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Saeed Ahmad Vs. Inspecting Assistant Commissioner of Income-tax, Range Ii - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberWrit Petition No. 460 of 1968
Judge
Reported in[1971]79ITR28(All)
ActsIncome Tax Act, 1961 - Sections 271(1); Constitution of India - Article 14
AppellantSaeed Ahmad
Respondentinspecting Assistant Commissioner of Income-tax, Range Ii
Appellant AdvocateS.K. Effandi, Adv.
Respondent AdvocateS.C. Das and ;H.N. Tilhari, Advs.
Excerpt:
- - 271 (1). if the income-tax officer or the appellate assistant commissioner, in the course of any proceedings under this act, is satisfied that any person- (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under sub-section (1) of section 139 or by notice given under sub-section (2) of section 139 or section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-section (1) of section 139 or by such notice, as the case may be, or (b) has without reasonable cause failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143, or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income......g.d. sehgal, j.1. the petitioner is a railway contractor and carries on business under the name and style of m/s. saeed ahmad and sons. he filed an income-tax return for the assessment year 1964-65 before the income-tax officer b-ward, circle ii, lucknow, opposite party no. 2, indicating an income of rs. 23,968.00. the amount of income in the return filed was arrived at as follows:rs.(a)coal handling contract of n. e, railway, charbagh zone. total payments received (fully backed by the certificate of payments from the disbursing department filed with the i.t.o.) net flat rate of profit estimated = 7% profit worked out to137,47534 9,62500(b)engimneering contract at lucknow. total paymentsreceived (as per certificate ofpayment from the disbursing officer filed with the i. t. o.54,89500net.....
Judgment:

G.D. Sehgal, J.

1. The petitioner is a railway contractor and carries on business under the name and style of M/s. Saeed Ahmad and Sons. He filed an income-tax return for the assessment year 1964-65 before the Income-tax Officer B-Ward, Circle II, Lucknow, opposite party No. 2, indicating an income of Rs. 23,968.00. The amount of income in the return filed was arrived at as follows:

Rs.

(a)

Coal handling contract of N. E, Railway, Charbagh Zone. Total payments received

(fully backed by the certificate of payments from the disbursing department filed with the I.T.O.) Net flat rate of profit estimated = 7% profit worked out to

137,47534

9,62500

(b)

Engimneering contract at Lucknow. Total paymentsreceived (as per certificate ofpayment from the disbursing officer filed with the I. T. O.

54,89500

Net rate of profit estimated =7% profit worked out to

3,84300

(c)

Purchase of- foundry clinckers of N. Railway-Totalpurchases (as per sale ordersin original filed with the I.T.O.)

1,44,60000

Estimated sale

1,50,00000

Net rate of profit estimated at 7%

Net profit worked out

10,50000

Grand Total.

21.968-00

2. It would thus appear that no actual accounts of income and expenditure were filed, but the income was assessed at certain rates of estimated profits. The return was not accepted by the Income-tax Officer concerned and the returned income enhanced to Rs. 52,017.00, the Income-tax Officer applying the following rates :

(a) Engineering contract rate of profit applied 15%

(b) Coal handling contract rate of profit applied 12'5%

(c) Foundry clinckers rate of profit applied 14%

3. The petitioner made an appeal to the Appellate Assistant Commissioner of Income-tax with the result that his total income was reduced by a sum of Rs. 4,172.00. A second appeal has been filed before the Income-tax Appellate Tribunal which is pending decision. As the total income disclosed by the petitioner in the return, i.e., Rs. 23,968.00 was less than 80 percent. of the income assessed, i.e., Rs. 47,845.00, the Income-tax Officer started penalty proceedings under Section 271(1)(c) Explanation to that section of the Income-tax Act, 1961 (hereinafter to be referred to as the Act). As the minimum penalty leviable in the petitioner's case exceeded one thousand rupees, the Income-tax Officer, opposite party No. 2, referred the case to the Inspecting Assistant Commissioner, opposite Party No. 1, under Section 274(2) of the Act. A show cause notice (annexure 'C') was thereafter issued by the opposite party No. 1 to the petitioner under Section 274(2) read with Section 271 of the Act charging the petitioner with concealment of the particulars of his income. The notice was contested, but ultimately opposite party No. 1 held that the provisions of Section 271(1)(c) read with the Explanation to that section were applicable to the petitioner's case and thus a penalty of Rs. 2,100 was imposed on the petitioner on account of the alleged concealment of income based on the difference between the income returned by the petitioner and the income assessed by the Income-tax Officer and the amount was directed to be recovered by the opposite party No. 2 from the petitioner. A copy of this order is contained in annexure ' E ' to the petition. It is against this order that this writ petition has been filed, and the relief claimed is that a writ of certiorari be issued for the quashing of the order of assessment, the notice for the imposing of the penalty and the order of the imposition of penalty (annexures 'B', 'C' and 'E'). A writ of mandamus also is prayed for directing opposite party No. 2, Income-tax Officer, not to recover from the petitioner the illegal penalty imposed on him. Besides these two reliefs, there are two other usual reliefs for awarding costs to the petitioner and for granting any other appropriate relief in the circumstances of the case. We have the prayer also for the waiving of 14 days' notice to the standing counsel on account of the urgency of the case, but as in this case the standing counsel could not represent the Government, it being the Union Government, the prayer appears to be misconceived.

