TMI Blog1972 (3) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... brought to the court by a clerk of the department, on an objection taken by the defendant, the learned Subordinate Judge ruled that they could not be produced in view of the provisions of section 138 of the Income-tax Act and the notification issued by the Central Government under sub-section (2) of that section on 3rd June, 1965. It is for quashing this order of the trial court, dated 8th August, 1969, that the plaintiff has come up in revision under section 115 of the Civil Procedure Code. During the last few years there has been a considerable change in the law concerning privilege attaching to the income-tax returns, etc., and to documents produced in or concerned with assessment of income-tax. Section 54 of the Indian Income-tax Act, 1922, provided, inter alia, that except for certain documents mentioned therein, no court shall, save as provided in that Act, be entitled to require any public servant to produce before it any such return, accounts, documents or record or any part of any such record, or to give evidence before it in respect thereof, and any proceedings relating to the recovery of a demand, prepared for the purposes of this Act, shall be treated as confidential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of any assessment made either under this Act or the Indian Income-tax Act, 1922, on or after 1st day of April, 1960, if he was satisfied that there were no circumstances justifying its refusal. This section 138 was itself amended by the Finance Act, 1964, which came into force on the 1st day of April, 1964. Section 137 of the Income-tax Act, 1961, having been deleted by the Finance Act, 1964, the only provision to which we have to turn to find out how far the disclosure of this information respecting an assessee is permissible is that contained in section 138 of the Act. Sub-section (1) thereof pertains to the powers that the Board or any other income-tax authority specified by it to furnish information relating to any assessee. Clause (b) of that sub-section, which alone is relevant for our purpose, provides: "138. (1)(b) Where a person makes an application to the Commissioner in the prescribed form for any information relating to any assessee in respect of any assessment made under this Act or the Indian Income-tax Act, 1922 (11 of 1922), on or after the 1st day of April, 1960, the Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature and without affording an opportunity to the Commissioner of Income-tax to apply his mind with a view to determine whether the information asked for should or should not be supplied. The argument proceeds that any other interpretation would make the provision nugatory as even in cases in which the application of a litigant for information relating to an assessment is rejected by the Commissioner of Income-tax in accordance with the provisions of sub-section (1)(b) of section 138, he would be in a position to circumvent that order by making an application for production of the entire assessment records to the court. This argument, in my opinion, is not without substance, and it can well be urged that even where an application for production of the assessment records relating to the income-tax department is made to the court, the court cannot order the production of the record but shall refer the matter to the Commissioner of Income-tax and it is for the latter to decide what documents or information should be permitted to be disclosed. There is no reported decision on this point. Considering the importance of the question and the fact that it is likely to arise quite often, I c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in any record of any assessment proceeding, or any proceeding relating to the recovery of a demand, prepared for the purposes of this Act, shall be treated as confidential, and notwithstanding anything contained in the Indian Evidence Act, 1872 (1 of 1872), no court shall, save as provided in this Act, be entitled to require any public servant to produce before it any such return, accounts, documents or record or any part of any such record, or to give evidence before it in respect thereof. (2) If a public servant discloses any particulars contained in any such statement, return, accounts, documents, evidence, affidavit, deposition or record, he shall be punishable with imprisonment which may extend to six months, and shall also be liable to fine. " Sub-section (3) provided for cases in which the record mentioned in sub-section (1) could be disclosed or produced but we are not concerned with those eventualities. Sub-section (4) of section 54 made an exception in the case of any document, declaration or affidavit filed, or the record of any statement or deposition made in a proceeding under section 25A or section 26A or to the giving of evidence of a public servant in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion in this behalf shall be final and shall not be called in question in any court of law. (2) Notwithstanding anything contained in sub-section (1) or any other law for the time being in force, the Central Government may, having regard to the practices and usages customary or any other relevant factors, by order notified in the Official Gazette, direct that no information or document shall be furnished or produced by a public servant in respect of such matters relating to such class of assessees or except to such authorities as may be specified in the order." By Finance (No. 2) Act, 1967, sub-section (1) of section 138 was substituted by the