Baburao Narayanrao Sanas vs Union of India
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Writ Petition (civil) 316 of 1954
Decision Date: 21 October 1954
Coram: Mehr Chand Mahajan, S.R. Das, G. Hasan, N.H. Bhagwati, T.L.V. Aiyyar
In the writ petition numbered 316 of 1954, filed on 21 October 1954, the petitioner Baburao Narayanrao Sanas challenged a tax liability before the Supreme Court of India. The bench hearing the matter consisted of Chief Justice Mehr Chand Mahajan, along with Justices G. Hasan, N.H. Bhagwati, and T.L.V. Aiyyur. The case was reported in AIR 1955 SC 257, and the judgment was delivered by Chief Justice Mehr Chand Mahajan.
Mr. Sanas was a resident of Poona in the State of Bombay, where he carried on business and also owned property in the city of Bombay. Over the eight-year period from the financial year 1940-41 through 1947-48, he was assessed on a total income of Rs 9,75,265. The Central Government, suspecting that he had evaded tax and concealed substantial profits, referred his case for investigation in 1948 to a Commission established under Section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947. The Commission was instructed to examine the profits he had earned during the period beginning 1 January 1939 and ending 31 December 1947.
After completing its inquiry, the Commission submitted a report dated 1 May 1953. The report concluded that income amounting to Rs 2,26,900 had escaped taxation for the relevant years and that the petitioner’s tax liability was therefore Rs 1,96,175. While the investigation was in progress, the petitioner applied for a settlement of this liability under Section 8-A of Act XXX of 1947. The Government accepted the application, entered into a settlement with him, and directed the Income-Tax Officer to enforce payment of the evaded tax according to the settlement’s terms and conditions.
Subsequently, the petitioner requested that the amount due be collected from him in easy instalments of Rs 25,000 each. By an order dated 28 July 1952, the Government agreed to recover the sum in three instalments: Rs 50,000 to be paid by 1 March 1954, another Rs 50,000 by 1 March 1955, and the remaining Rs 96,175 by 1 March 1956. Later, the petitioner sought to have the outstanding amount recovered in ten yearly instalments. At that point, apparently influenced by the Supreme Court’s decision in Suraj Mal Mohta’s case, he was advised to file the present application, alleging that the procedure leading to the assessment of Rs 1,96,175 was wholly illegal, ultra-vires, void and unconstitutional.
The petitioner relied on the same grounds that he had raised earlier in Petition No. 315 of 1954, titled Dewan Bahadur Seth Gopal Das Mohta v. The Union of India and Others. The Court subsequently set out its reasoning, which concluded that the petition was misconceived because the liability now arose under a voluntarily entered settlement and could not be challenged by a petition under Article 32 of the Constitution. Accordingly, the petition was dismissed with costs.
The Court observed that, based on its earlier judgment in the earlier petition, the present petition was fundamentally misconceived. It explained that the petitioner’s obligation to pay the tax that had been previously evaded now originated from a settlement that the petitioner had voluntarily entered into with the Central Government. The Court further noted that a settlement of this nature could not be challenged by invoking a petition filed under Article 32 of the Constitution. Consequently, the Court concluded that the petition could not succeed. As a result, the petition was dismissed and the petitioner was ordered to pay costs.