4. The order imposing penalty passed by opposite party No. 1 is an appealable order and normally, therefore, if an alternative remedy to the petitioner was available, the writ would not have been entertained. The writ, however, challenges the vires of the provisions of the Explanation to Clause (c) of Sub-section (1) of Section 271 of the Act and as such it was allowed to be entertained, the contention being that the vires of the Act could not be challenged in appeal which is a proceeding arising out of the provisions of the Act itself and the authority hearing the appeal was bound to give effect to the provisions of the Act. We have, therefore, to see as to how far the provisions of the Explanation to Clause (c) of Sub-section (1) of Section 271 can be said to be ultra vires the legislature.

5. The imposing of penalty has been challenged on some other grounds also, namely, of the show cause notice being not a proper notice, being vague and uncertain and its failing to disclose the alleged concealing of income and also on the ground, which ground though not specifically taken in the petition, has been tried to be urged before us that the Explanation could not control the provisions of the substantive enactment.

6. The petitioner's counsel, however, was not allowed to urge grounds other than those relating to the vires of the provisions of the Explanation, for in case the provisions were held to be intra vires, there was no reason why he should not have sought his remedy against the penalty by way of appeal as provided under the Act itself and the other points could in that case be raised before the appellate authority. The only point, therefore, that we have to determine in the case is as to whether the provisions which have been challenged as being ultra vires the legislature are actually so.

7. In order to appreciate the arguments advanced on behalf of the petitioner the provisions of Section 271(1) of the Act may here be quoted in full;

' 271 (1). If the Income-tax Officer or the Appellate Assistant Commissioner, in the course of any proceedings under this Act, is satisfied that any person-

(a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under Sub-section (1) of Section 139 or by notice given under Sub-section (2) of Section 139 or Section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by Sub-section (1) of Section 139 or by such notice, as the case may be, or

(b) has without reasonable cause failed to comply with a notice under Sub-section (1) of Section 142 or Sub-section (2) of Section 143, or

(c) has concealed the particulars of his income or furnished inaccurate particulars of such income.

he may direct that such person shall pay by way of penalty,--

(i) in the cases referred to in Clause (a), in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent. of the tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the tax ;

(ii) in the cases referred to in Clause (b), in addition to any tax payable by him, a sum which shall not be less than ten per cent., but which shall not exceed fifty per cent. of the amount of the tax, if any, which would have been avoided if the income returned by such person had been accepted as the correct income;

(iii) in the cases referred to in Clause (c), in addition to any tax payable by him, a sum which shall not be less than twenty per cent. but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income.

Explanation.--Where the total income returned by any person is less than eighty per cent. of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under Section 143 or Section 144 or Section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of Clause (c) of this sub-section.

8. The grounds disclosed in the petition itself are as follows :

'I. That the provisions of the Explanation appended to Section 271(1)(c) of the Income-tax Act are null and void as being violative of Article 14 of the Constitution of India.

II. That the provisions of the Explanation are null and void as they cast the onus or the burden of proving his innocence oh the petitioner.

III. That the provisions of the Explanation are null and void as they presume an automatic offence without any proof as regards its ingredients.

IV. That the Explanation is bad in law as it takes for granted concealment without there being a concealment in fact.

V. That the provisions of the Explanation are null and void as they take for granted an act to be an offence which is not an offence otherwise.

