TMI Blog1974 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... come to us. Mr. Suresh M. Shah, appearing for the petitioner (original defendant No. 1), has urged that in view of the provisions of section 138 of the Income-tax Act, 1961 (which will be hereinafter referred to as "the Act of 1961"), which came into force on 1st April, 1962, the documents produced in an assessment proceeding before the income-tax authority prior to the coming into force of that Act as well as subsequent to the date of the coming into force of that Act, and in spite of the omission of section 137 from the Act of 1961, these documents cannot be permitted to be produced. In support of his argument, he has mainly relied upon the aforesaid decision of the Division Bench of the Madras High Court. Mr. Suresh M. Shah has also alternatively urged that, at any rate, the documents referred to in para. 5 of the trial court's judgment at items Nos. 3 and 4, cannot be permitted to be produced as they are documents for the period prior to 1st April, 1964, when section 137 came to be omitted from the Act of 1961. Mr. D. U. Shah, appearing for plaintiff-opponent No. 1, has urged that, in view of the omission of section 137 from the Act of 1961, under which there was proh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd shall also be liable to fine." Sub-section (3) of section 54 of the Act of 1922 provided for cases in which the record mentioned in sub-section (1) of section 54 could be disclosed or produced. But we are not concerned in the instant case with those eventualities. Sub-section (4) of section 54 of the Act of 1922 made an exception in regard to the production by a public servant before a court 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 by a public servant in respect thereof. By section 9 of the Taxation Laws (Amendment) Act (XXVIII of 1960), section 59B was inserted in the Act of 1922 with effect from April 1, 1960, which reads as under: "59B. Where a person makes an application to the Commissioner in the prescribed form and after payment of the prescribed fee for information as to the amount of tax determined as payable by any assessee in respect of any assessment made on or after the 1st day of April, 1960, the Commissioner may, notwithstanding anything contained in section 54, if he is satisfied that there are no circumstances justifyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all 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 dealings 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 functions under any other law as the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny information asked for by any person, by making an application to him in the prescribed form, relating to any assessee in respect of any assessment made under the Act of 1922 or the Act of 1961 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 appears that an order was notified in the year 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 1st April, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment so repealed." Mr. D. U. Shah, Appearing for plaintiff--opponent No. 1, has submitted that these provisions contained in section 6(e) of the General Clauses Act, 1897, cannot have any application, as the present case could not be said to be a case where any right, privilege, obligation or liability was acquired, accrued or incurred under the repealing provisions, i.e., provisions contained in section 137 which came to be omitted from the Act of 1961 with effect from 1st April, 1964. It was submitted by Mr. D. U. Shah that there was only a procedural ban under section 54 of the Act of 1922 as well as under section 137 of the Act of 1961. There was no right or privilege conferred by the statute on any individual person. There is no obligation also cast upon the income-tax authority or any public servant. It was only for the internal and proper administration of the income-tax department that there was such a procedural ban imposed under the provisions of those sections. By omission of section 137 of the Act of 1961 and the repeal of the Act of 1922, in view of the provisions contained in section 297 of the Act of 1961, that ban was removed. Mr. D. U. Shah has, therefore, conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, privileges, obligations or liabilities acquired, accrued or incurred are affected or set at naught. The acceptance of this contention would be tantamount to making a dead letter of clause (c) of section 6 of the General Clauses Act. The plain inference from clause (c) of section 6 necessarily is that the repeal of an enactment would not affect the rights, privileges, obligations or liabilities acquired, accrued or incurred under the enactment so repealed, unless there appears a different intention. Something more than repeal simpliciter of the enactment would be essential in order to substantiate a plea of 'different intention'. It is true that the repeal of the Act of 1922 was simultaneously accompanied by fresh legislation on the subject but the fresh legislation, in my opinion, does not manifest an intention to destroy the privilege which had already accrued in respect of the documents which were filed at the time section 54 of the Act of 1922 was in force. No doubt, there has been some kind of erosion of the privilege which was in existence under section 54 of the Act of 1922, after the repeal of the aforesaid Act, but the privilege still exists substantially in some form