Judgment

MAHAJAN C.J.I. The petitioner in this matter is a resident of Akola in the State of Madhya Pradesh and carries on business in various lines i.e., oil mills, banking money lending, etc. It is alleged that during the war years he made huge profits but evaded payment of tax. In the year 1948 the Central Government acting under Section 5(1) of the Taxation on Income (Investigation Commission) Act. 1947, referred his case to the Investigation Commission for investigation and report, in respect of the profits made by him during the period commencing with 1st of January 1939 and ending on 31st of December 1947.

The Commission, after investigation, reported on the 28th of February 1951 that the income of the petitioner concealed and withheld from taxation was in the sum of Rs. 27,25,363 / and the tax payable by him amounted to Rs. 18,44,949/-.

2. During the pendency of the investigation the petitioner applied for settlement under the provisions of Section 8-A of Act XXX of 1947. This application was forwarded along with the report by the Commission to the Central Government. In the settlement application the applicant proposed that he was prepared to pay the sum of Rs. 18,44,949/- as under :

On or before 25-6-1951-Rs. 3,44,949/-

On or before 25-3-1952-Rs. 5,00,000/-

On or before 25-3-1953-Rs. 5,00,000/-

On or before 25-3-1954-Rs. 5,00,000/

and that he be given credit for a sum of Rs. 32,034-4-6 already paid by him.

The Central Government accepted this proposal and the claim for evaded income-lax was thus finally settled by mutual agreement. The assessee, subsequently, asked for more time to pay these instalments and this was also granted from time to time.

3. Commencing from 16th of July 1951 and till the 10th April 1954 the petitioner paid a total sum of about Rs. 14,00,000 /- towards discharge of the liability voluntarily agreed to by him on account of the tax evaded. A sum of Rs. 4,50,000/- still remains due and is payable in instalments up to the 25th of March 1955. By one of the terms of the settlement the petitioner undertook not to transfer, mortgage, charge or alienate or encumber in any manner whatsoever any of his movable or immovable properties, barring stock-in-trade of the business, except with the permission of the Commissioner of Income-tax and except for the, purpose of the payment of the tax due under the settlement.

4. In June 1954, after the decision by this Court of - Suraj Mal Mohta and Co. v. A. V. Visvanatha Sastri , AIR 1954 SC 545 (A), the petitioner preferred this petition under the provisions of Article 32 of the Constitution alleging that he had been advised that the entire proceeding under the Act which had resulted in the imposition upon him of a liability of Rs. 18,44,949/ and in the payment already made of an aggregate amount of Rs. 13,99,175 /- were wholly illegal, ultra vires , void and unconstitutional and that the Income-tax authorities were not legally entitled to recover the amount of Rs. 4.50,000/- from him.

In the grounds of the petition it was stated that Sections 5, 6, 7 and 8 of Act XXX of 1947 were invalid and ultra vires in so far as they contravene the provisions of Articles 14, 19(l)(f) and 31 of the Constitution and that under the Act there was no reasonable or equitable basis for classification, and that the Act gave to the executive unrestrained and absolute right to pick and choose and to differentiate between the same class of tax-payers.

It was also alleged that the procedure prescribed by the Act for discovering concealed profits was substantially different and was more prejudicial to the assessee than the procedure prescribed under the Indian Income-tax Act by Section 34.

In the concluding paragraph of the petition it was prayed that an appropriate writ or direction be issued quashing the entire procedure and all orders passed under the Act by the Central Government and the respondent Commission, and restraining them from taking any proceedings whatsoever under the Act against the