and thus the persons against whom proceedings are taken under section 5(4) are deprived of the rights of appeal, second appeal and revision conferred by sections 31, 32 and 33 of the Indian Income tax Act on assessees whose cases are dealt with under the procedure of section 34 of the Indian.
Income tax Act.
A person who has evaded payment of income tax and is proceeded with under section 34 and is held to have escaped income tax has a right of appeal to the Appellate Assistant Commissioner of Income tax and can challenge all the findings of fact given by the Income tax Officer.
If he does not get relief from the Appellate Assistant Commissioner, he is entitled to go before the Appellate Tribunal under section 33 and can challenge all the findings of fact given by the Income tax Officer.
On the other hand, a person dealt with under section 5(4) of the impugned Act has no such right.
The learned Solicitor General contended that the constitution 464 of the Commission was such that it was a good substitute for the rights of appeal, second appeal and revision conferred by the Income tax Act inasmuch as the Commission is comprised of a High Court Judge and two other responsible persons and these sitting together were as good a tribunal as the totality of persons comprising the Income tax Officer, Appellate Assistant Commissioner and the Appellate Tribunal.
In our opinion, the constitution of the Commission by itself cannot be held to be a sufficient safeguard and a good substitute for the rights of appeal and second appeal and revision given by the Indian Income tax Act and there can thus be no doubt that the procedure prescribed by the impugned Act deprives a person who is dealt with under that Act of these valuable rights of appeal, second appeal and revision to challenge questions of fact decided by the Judge of first instance.
There is thus a material and substantial difference between the two procedures, one prescribed by the impugned Act and the other prescribed by the Indian Income tax Act.
2.When an assessment on escaped or evaded income is made under the provisions of section 34 of the Indian Income tax Act, all the provisions for arriving *at the assessment provided under section 23(3) come into operation and the assessment has to be made on all relevant materials and on evidence and the assessee ordinarily has the fullest right to inspect the record and all documents and materials that are to be used against him.
Under the provisions of section 37 of the Indian Income tax Act the proceedings before the Income tax Officer are judicial proceedings and all the incidents of such judicial proceedings have to be observed before the result is arrived at.
In other words, the assessee would have a right to inspect the record and all relevant documents before he is called upon to lead evidence in rebuttal.
This right has not been taken away by any express provisions of the Income tax Act but the impugned Act contains a mandate in sub section (4) of section 7 to the effect that "no person shall 'be entitled to inspect, call for, or obtain copies of, any documents, statement or papers or materials furnished to, obtained by or produced before the Commission or any authorized official in.
any proceedings under this 465 Act.
" There is a proviso to sub section (4) which says that for the purpose of enabling the person whose case or points in whose case is or are being investigated to rebut any evidence brought on the record against him, he shall, on application made in this behalf and on payment of such fees as may be prescribed by rules, be furnished with certified copies of documents, statements, papers and materials brought on the record by the Commission.
This little, mercy shown to the person whose case is being investigated by the Commission is no substitute for the fullestright of inspection which under ordinary law and the Code of Civil Procedure and in a judicial proceeding a person would have in order to meet the case made against him.
He is entitled only to get copies of that portion of the materials which is brought on the record and which is going to be used against him and it is clear that portions of the material which are in his favour and which have not been brought on the record may not be available to him at all.
He is not even entitled to see all the books of account which may have been impounded under the Act and taken possession of by the Commission.
It may well happen that there are entries in those books which contain the rebuttal evidence, but the assessee is not entitled to have their copies.
The assessee is not even entitled to see his own books which are in the possession of the Commission and take copies of those entries which are favourable to him and which would completely demolish the case made against the assessee by the Commission.
The procedure thus prescribed in this matter by the impugned Act is substantially prejudicial to the assessee than the procedure prescribed under the Indian Income tax Act.
