Case: Ranjit Singh Vs. The Commissioner Of Income-Tax, U. P. And Others

44 and 46 of the Indian Income-tax Act, 1922, shall be applicable to the recovery of any sum specified in such settlement by the Income-tax Officer having jurisdiction to assess the person by whom such sum is payable as if it were income-tax or an arrear of income-tax within the meaning of those provisions."The scheme of S. 8-A is different from that of S. 8. The latter section contemplates an assessment or re-assessment in accordance with the direction of the Central Government; see sub-sec. (4) of S. 8. That is not the position under S. 8-A, sub-sec. (2) whereof provides for the enforcement of the norms of any settlement arrived at in pursuance of sub-sec. (1). There is no doubt a reference to certain special provisions of the Indian Income-tax Act, 1922, regarding assessment of partners in a registered firm, tax payable by the representative of a deceased person etc.; but the reference to those provisions does not necessarily mean that a fresh assessment must be made. They merely show that these special provisions will be applicable in appropriate cases. Sub-section (2) ends by saying that "Ss. 44 and 46 of the Indian Income-tax Act, 1922, shall be applicable to the recovery of any sum specified in such settlement by the Income-tax Officer having jurisdiction to assess the person by whom such sum is payable as if it were income-tax or an arrear of income-tax within the meaning of these provisions."This clearly shows that the true scope and effect of the sub-section is to enforce the terms of any settlement arrived at in pursuance of sub-sec. (1) and to recover any sum specified in such settlement as if it were income-tax or arrear of income-tax in accordance with the provisions of Ss. 44 and 46 of the Indian Income-tax Act, 1922. We are unable, therefore, to accept the construction which learned counsel for the petitioner seeks to put on the sub-section.11. This brings us to the main contention that the petitioner has been subjected to a discriminatory procedure after the coming into force of the Constitution by reason of S. 8-A (2) of the Act. Learned counsel for the petitioner has put his argument in the following way. He has submitted that what the petitioner agreed to pay to Government was really a debt arising out of a contract, viz., the settlement between him and Government and the petitioner is one amongst the larger class of persons who are debtors of Government; against all other debtors Government have the ordinary remedy by way of suit but against the petitioner a special remedy is provided which is more drastic and envisages the imposition of a penalty under S. 46 of the Indian Income-tax Act, 1922, if the petitioner is in default in making a payment of the amount due. This it is argued, is a discriminatory procedure which has been continued even after the coming into force of the Constitution. We are unable to accept this argument as correct. First of all the petitioner does not really belong to the larger class of persons whom learned counsel has characterised as debtors of Government. The petitioner belongs to a special class who had evaded payment of income-tax and had entered into a set element to pay the amount due as income-tax or arrear of income-tax. For this class of persons the procedure laid down in S. 8-A (2) is one and the same and no discrimination is made in favour of or against any member of the same class. The classification is a reasonable classification having a just relation to the object of the provision. For the recovery of the amount due as income-tax or arrear of income-tax all these persons are treated on the same footing. Neither is there any discrimination between them and other persons similarly placed in the matter of recovery of income-tax or arrears of income-tax. Secondly it is open to the legislature to make a law as to how particular Government dues should be realised and if the law applies equally to all persons similarly situated, no objection can be taken to such law on the ground of discrimination. The truth of the matter is that what the petitioner agreed to pay to Government is really income-tax which should have been paid in regard to the relevant assessment years but which had escaped assessment and therefore the recovery is to be made according to income-tax law. That is all that S. 8-A (2) says. In the decisions of this Court to which we had earlier adverted, what was held to be bad was the application of a discriminatory procedure after the coming into force of the Constitution; even in Basheshar Naths case 1959 Supp (1) SCR 528: (AIR 1959 SC149) (supra) the Commission applied the discriminatory procedure after the coming into force of the Constitution and then submitted its report on May 24, 1954 and the Central Government accepted the settlement on July 5, 1954. It was held that the settlement itself was vitiated by the discriminatory procedure adopted by the Commission. That is not the position here. In this case everything was concluded before January 26, 1950, when the Constitution came into force, including the issuance of a notice of demand. All that remained to be done was the recovery of the amount according to the notice of demand. Therefore, the crucial question is - is the recovery procedure discriminatory in any way, having regard to the undoubted validity of the proceedings which had been taken against the petitioner before January 26, 1930? We are unable to answer this question in favour of the petitioner for the reasons which we have already stated.12. Learned counsel for the petitioner relied on the decision in M. L. M. Muthiah Chettiar v. Commr., of Income-tax Madras, 1959-35 ITR 339: (AIR 1959 Mad 158 ). The facts of that case were entirely different and no question arose there of considering the provisions of S. 8 -A (2) of the Act.