- (1.) THESE two appeals by certificate granted by the High Court of Kerala are directed against the judgment of the High Court passed in Appeal No. 1067 of 1959, which arose out of Original Suit filed in the Court of Subordinate Judge, Cochin. Civil Appeal No. 100/66 is by M. J. Kanaka Bai and others hereinafter referred to as plaintiffs and Civil Appeal No. 101/66 is by the Union of India hereinafter referred to as the defendant.
(2.) IN order to appreciate the contentions raised before us it is necessary to set out the following facts: One Shri A.N. Padmanabha Shenoi, fater of the two plaintiffs, was carrying on a Joint Hindu Family business under the name and style of "A.N. Guna Shenoi & Bros." in the former State of Cochin. At the relevant time, the Cochin Excess Profits Tax Act (II of 1117 M.E.) (1941 A.D.) and Cochin Income Tax Act (VI of 1117 M.E.) were in force in Cochin State. Cochin later became part of the State of Travancore-Cochin. On the commencement of the Constitution, the latter State became part B State in the Union of India.
(3.) THE Government of India on May 20, 1951, issued a notification giving certain terms to assessees if they disclosed their hidden income or income which had escaped taxation. We are not concerned with the e;,act concessions given but only with the question whether this notification was also concerned with the assessment under the Excess Profits Tax Act. Our attention was invited by the plaintiffs to the opening sentence of the Notification, which is as follows :- "Detailed measures for launching a special drive for the clearance of arrears of income tax have now been finalised by the Government of India." It was also pointed out that only Income Tax Officers were mentioned in various parts of the Notification and no reference was made to excess Profits Tax Officers. In pursuance of this notification, A.N. Padmanabha Shenoi made two statements dated August 30,1951 and October 22, 1951, disclosing income of the Joint Family business from 1-1-1115 M.E. (1939) to end of 1122 M.E. (1946) to the extent of Rs. 3,70,000/-which had escaped assessment to income tax in those years. In the disclosure dated October 22, 1951, it was stated that "a portion of these profits amounting to Rs. 81,759/- has already been taxed in the assessments for the years 1116 and 1117 and a sum of Rs. 30,000/- was added back to the disclosed profits in the year 1123." In para 7 of the disclosure statement dated October 22, 1951, it was stated. "I request that I may be allowed to pay the aggregate tax due by me in twenty monthly instalments as I am not in a position to command the cash necessary for paying the whole of the deficient tax that may be due by me in a lump." He further requested that certain investigations being carried on against him in respect of the assessment years 1121, 1122 and 1123 be dropped.;