HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Basheshar Nath v. Commissioner of Income-tax, Delhi and Rajasthan and Another
Civil Appeal No. 208 of 1958
[1959] Supp (1) SCR 528 ·
Taxation on Income (Investigation Commission) Act, 1947: sections 5(1), 6, 7, 8 and 8A · Constitution of India: Articles 13 and 14 · Indian Income-tax Act, 1922: section 34 (comparative procedural background)
Sources & disclosures includedDownload original judgment / order
5-judge bench · S. R. Das · N. H. Bhagwati · S. K. Das · J. L. Kapur · K. Subba Rao
01 · Facts of the case
The Central Government referred the assessee to the Investigation Commission on 22 July 1948 under section 5(1) of the 1947 Act. Investigation continued after the Constitution commenced, including examination of accounts and a 1953 report. The Commission ultimately determined escaped income of Rs 4,47,915 for the investigation period 1 April 1939 to 31 March 1947. On 20 May 1954 the assessee sought a section 8A settlement; Government accepted the recommendation and on 5 July 1954 directed recovery of Rs 3,50,000, including Rs 14,064 penalty. The assessee paid Rs 1,28,000 in instalments by September 1957. After the Supreme Court decision in M. Ct. Muthiah, he challenged further recovery and attachment. The Commissioner rejected his objection on 29 January 1958, leading to this special-leave appeal. The investigation period is not represented as a single assessment year.
Source: Primary report: SCR 538–545 and 566–570; PDF pp 11–18 and 39–43.
02 · Discussion by the Hon’ble Court
The assessee argued that section 5(1), already held discriminatory under Article 14 in Muthiah, could not support the settlement and continuing recovery. Revenue contended that section 8A supplied an independent settlement jurisdiction, that no actionable discriminatory procedure had actually been used, and that the assessee had waived objection by seeking the concession and paying instalments. The Court rejected the proposed separation: section 8A was part of the investigation machinery, and the Commission had in fact used its summary and drastic procedure before the settlement application. The ordinary section 34 procedure and the special investigation procedure treated members of the same class differently. The American waiver authorities and earlier Indian Article 32 decisions were examined, but the latter were not treated as settled waiver precedents.
Source: Primary report: SCR 543–555, 576–588; PDF pp 16–28, 49–61.
03 · Judicial decision
The section 8A settlement could not be enforced on this post-Constitution investigation. Das CJ and Kapur J held that the State obligation under Article 14 could not be waived; they left other fundamental rights open. Bhagwati and Subba Rao JJ agreed on Article 14 and took the broader position that Part III rights could not be waived. S. K. Das J agreed that the settlement was invalid but reasoned separately on waiver: Revenue bore the burden and had not established an intentional relinquishment of a known right. Submission to a statute presumed valid and later instalment payments did not establish the necessary waiver. He disagreed with an absolute rule barring waiver of every fundamental right. Subba Rao J additionally reasoned that consent could not confer jurisdiction to continue proceedings under the constitutionally invalid provision.
Source: Primary report: SCR 549–565, 583–606 and 610–622; PDF pp 22–38, 56–79 and 83–95.
04 · Outcome / in whose favour
The appeal was allowed with costs. The Commissioner’s order of 29 January 1958 was set aside, and all proceedings then pending to implement the Union Government’s order of 5 July 1954 were quashed. The refund prayer concerning Rs 1,28,000 already paid was not pressed and was not adjudicated.
Source: Primary report: SCR 544, 569–570, 606 and 623; PDF pp 17, 42–43, 79 and 96.
05 · AKHB REVIEW POINT
For historical tax-settlement analysis, test the constitutional validity and actual procedure of the underlying investigation before treating consent or instalment payments as curing it. Preserve the distinct opinions: the Article 14 non-waiver position commands four votes, whereas a categorical rule covering all Part III rights is stated only by Bhagwati and Subba Rao JJ. Distinguish quashing future enforcement from refund of money already paid. This note reports the 1958 decision and does not determine modern settlement provisions, present constitutional doctrine, or current litigation outcomes.
Source: Primary report: SCR 549–565, 588–590, 605–606, 618–623; PDF pp 22–38, 61–63, 78–79 and 91–96.
Source & verification
Download original judgment / order · Open cited source rendition
Complete 96-page report segment SCR 528–623 read, including headnote, Das CJ opinion for himself and Kapur J (SCR 532–556), Bhagwati J (556–565), S. K. Das J (565–606), Subba Rao J (606–622), and common operative order (623). N. T. Veluswami Thevar v. G. Raja Nainar begins after the operative order on the last PDF page and is an adjacent election case, excluded from this note.
Statutory scope
Historical legislation expressly identified in this note. This is not a decision under the Income-tax Act, 1961 or the Income-tax Act, 2025. Verify enacted wording, commencement, transition and subsequent judicial treatment independently before modern reliance.
Later treatment
Source checked 2026-10-23. Subsequent treatment and present-law applicability have not been comprehensively checked.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note uses AI assistance and a preserved full-primary review, with refreshed exact original-byte verification. Independent human review is not represented.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. AKHB REVIEW POINT is editorial analysis, not the Court’s holding.