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]they all dealt with the operation of a discriminatory procedure under the different provisions of the Act after the commencement of the Constitution. The position in the case under our present consideration is that the settlement, the order under S. 8A(2) of the Act, and even the notice of demand in pursuance of that order-all these took place before the coming into force of the Constitution, and this vital distinction must be borne in mind in considering the contentions urged by learned counsel for thethe materials in the record it is clear that the proceedings against the petitioner culminating in the service of the notice of demand against him were all completed before the coming into force of the Constitution and the petitioner cannot challenge those proceedings under Art. 14 of the Constitution; for it is well settled that the Constitution is prospective and notscheme of S. 8-A is different from that of S. 8. The latter section contemplates an assessment or re-assessment in accordance with the direction of the Central Government; see sub-sec. (4) of S. 8. That is not the position under S. 8-A, sub-sec. (2) whereof provides for the enforcement of the norms of any settlement arrived at in pursuance of sub-sec. (1). There is no doubt a reference to certain special provisions of the Indian Income-tax Act, 1922, regarding assessment of partners in a registered firm, tax payable by the representative of a deceased person etc.; but the reference to those provisions does not necessarily mean that a fresh assessment must be made. They merely show that these special provisions will be applicable in appropriate cases. Sub-section (2) ends by saying that "Ss. 44 and 46 of the Indian Income-tax Act, 1922, shall be applicable to the recovery of any sum specified in such settlement by the Income-tax Officer having jurisdiction to assess the person by whom such sum is payable as if it were income-tax or an arrear of income-tax within the meaning of these provisions."This clearly shows that the true scope and effect of the sub-section is to enforce the terms of any settlement arrived at in pursuance of sub-sec. (1) and to recover any sum specified in such settlement as if it were income-tax or arrear of income-tax in accordance with the provisions of Ss. 44 and 46 of the Indian Income-tax Act, 1922. We are unable, therefore, to accept the construction which learned counsel for the petitioner seeks to put on theof all the petitioner does not really belong to the larger class of persons whom learned counsel has characterised as debtors of Government. The petitioner belongs to a special class who had evaded payment of income-tax and had entered into a set element to pay the amount due as income-tax or arrear of income-tax. For this class of persons the procedure laid down in S. 8-A (2) is one and the same and no discrimination is made in favour of or against any member of the same class. The classification is a reasonable classification having a just relation to the object of the provision. For the recovery of the amount due as income-tax or arrear of income-tax all these persons are treated on the same footing. Neither is there any discrimination between them and other persons similarly placed in the matter of recovery of income-tax or arrears of income-tax. Secondly it is open to the legislature to make a law as to how particular Government dues should be realised and if the law applies equally to all persons similarly situated, no objection can be taken to such law on the ground of discrimination. The truth of the matter is that what the petitioner agreed to pay to Government is really income-tax which should have been paid in regard to the relevant assessment years but which had escaped assessment and therefore the recovery is to be made according to income-taxthe crucial question is - is the recovery procedure discriminatory in any way, having regard to the undoubted validity of the proceedings which had been taken against the petitioner before January 26, 1930? We are unable to answer this question in favour of the petitioner for the reasons which we have already stated.12. Learned counsel for the petitioner relied on the decision in M. L. M. Muthiah Chettiar v. Commr., of Income-tax Madras, 1959-35 ITR 339: (AIR 1959 Mad 158  ). The facts of that case were entirely different and no question arose there of considering the provisions of S. 8 -A (2) of the Act.