VI. That the provisions of the Explanatian are null and void as they purport to create an offence through legal fiction much against the principles of natural justice.

VII. That the provisions of the Explanation are null and void as the so-called offence is created by the I. T. O. and its consequences are fastened on the petitioner.

VIII. That the provisions of the Explanation are null and void as the main ingredients of the offence are the product of the Income-tax Officer's arbitrary judgment and have nothing to do with the guilty mind or conduct of the petitioner. ....

XI. That the provisions of the Explanation to Section 271(lXc) are null and void, as the principal and the primary ingredient or the determination contemplated therein, that is, ' the assessed income ' is always a very changing and a shifting factor dependent upon the outcome of the appeals, revision, reference and other remedies under the Act. '

9. Grounds Nos. IX and X have not been mentioned as they challenge the show cause notice itself which presumes that the provision is not ultra vires as it is a challenge to the manner in which the authorities have proceeded against the petitioner. It could be raised before the appellate authority if the provision is held to be intra vires and not otherwise.

10. As to grounds Nos. I to VIII and XI, it may be pointed out that the Explanation creates a presumption in certain circumstances to the effect that the assessee will be deemed to have concealed the particulars of his income or furinshed inaccurate particulars of such income for the purpose of Clause (c) of this section if certain conditions are satisfied, namely, where the total income returned is less than 80% of the total income as assessed reduced by the expenditure bona fide incurred by the assessee for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction. We fail to see how the raising of such a presumption, if the conditions mentioned therein are satisfied, can be said to be ultra vires under any provision of law. The Explanation only lays down a rule of evidence and there is 110 bar to the legislature prescribing for a rule of eyidence. It is not a case of establishing or disestablishing specific substantive right, but it is a case of raising a presumption only as a rule of evidence. As has been laid down in Izhar Ahmad v. Union of India, A.I.R. 1962 S.C. 1052 in deciding a question as to whether a rule about irrebuttable presumption--in the instant case it is a rule of rebuttable presumption--is a rule of evidence or not, the proper approach to adopt would be to consider whether fact A from the proof of which a presumption is required to be drawn about the existence of fact B, is inherently relevant in the matter of proving fact B and has inherently any probative or persuasive value in that behalf or not. If fact A is inherently relevant in proving the existence of fact B and to any rational, mind it would bear a probative or persuasive value in the matter of proving the existence of fact B, then a rule prescribing either a rebuttable presumption or an irrebuttable presumption in that behalf, would be a rule of evidence. On the other hand, if fact A is inherently not relevant in proving the existence of fact B or has no probative value in that behalf and yet a rule is made prescribing for a rebuttable or an irrebuttable presumption in that connection, that rule would be a rule of substantive law and not a rule of evidence. Therefore, in dealing with the question as to whether a given rule prescribing a conclusive presumption is a rule of evidence or not, the view that all rules prescribing irrebuttabie presumptions are rules of substantive law cannot be adopted. The. question can only be answered after examining the rule and its impact on the proof of facts A and B.

11. In the light of the above observations let us examine as to whether the rule contained in the Explanation can be said to be a rule of substantive law or a rule of procedural law, i.e., whether it is a rule for establishing or dis-establishing a specified substantive right or a rule of evidence merely.

