LAXMANAPPA HANUMANTAPPA JAMKHANDI Vs. UNION OF INDIA

JUDGEMENT

(1.) This is a petition under Article 32 of the Constitution of India for the enforcement of fundamental rights under Articles 31(1) and 19(1) (f) of the constitution and for the issue of writs in the nature of 'mandamus' and/or 'certiorari' and for suitable directions restraining the respondents from interfering with the petitioner's properties in violation of his fundamental rights.

(2.) The petition arises in these circumstances. The petitioner, along with his brothers, used to carry on the business of toddy and liquor vendors. In addition to this, one of he brothers used to run a bus service and dealt in cotton and money-lending also. All the brothers owned extensive properties, both agricultural and non-agricultural. Though prior to the assessment year 1926-27 all the brothers were assessed to income-tax as a Hindu undivided family, since then up to the year 1946 they were assessed separately on account of a partition alleged to have been made between them. In December 1946 the Income-tax Officer commenced proceedings against them under Section 34 on the ground that the case of partition, set up by them was not correct and as a matter of fact there had been no partition between them and they were carrying on business jointly. As a result of these proceedings an assessment under Section 34 was made on the four brothers jointly, treating them as an association of persons, for the year 1942-43. Similar assessment proceedings were taken against them in respect of the years 1940-41, 1941-42 and 1943-44.

(3.) In December 1947 the Central Government, under the 'bona fide' belief that the petitioner's brothers had made huge profits during the war and had evaded tax, made five references to the Income-tax Investigation Commission under Section 5(1) of the Taxation on Income (investigation Commission) Act, 1947. Reference No. 175 concerned all the brothers as an association of persons while the other four references related to the brothers individually. As a result of the proceedings before the Investigation Commission, the Commission made a report to the Central Government on the 26th of September 1952 estimating the amount of escaped income at Rs. 16, 79, 203 between the years 1940-41 and 1948-49. In pursuance of this report the Central Government passed an order under Section 8 (2) of the Taxation on Income (Investigation Commission) Act directing that the assessment proceedings be taken under the Indian Income-tax Act and Excess Profits Tax Act, 1940, as well as under the Business Profits Tax Act, 1947 against M/s. Jamkhandi Bros. as an association of persons with a view to assess or reassess the income that had escaped assessment according to the report of the Investigation Commission. In accordance with these orders the Income-tax Officer commenced proceedings against M/s. Jamkhandi Bros. as an association of persons. On the 30th November 1953, various assessment orders were passed by the income-tax Officer assessing the petitioner under the Income-tax Act and the Excess Profits Tax Act. Proceedings were then taken against the petitioner for recovery of the tax assessed by the Income-tax Officer and in those proceedings the properties of the petitioner in the District of Belgaum were attached for payment of the dues and one of his properties comprising of about 12 plots of land was sold by public auction under the provisions of the Bombay Land Revenue Code.