K.S.RASHID & SONS AND ANOTHER vs. COMMISSIONER OF INCOME-TAX, U.P. AND OTHERS

CIVIL APPEAL No. 37/1963Supreme Court[1964] 6 S.C.R. 82619 February 1964Bench: 5 JudgesAuthor: P.B. GAJENDRAGADKAR, K.N. WANCHOO, K.C. DAS GUPTA, J.C. SHAH, N. RAJAGOPALA AYYANGAR12 pages
AI SummaryDismissed

What were the facts?

The Supreme Court heard appeals and writ petitions concerning the validity of Section 34(1A) of the Indian Income-tax Act, 1922. The assessees, including M/s. K. S. Rashid & Son and M/s. Bhawani Prasad Girdharlal, challenged notices issued under this section for income escaping assessment. They argued that Section 34(1A) contravened Article 14 of the Constitution by denying remedies available under Section 34(1) and by not providing the 8-year limitation period applicable to Section 34(1)(a). The assessees were issued notices for assessment years ranging from 1941-42 to 1946-47. The High Court had dismissed their writ petitions, leading to these appeals.

What did the Supreme Court hold?

The Supreme Court held that Section 34(1A) of the Indian Income-tax Act, 1922, is valid and does not contravene Article 14 of the Constitution. Regarding the first issue, the Court found that the intention of the legislature was for the relevant provisions of the Act to apply to proceedings under Section 34(1A), and the words "thereupon" and "accordingly" in the section support this. The argument that appellate and revisional remedies were denied was not sustained. Concerning the second issue, the Court reasoned that while both sections deal with escaped income, Section 34(1A) specifically targets a class of assessees who made large profits during a particular war period (September 1, 1939, to March 31, 1946) and where the escaped income was likely Rs. 1 lakh or more. This difference in magnitude of escaped income provided a rational basis for classification. The argument of overlapping years between Section 34(1) and 34(1A) was deemed insignificant as the subsequent procedure and remedies would be the same. On the third issue, the Court found that the appellant in Civil Appeal No. 589 of 1963 had not pressed the argument that no reasons were recorded; rather, the controversy was about the entitlement to a copy of those reasons, which was not a point pressed. The pleadings indicated that reasons were assumed to have been recorded. Therefore, all appeals and writ petitions were dismissed.

What were the issues?

1. Does Section 34(1A) of the Indian Income-tax Act, 1922, contravene Article 14 of the Constitution by denying assessees the remedy of appeals and revisions available under Section 34(1)? - Assessee contention: Section 34(1A) discriminates by withholding appellate and revisional remedies, unlike Section 34(1). - Revenue contention: Not recorded. 2. Does Section 34(1A) contravene Article 14 of the Constitution by not providing the 8-year limitation period available under Section 34(1)(a) for cases of escaped income? - Assessee contention: The absence of a limitation period under Section 34(1A) constitutes unconstitutional discrimination compared to the 8-year period in Section 34(1)(a). - Revenue contention: Not recorded. 3. Was the condition precedent under the proviso to Section 34(1A), requiring the Income-tax Officer to record reasons and the Central Board of Revenue to be satisfied, complied with in the case of M/s. Bhawani Prasad Girdharlal? - Assessee contention: The condition precedent was not satisfied, invalidating the notice. - Revenue contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 34(1A),Section 34(1),Section 34(1)(a),Section 22

AI-generated summary — verify with the full judgment below

• 1961 ·Rlllnclumdra Rambu v.

Clunnpabal Mudholkar J. 1961 ,Fcbr1111TY 19. 826 SUPREME COURT REPORTS [1964] allowed Sitabai to remain in possession of Ramdhan's movables.

At least, he would have obtained from her a document containing the list and description of the movables and also an admission to the effect that she was entrusted with them by the appellant and that she had no right in them.

Had she refused to execute such a document, one would have naturally expected the appellant to institute a suit for their possession immediately. There is no explanation for the absence of such a document, and thus this is also a circums- tance which militates against the genuineness of the will.

In the circumstances, we hold that the High Court was right in rejecting the evidence of the attesting witnesses and the scribe as well as of the appellant with regard to the exe- cution of the will by Ram4han. · We accordingly uphold the judgment of the High Court, and dismiss the appeal with costs.

Appeal dismissed. K. S. RASHID & SONS AND ANOTHER v. COMMISSIONER OF INCOME-TAX, U.P. AND OTHERS (P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. C. DAS GUPTA, J.C. SHAH

The order continues below.

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