12. Clause (c) of Sub-section (1) of Section 271 provides for the payment of certain penalty that may be directed by the Income-tax Officer or the Appellate Assistant Commissioner if he is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. Thus a person becomes liable to the penalty, how much that penalty should be we are not concerned with in connection with the enquiry, if he has concealed the particulars of his income or furnished inaccurate particulars of the same. The Explanation only provides that, in certain circumstances, the assessee will be deemed to have concealed the particulars of his income or furnished inaccurate particulars and the burden will then be on him to establish that the failure to return the correct income did not arise from any fraud or any gross or wilful negleet on his part. The condition which raises this presumption is that where the total income returned by the assessee is less than 8.0% of the total income as assessed under Sections 143, 144 and 147 reduced by the expenditure incurred by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction, the presumption will arise. Thus if an assessee makes a return and that return is disbelieved and he is assessed to a higher amount than he purports to show in the return and the total income that he has shown in his return is less than 80% of the income for which he is assessed, then the law thinks, as provided by this Explanation, that he has concealed the particulars of his income or furnished inaccurate particulars. Can it be said, in the circumstances, that the existence of the position of the return being less than 80% of the total income assessed is not relevant to the concealment of the particulars of his income by the assessee or his furnishing inaccurate particulars of such income. Clause (c) of Sub-section (1) of Section 271 contemplates a certain amount of penalty for concealment of the particulars of income or furnishing inaccurate particulars by an assessee. If the return of an assessee's income is found not to be correct and is less than 80% of the income at which he is ultimately assessed, the Explanation in such a state of affairs provides for the raising of a presumption against the assessee for his having concealed the particulars of his income or having furnished inaccurate particulars of such income. Obviously applying the test laid down in Azhar Ahmad Khan's case, A.I.R. 1962 S.C. 1052 the Explanation provides nothing more than a rule of evidence relating to the raising of a rebuttable presumption in certain circumstances. It is not a rule which creates or negatives any substantive right. Such a rule is within the competence of the legislature to create. The question, however, is as to whether by the creation of such a rule the provisions of Article 14 of the Constitution have been violated.

13. Article 14 of the Constitution guarantees to every citizen equality before the law and for the equal protection of the laws within the territory of India. The meaning and scope of this Article having been discussed in the case of Chiranjit Lal Chowdhury v. Union of India, [1951] 21 Camp. Cas. 33 (S.C.) the proposition laid down in which were later on summarised in State of Bombay v. F.N. Balsara, [1951] S.C.R. 682, 708 (S.C.) as follows :

(1) The presumption is always in favour of the constitutionality of an enactment, since it must be assumed that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and its discriminations are based on adequate grounds.

(2) The presumption may be rebutted in certain cases by showing that,on the face of the statute, there is no classification at all and no differencepeculiar to any individual or class and not applicable to any other individual or class, and yet the law hits only a particular individual or class.

(3) The principle of equality does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstances in the same position, and the varying needs of different classes of persons often require separate treatment.

(4) The principle does not take away from the State the power of classifying persons for legitimate purposes.

(5) Every classification is in some degree likely to produce some inequality, and mere production of inequality is not enough.

(6) If a law deals equally with members of a well defined class, it is not obnoxious and' it is not open to the- charge of denial of equal protection on the ground that it has no application to other persons.

(7) While reasonable classification is permissible, such classification must be based upon some real and substantial distinction bearing a reasonable and just relation to the object sought to be attained, and the classification cannot be made arbitrarily and without any substantial basis. '

14. In V.S. Rice & Oil Mills v. State of Andhra Pradesh, A.IR. 1964 S.C. 1781 it has been laid down, reiterating the position which has been repeatedly pointed out by the Supreme Court, that when a citizen wants to challenge the validity of any statute on the ground that it contravenes Article 14, specific, clear and unambiguous allegations must be made in that behalf and it must be shown that the impugned statute is based on discrimination and that such discrimination is not referable to any classification which is rational and which has nexus with the object intended to be achieved by the said statute.

15. In Probhudas Morarji Rajkotia v. Union of India, [1967] 2 S.C.R. 615; A.I.R. 1966 S.C. 1044 following the observations in Ramchand Jagdish Chand v. Union of India, [1962] 3 S.C.R. 72 ; A.I.R. 1963 S.C. 563 it was again pointed out that to make out a case of denial of the equal protection of the laws under Article 14 of the Constitution, a plea of differential treatment is by itself not sufficient.

16. An applicant pleading that Article 14 has been violated must make out that not only he had been treated differently from others, but he has been so treated from persons similarly circumstanced without any reasonable basis, and such differential treatment is unjustifiably made.

