MADAN GOPAL KABRA Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is a test case under the Indian Income-tax Act. The petitioner Madangopal Kabra resiles and carries on business in the district of Jodhpur in the United State of Rajasthan where income-tax had not been levied prior to 1st of April 1950. In the Rajasthan Gazette dated the 13th of May, 1950, the following notice was published: - "in pursuance of sub-section (1) of section 22 of the Indian Income-tax Act, 1922 (XI of 1922) we the Income-tax Officers mentioned in column 1 of the table below hereby give notice to every person subject to our jurisdictions as specified in the corresponding entry in column 3 whose total income during the previous year exceeded the maximum amount not chargeable to income-tax to furnish within sixty-five days from the date of publication of this notice a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as are required by the said form) his total income and total world income during that year. Penalty.- Any person who fails without reasonable cause to furnish the return required by this notice or fails without reasonable cause to furnish it within the time allowed or in the manner re mired is liable under section 28 of the said Act to a penalty not exceeding one and a half times any tax paya-able by him. "

(2.) UNDERNEATH the notice were published the names of various Income-tax Officers with their addresses and jurisdictions. Thereafter, on 7th of August 1950, a notice was served upon the petitioner requiring him to produce his account books on 11th of August 1950 in connection with the income-tax assessment. The Constitution of India came into force on the 26th of January 1950 giving the Dominion Parliament power to legislate in matters relating to income-tax for the whole of India, while according to the Finance Act of 1950, Rajasthan became taxable territory from 1st of April 1950, The petitioner has approached this Court with an application under Article 226 of the Constitution of India objecting to his income being assessed to income-tax which accrued prior to 1st of April 1950 and has based it on two principal grounds, namely: - (1) That Rajasthan became taxable territory on 1st of April 1950 and, therefore, income accruing or arising before that date was not assessable to income-tax. (2) That the Dominion Parliament did not make any law authorizing taxation on income accruing prior to 1st of April 1950 and had no jurisdiction to make any law relating to the imposition of income-tax in Rajasthan prior to the 26th of January 1950.

(3.) THE relevant section which calls for a careful consideration is section 2 (14-A) of the Income-tax Act, as amended by the Finance Act of 1950, which defines "taxable territories," and is as under: - 'taxable territories' means - (a) as respects any period before the 15th day of August, 1947, the territories then referred to as British India, but including Berar, (b) as respects any period after the 14th day of August, I947, and before the 26th day of January, 1950, the territories for the time being comprised in the Provinces of India, but excluding the merged territory of Cooch-Behar, (c) as respects any period after the 25th day of January and before the 1st day of April, 1950, the territories comprised in Part A States, but excluding the merged territories of Cooch-Behar, and the territories comprised in Part C States, but excluding the States of Manipur, Tripura and Vindhya Pradesh, (d) as respects any period after the 31st day of March, 1950, and before the 13th day of April, 1950, the territory of India excluding the State of Jammu and Kashmir and the Patiala and East Punjab States Union, and (e) as respects any period after the 12th day of April, 1950, the territory of India excluding the States of Jammu and Kashmir: Provided that the taxable, territories shall be deemed to include - (a) the merged territories - [i] as respects any period after the 31st day of March, 1949, for any of the purposes of this Act, and [ii] as respects any period included in the previous year, for the purpose of making any assessment for the year ending on the 31st day of March, 1950, or for any subsequent year; and (b) the whole of the territory of India excluding the State of Jammu and Kashmir - [i] as respects any period, for the purposes of sections 4a and 4b, [ii] as respects any period after the 31st day of March, 1953, for any of the purposes of this Act, and [iii] as respects any period included in the previous year for the purpose of making any assessment of the year ending on the 31st day of March, 1951, or for any subsequent year. "