following sub-section: "138. Disclosure of information respecting assessees :- (1)(a) The Board or any other Income-tax authority specified by it by a general or special order in this behalf may furnish or cause to be furnished to- (i) any officer, authority, or body performing any functions under any law relating to the imposition of any tax, duty or cess, or to dealigs in foreign exchange as defined in section 2(d) of the Foreign Exchange Regulation Act, 1947 (VII of 1947); or (ii) such officer, authority or body performing functi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be furnished any information asked for by any person, by making an application to him in the prescribed form, relating to any assesssee to respect of any assessment made under the 1922 Act or 1961 Act on or after April 1, 1960, if he is satisfied that it is in the public interest so to do and his decision in that behalf is final and cannot be called in question in any court of law. With effect from that very day the Central Government had been given the power to direct, by order notified in the Official Gazette, that no information or document shall be furnished or produced by a public servant in respect of such matters relating to such class of assessees and in respect of such authorities as may be specified in the order. It is common ground that an order was notified in 1965 with regard to the assessment of banking companies to the effect that no record of assessment qua them could be produced in any court nor could any information be disclosed on the basis thereof. With effect from April 1, 1967, the Board or any other income-tax authority specified by it has been authorised to furnish information from the assessment records of the income-tax department to certain classes of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the higher courts in appeal or revision. But if the decision of even the higher courts goes against him, then the Commissioner of Income-tax cannot be deemed to have been authorised to set at naught the judicial order of a court of law and he must obey that order by sending that record to the court concerned. Of course, it will be open to the Commissioner of Income-tax to claim privilege for any documents and notes forming part of that record under the provisions of sections 123 and 124 of the Indian Evidence Act, 1872. It has to be remembered that the scope of the power of the court under the general law for summoning the relevant record is entirely different from the scope of the power of the Commissioner of Income-tax under section 138(1)(b) of the 1961 Act whereunder the Commissioner of Income-tax is authorised to furnish the information asked for only if he is satisfied that it is in the public interest so to do. The court, while asking for the production of any record, has to be satisfied that the summoned record is relevant for the decision of the controversy before it and conducive to the satisfactory administration of justice between the parties in accordance with law. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n passed, which clearly means that the provisions of section 54 would continue to apply in the case of such assessments, though made after the 1st day of April, 1962. In those cases it cannot be said that section 54 of the 1922 Act stood repealed by the 1961 Act and the further omission of section 137 of the 1961 Act has no effect on the applicability of section 54 to the assessments made under the 1922 Act. The obligation under that section to keep the particulars mentioned therein as confidential was or is incurred by the income-tax authorities and public servants the moment those particulars formed part of the assessment record and the repeal of the 1922 Act cannot destroy or obliterate that obligation. The provisions of section 54 of the 1922 Act, therefore, continue to have effect in respect of the assessments made thereunder, whether before or after the coming into force of the 1961 Act, irrespective of its repeal by section 297(1) of the 1961 Act. A fortiori all assessments under the 1961 Act up to the 31st day of March, 1964, will continue to be governed by the provisions of section 137 of that Act irrespective of its repeal with effect from the 1st day of April, 1964, as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 1922 Act, has remained unimpaired by the repeal of that Act with effect from April 1, 1962, or the deletion of section 137 of the 1961 Act with effect from April 1, 1964. 2. In the case of assessments completed after the 1st day of April, 1960, under the 1922 Act, the information regarding the tax determined as payable by an assessee can only be disclosed as provided in section 59B of the 1922 Act read with rule 50 of the Income-tax Rules, 1922, framed under that Act or as provided in section 138(1)(b) of the 1961 Act. 3. In respect of all assessments made under the 1961 Act prior to the 1st day of April, 1964, the provisions of section 137 of that Act will continue to apply notwithstanding its repeal by the Finance Act, 1964. 4. Section 138 of the 1961 Act, as amended from time to time, only enables the Commissioner of Income-tax to disclose certain information to (a) public officers, and (b) any other person as specified therein and this section does not apply to the power of the courts to require the production of the assessment records or the disclosure of any information therefrom. Of course, the Commissioner of Income-tax or any other competent authority shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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