17. Section 271(1) consists of three clauses. The first two clauses deal with a case of the failure of the assessee to furnish the return of total income either initially or witbin the time allowed under the provisions of law referred to therein and also with the failure to comply without reasonable cause with a notice under certain provisions of law mentioned therein and if these conditions are satisfied, i.e., of the failure to file the return or complying with the notice, then penalty is provided for in accordance with clauses (i) and (ii) following these three clauses. But if it is a case of concealment of a particular income or furnishing inaccurate particulars of income, then the penalty as contemplated under the following Clause (iii) , becomes liable to be imposed on the defaulting assessee. The penalty contemplated in the'case of a person covered by Clause (a), i.e., who has failed to furnish his returns under the provisions referred to in that clause is that in addition to the amount of tax if any payable by him, he becomes liable to a sum equal to two per cent. of the tax for every month during which the default continued but not exceeding in the aggregate fifty per cent. of the tax by way of penalty. In case he fails to comply with notices contemplated under Clause (b), he becomes liable to pay, in addition to any tax payable by him, by way of penalty a sum which shall not be less than ten percent. but which shall not exceed fifty per cent. of the amount of the tax, if any, which would have been avoided if the income returned by such person had been accepted as the correct income. In the case of Clause (c), namely, of concealing of particulars of his income or furnishing inaccurate particulars such income, a person becomes liable to pay by way of penalty, in addition to any tax payable by him, a sum which shall not be less than twenty per cent. but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income had been accepted as the correct income.

18. Three classes of persons are thus covered by Clauses (a), (b) and (c) of Sub-section (1) of Section 271, but on account of their default under Clauses (a) and (b) and deliberate act under Clause (c) they are liable to pay varying amounts of penalty. The legislature views with disfavour the three types of assessees and considers the case of those covered by Clause (c) to be more serious. Under the Explanation what is contemplated by the legislature is that if an assessment has been made in the case of a person who has concealed the particulars of his income or has furnished inaccurate particulars and the return that he has shown is less than 80% of the total income to which he is assessed, he will be deemed to have concealed the particulars of his income or furnished inaccurate particulars thereof for the purpose of the penalty unless he proves that the failure to return the correct income did not arise from any fraud or wilful neglect on his part. The purpose of the clauses is to discourage concealing the particulars of one's income or furnishing inaccurate particulars of such income in the course of filing the returns. Such persons are looked upon with disfavour. If the concealment is a large amount or the inaccuracy in the furnishing of the particulars is large, the test of which is that it is less than 80% of the amount for which the assessee has been ultimately assessed, the legislature thinks that there would be a presumption of such concealment having been made or inaccurate particulars having been supplied arising out of fraud or gross or wilful neglect on the part of the assessee. The purpose of the Explanation, therefore, is to discourage concealment of particulars in the filing of the returns of income and the furnishing of inaccurate particulars in the return and the more serious the concealment of the particulars or the furnishing of inaccurate particulars is, the more serious view is taken of the matter. This Explanation applies to all persons similarly placed, i.e., placed in a position covered by Clause (c) of Sub-section (1) of Section 271 of the Act in whose case the return of income is less than 80% of the income assessed. No doubt, such persons have been treated differently from others but they have not been so treated from persons similarly circumstanced. All persons placed in the same circumstances have been equally treated by the Explanation. The Explanation does create a class of persons. But the class of persons to whom the Explanation applies is a rational classification and has nexus with the object intended to be achieved, namely, of discouraging the concealment of the particulars of one's income or the furnishing of inaccurate particulars of such income during the course of assessment. In the circumstances, it cannot be said that the impugned provision of law violated the provisions of Article 14 of the Constitution and is ultra vires.

19. We are fortified in our view by two cases of the Supreme Court where similar legislation came up for consideration as to whether it violated Article 14 of the Constitution. In A. S. Krishna v. State of Madras, A.I.R. 1957 S.C. 297 the question was whether Section 4(2) of the Madras Prohibition Act (X of 1937) violated Article 14 of the Constitution. Section 4 of the Act reads: ' 4. (1) Whoever-

(a) imports, exports, transports or possesses liquor or any intoxicating drug; or ......

(g) uses, keeps or has in his possession any materials, still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug ; or ......

(j) consumes or buys liquor or any intoxicating drug; or

(k) allows any of the acts aforesaid upon premises in his immediate possession;

shall be punished--......

Provided that nothing contained in this sub-section shall apply to any act done under, and in accordance with, the provisions of this Act or the terms of any rule, notification, order, licence or permit issued thereunder.

