Purporting to exercise authority under s. 8 2 of the Investigation Act read with s. 3, cl.
By s. 2 of that Act, amongst others, the Taxation on Income Investigation Commission Act, XXX of 1947 enacted by the Central Legislature and all rules and orders made thereunder which were in force immediately before the companymencement of Act XXX of 1950, were extended to the rest of India except the State of Jammu and Kashmir, but by s. 3, in so far as it is material, it was provided that, If immediately before the companymencement of this Act there is in force in any part B State other than Jammu and Kashmir any law x x x x companyresponding to the Taxation on Income Investigation Commission Act, 1947 XXX of 1947 that law shall companytinue to remain in force.
By sub s. 4 of s. 8, all assessment or reassessment proceedings taken in pursuance of the direction under sub s. 2 , the findings recorded by the Commission on the case or on the points referred to it were, subject to the provisions of sub ss.
On August 6, 1949, the Government of Travancore Cochin passed an order referring the case of the appellants to the Commission for investigation and report under s. 5 of the Investigation Act.
The order passed by the Government of India on October 25, 1951, is number in any way inconsistent with the order dated February 14, 1950.
The appellants are a firm of merchants carrying on business in yarn in the Districts of Trivandrum, and Nagercoil in the Travancore Cochin State.
For the accounting year 1118 M. E. August 17, 1942 to August 16, 1943 , the appellants submitted a return under the Income Tax Act showing a net return of Rs.4,78,5945 0 as assessable income, and they were assessed to income tax and super tax by the Income Tax Officer on that return.
fore be regarded as effectuating the earlier order passed by the Travancore Cochin Government on February 14, 1950.
At the instance of the appellants, a reference was made to the High Court of Travancore Cochin under s. 8 5 of the Investigation Act and the three questions set out hereinbefore were referred to that companyrt.
The order passed by the Government of India on October 25, 1951, may there.
Sub section 5 of s. 8 provided for a reference to the High Court on any question of law arising out of any order made by the Commission.
Cochin High Court in Income tax Reference No.
Whatever authority companyld be exercised by the Travancore Cochin Government before the enactment of the Opium and Revenue Laws Extension of Application Act, 1950, companyld therefore, since the application of that Act, be exercised by the Central Government, and the latter Government companyld direct in respect of a case that proceedings for reassess ment be companymenced against a tax payer.
Appeal by special leave from the judgment and order dated July 19, 1954, of the former Travancore.
5 and 6 to be final.
Pursuant to this direction, the Income Tax Officer, without holding any fresh assessment proceedings, issued on March 15,1950, a demand numberice under s. 42 of the Income Tax Act for the additional tax imposed on the appellants according to the findings of the Commission and called upon the appellants to pay Rs.
Against the order of the High Court answering the reference, this appeal has been preferred with special leave.
5 of 1952.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
In 1124 M. E., the Legislature of Travancore enacted the Investigation Act companyferring authority upon the Government of Travancore to companystitute a companymission to be called an Income Tax Investigation Commission to investigate and, report 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 companylection of such taxation was inadequate to prevent evasion thereof and to investigate in accordance with the pro visions of the Act in cases referred, on or before February 16, 1950, to it under s. 5.
The Commission then proceeded to companypute the tax payable by the appellants and found that the amount of tax payable by the appellants on their true income was Rs.
The High Court answered the three questions in the affirmative.
By s. 3 of the Opium and Revenue Laws Extension of Application Act, XXXIII of 1950, the Investigation Act companytinued to remain in force with the modification that reference in the State law to the State Government was in relation to income other than agricultural income, to be companystrued as a reference to the Central Government.
The facts which gave rise to the reference are briefly these.
76 1 I.T/51 dated 25 10 1951 of the Government of India passed under the provisions of s. 8 2 of the Travancore Taxation on Income Investigation Commission Act read with s. 3 of the Opium and Revenue Laws Extension of Application Act of 1950, a legal and valid order ?
304/56.
The State of Travancore Cochin merged with the Indian Union on March 7, 1949, but the Income Tax Act and the Investigation Act companytinued to apply to that area numberwithstanding the merger.
with the following modifications, a all cases referred to or pending before the State Commission by whatever name called in respect of matters relating to taxation on income other than agricultural income, shall stand transferred to the Central Commission for disposal Provided b bb Any reference in the State law, by whatever form of words, to the State Government or the State Commission shall, in relation to income other than agricultural income, be companystrued as a reference to the Central Government or the Central Commission, as the case may be.
V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the appellant.
1,35,736 8 0 and that they were liable to pay that amount subject to credit for the tax, already paid, The Government of Travancore Cochin by order dated February 14, 1950, accepted the report of the Commission and directed that immediate steps be taken to recover, under the Income Tax Act, from the appellants the tax due according to the findings recorded by the Commission.
13,337 13 0 as additional tax.
1,31,750 which was number included in the earlier assessment.
N. Rajagopal Sastri and D. Gupta, for the respondent.
Whether on the facts and in the circumstances of the case, the order passed by the Income Tax Officer in pursuance of the directions of the Government under s. 8 2 of the Travancore Taxation on Income Investigation Commission Act, 1124, was a legal and valid order?
On the facts and in the circumstances of the case was the order C. No.
September 1.
The Government was authorised after companysideration of the report to direct that proceedings be taken under the various Acts including the Income Tax Act, in respect of any period companymencing after August 16, 1939.
The Judgment of the Court was delivered by SHAH J. The Commissioner of Income Tax for Mysore, Travancore Cochin and Coorg at Bangalore 60 referred under s. 8 5 of the Travancore Taxation on Income Investigation Commission Act, 1124 Malayalam Era hereinafter referred to as the Investigation Act read with s. 113 of the Travancore Income Tax Regulation, 1096 Malayalam Era hereinafter referred to as the Income Tax Act, the following questions to the High Court of Travancore Cochin Whether on the facts and in the circumstances of the case, there was any evidence before the companymission to companye to the companyclusion to which it came in its report ?
The case of the appellants was referred to the Investigation Commission by the Travancore Cochin Government and report was made to that Government by the Commission, and the authority of the Government of Travancore Cochin to take action on the report having been companyferred upon the Central Government by s. 3 c of the Opium and Revenue Laws Extension of Application Act, the Central Government was primal facie companypetent to direct that proceedings under the Income Tax Act as may be justifiable be taken against the appellants.
ID the view of the High Court, there was evidence on which the Commission companyld arrive at the companyclusion recorded by it.
1,31,750 which had escaped assessment On January 1, 1952, the Commissioner of Income Tax withdrew the numberice of demand dated March 15, 1950, and thereafter the Income Tax Officer companymenced reassessment proceedings against the appellants and by his order dated March 29, 1952, directed the appellants to pay income tax and super tax on the companycealed income.
The Government of India had, on a companysideration of the report of the Commission, directed on October 25, 1951, that assessment proceedings be started against the appellants.
Evidently, the High Court was incompetent, in answering the question, to enter upon a review of the evidence in exercise of its advisory jurisdiction and Mr. Viswanatha Sastri on behalf of the appellants has fairly number attempted to challenge the answer recorded by the High Court on the first question.
The Union Legislature enacted on April 17, 1950, the Opium and Revenue Laws Extension of Application Act providing for the extension of certain opium and revenue laws to certain parts of India.