It was not disputed by the learned Solicitor General that the procedure prescribed by the impugned Act in sections 6 and 7 was more drastic than the procedure prescribed in sections 37 and 38 of the Indian Income tax Act.
Again, so far as the procedure for reference under subsection (4) of section, 5 is concerned, it is also to a certain extent prejudicial to the assessee.
There is no doubt that there is in this matter in the first stages some similarity in the procedure to be followed for catching evaded income both under section 34 of the Indian Income tax Act and under the provisions of 69 466 subsection (4) of section 5 of the impugned Act; but the overall picture is that though under the Indian income tax Act the same officer who first arrives at a tentative conclusion hears and decides the case, his decision is not final but is subject to appeal, while under the provisions of sub section (4) of section 5 the decision of the Commission tentatively arrived at in the absence of the assessee becomes final when taken in his presence, and that makes all the difference between the two procedures.
If there was a provision for reviewing the conclusions of the Investigation Commission when acting both as investigators and judges, there might not have been such substantial discrimination in the two procedures as would bring the case within article 14; but as pointed out above, there is no provision of that kind in the impugned Act.
It may also be pointed out that under the provisions of section 34 investigation into escaped income or evaded income is limited to a maximum period of eight years, while under the provisions of sub section (4) of, section 5 it is not limited to any period and this certainly operates to the detriment of those dealt with under sub section (4) of section 5 of the impugned Act, and those dealt with under section 34 of the Indian Income tax Act.
For the reasons given above we are of the opinion that sub section (4) of section 5 and the procedure prescribed by the impugned Act in so far as affects the persons proceeded against under that sub section being a piece of discriminatory legislation offends against the provisions of article 14 of the Constitution and is thus void and unenforceable.
In reaching this decision we refrain from expressing any opinion, as above pointed out, on the validity of section 5(1) of the Act or on the question whether section 6(5) of the impugned Act offends against the provisions of article 20 sub clause (3) of the Constitution.
We accordingly direct that an appropriate writ be issued against the Investigation Commission prohibiting it from taking any proceedings under the provisions of the impugned Act against the petitioner.
The petitioner will have his costs of these proceedings.

Response:
Sub section (4) of section 5 of the Taxation on Income (Investigation Commission) Act, 1947, does not deal with the same class of persons as are said to have been grouped together in subsection (1) of section 5 of the Act as persons who to a substantial extent evaded payment of taxation on income.
On a plain reading of the section it is clear that sub section (4) of section 5 is not limited only to persons who made extraordinary profits and to all persons who may have evaded payment of taxation on income irrespective of whether the evaded profits are substantial or insubstantial and therefore the scope of sub section (4) of section 5 is different from the scope of sub section (1) of section 5 both in extent and range.
Sub section (4) of section 5 of the Act, obviously deals with the same class of persons who fall within the ambit of section 34 of the Indian Income tax Act and are dealt with in sub section (1) of that section and whose income can be caught by the proceeding under that section.
It is not possible to hold that all such persons who evaded payment of income tax and do not truly disclose all particulars or material facts necessary for their assessment and against whom a, report is made under sub section (4) of section 5 of the impugned 449 Act by themselves form a class distinct from those who evade payment of income tax and come within the ambit of section 34 of the Indian Income tax Act.
Both section 34 of the Indian Income tax Act, 1.922, and subsection (4) of section 5 of the Taxation on Income (Investigation Commission) Act, 1947, deal with all persons who have similar characteristics and similar properties, the common characteristics being that they are persons who have not truly disclosed their income and have evaded payment of taxation on income.
The procedure prescribed by the Taxation on Income (Investigation Commission) Act, 1947, is substantially more prejudicial and more drastic to the assessee than the procedure under the Indian Income tax Act (XI of 1922).
Held, therefore that sub section (4) of section 5 and the procedure prescribed by the impugned Act in so far as it affects the persons proceeded against under that sub section being a piece of discriminatory legislation offends against the provisions of article 14 of the Constitution and is thus void and unenforceable.