(2) It shall be presumed until the contrary is shown-

(a) that a person accused of any offence under Clauses (a) to (j) of Sub-section (1) has committed such offence in respect of any liquor or intoxicating drug or any still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug, or any such materials as are ordinarily used in the tapping of toddy or the manufacture of liquor or any intoxicating drug, for the possession of which he is unable to account satisfactorily ; and

(b) that a person accused of any offence under Clause (k) of Sub-section (1) has committed such offence if an offence is proved to have been committed in premises in his immediate possession in respect of any liquor or intoxicating drug, or any still, utensil, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor or any intoxicating drug, or any such materials as are ordinarily used in the tapping of toddy or the manufacture of liquor or any intoxicating drug. '

20. When the provisions of Section 4(2) above-quoted were challenged as being repugnant to Article 14 of the Constitution, the learned judges observed that they were unable to see how Section 4(2) offended the requirement as to equality before law or the equal protection of laws. The presumptions enacted therein had to be raised against all persons against-whom the facts mentioned therein were established. After considering the matter their Lordships arrived at the following conclusion :

' It is, therefore, clear that even on the application of the due process clause, the presumptions laid down in Section 4(2) cannot be struck down as unconstitutional. We should add that the constructions which the appellants seek to put on Section 4(2) that a person in possession of liquor could, under that section, be presumed to have committed an offence under Section 4(1)(g) or that a person who is in possession of materials, implement or apparatus could be presumed to have committed offences under Section 4(1)(a) and (j) is not correct. In our opinion, the matters mentioned in Section 4(2) should be read distributively in relation to the offences mentioned in Section 4(1). Possession of liquor, for example, is an offence under Section 4(1)(a). The presumption in Section 4(2) is that if it is found in the possession of a person, he should be presumed to have committed the offence under Section 4(1)(a), unless he could give satisfactory explanation therefor, as for example, that it must have been foisted in the place without his knowledge. Likewise, it would be an offence under Section 4(1)(g) to be in possession of materials, still, implement or apparatus whatsoever for the tapping of toddy or the manufacture of liquor. Under Section 4(2)(a), if a person is found to be in possession of materials or other things mentioned in the sub-section, there is a presumption that he has committed an offence under Section 4(1)(g), but it is open to him to account satisfactorily therefor. The contention, therefore, that there is no reasonable relation between the presumption and the offence is, in our opinion, based on a misreading of the section. '

21. Similarly, in C.I. Emden v. State of Uttar Pradesh, A.I.R. 1960 S.C. 548 the question that came up for consideration was as to whether Section 4(1) of the Prevention of Corruption Act, 1947, which requires a presumption to be raised against an accused person is unconstitutional and ultra vires and it violates the fundamental rights granted by Article 14 of the Constitution. What seems to have been urged before the Supreme Court was that this legislation was not based on reasonable classification founded on intelligible differentia and that the said differentia had no rational relation to the object sought to be achieved by it. As to it, their Lordships observed:

' In the present case there can be no doubt that the basis adopted by the legislature in classifying one class of public servants who are brought within the mischief of Section 4(1) is a perfectly rational basis. It is based on an intelligible differentia and there can be no difficulty in distinguishing the class of persons covered by the impugned section from other classes of persons who are accused of commiting other offences. Legislature presumably realised that experience in courts showed how difficult it is to bring home to the accused persons the charge of bribery ; evidence which is and can be generally adduced in such cases in support of the charge is apt to be treated as tainted, and so it is not very easy to establish the charge of bribery beyond a reasonable doubt. Legislature felt that, the evil of corruption amongst public servants posed a serious problem and had to be effectively rooted out in the interest of clean and efficient administration. That is why the legislature decided to enact Section 4(1) with a view to require the raising of the statutory presumption as soon as the condition precedent prescribed by it in that behalf is satisfied. The object which the legislature thus wanted to achieve is the eradication of corruption from amongst public servants, and between the said object and the intelligible differentia on which the classification is based there is a rational and direct relation. We have, therefore, no hesitation in holding that the challenge to the vires of Section 4(1) on the ground that it violates Article 14 of the Constitution must fail. '

22. Their Lordships then referred to the case of A.S. Krishna v. State of Madras, A.I.R. 1957 S.C. 297 and pointed out that a similar challenge to the vires of a statutory presumption required to be raised under Section 4(2) of the Madras Prohibition Act (10 of 1937) also was repelled.

23. The provision having been held not to be ultra vires as being violative of Article 14 of the Constitution the petition has to be dismissed and any question about the validity of the show cause notice can be raised in the appeal permitted tinder the statute itself before the appellate authority.

24. The petition accordingly fails and is hereby dismissed with costs.


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