or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed by a fresh legislation. Section 6 would be applicable in such cases also unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section. Such incompatibility would have to be ascertained from a consideration of all the relevant provisions of the new law and the mere absence of a saving clause is by itself not material. The provisions of section 6 of the General Clauses Act will apply to a case of repeal even if there is simultaneous enactment unless a contrary intention can be gathered from the new enactment." In State of Kerala v. N. Sami Iyer, the Supreme Court has reaffirmed that test and has made the following pertinent observations: "It was held that by virtue of section 4(c) of the Travancore and Cochin General Clauses Act, 1125, corresponding to section 6(c) of the Indian General Clauses Act, the dealer (assessee) continued to be liable to taxation under the Madras General Sales Tax Act in respect of the disputed turnover at the purchase point. For example, if for some reason he had not been assessed before Act 12 of 1957 (which repealed the Madras General Sales Tax Act in Malabar area), came into force, he wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no dispute that till the date of completion the veil of secrecy attached to all the particulars contained in the assessment file as mentioned in sub-section (1) of section 54. The object of the protection as stated in various authorities referred to at page 609 of volume 1 of the Law and practice of Income Tax by Kanga and Palkhivala (fifth edition), was to enable people to feel that they could freely state the facts relating to their income, facts which may often involve confidential matters relating to their business, without fear of the matters being disclosed to others." After referring to the relevant provisions of the two Acts--the Act of 1922 and the Act of 1961.--and the changes made in those relevant sections, the test laid down by the aforesaid Supreme Court decisions has been referred to, and thereafter, at page 170, it is observed: "Keeping in view the above test, it must be held that there is nothing in the Income-tax Act, 1961, which manifests an intention that the protection from and prohibition of disclosure of assessment records as afforded by section 54 would not be applicable to assessments which had been completed before the 1st day of April, 1962, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee who happens to be a partner in a firm, the Income-tax Officer would not be justified in allowing even the assessee's partner to be present at and to take part in the assessment proceedings. (Dinshaw Darabshaw Shroff v. Commissioner of Income-tax ). This ban is clearly, intended for the benefit of the assessees and confers a right upon them to insist that no unauthorised person would be allowed to be present at the time when their assessments take place and a similar right extends to them to insist that nothing which is brought on their assessment record by way of statement, returns, documents and evidence would be revealed to anybody including a court. In this background, it is not possible to say that section 54 merely imposes an obligation upon the income-tax authorities without creating any corresponding right in favour of any particular person." He relies upon the decision of a Division Bench of the Punjab High Court in O. P. Aggarwal v. State and also (upon the decision of a single judge of the Madras High Court in P. Kandaiah Thevar v. Third Income-tax Officer, Tirunelveli. He thereafter refers to the decision of a Division Bench of the Madras High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... single judge of the Patna High Court has observed: "After the repeal of section 137 of the Income-tax Act, 1961, by Act V of 1964, there cannot be any impediment in the way of a civil court in directing production of documents which were filed before an Income-tax Officer." An argument was advanced before that single judge of the Patna High Court as has been done by Mr. Suresh M. Shah for the petitioner, relying upon the provisions of section 138(1)(b) of the Act of 1961. It is observed in that behalf: "Learned counsel for the opposite party pointed out that section 138 as amended by Act 5 of 1964 has been further amended and substituted by Act 20 of 1967. On the basis of this amended provision, it was suggested that there is a prohibition, although not explicit but by necessary implication, so far as calling for production of documents by the court is concerned. Reliance was placed on section 138(1)(b) of the Act. I do not find any prohibition explicit or implicit in that provision. The provision only enables the Commissioner to give copies of certain documents, provided the grant of it is in public interest. This sub-clause does not apply where a party wants the document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at page 11: "The provisions of section 54 of the 1922 Act, therefore, continue to have effect in respect of the assessment, 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 the obligation to keep the records mentioned in that section as confidential and not to disclose any information relating thereto or derived therefrom was incurred on the date or dates when the assessment records were prepared prior to April 1, 1964, and that obligation cannot be said to have been done away with by the repeal of section 137. Therefore, no information from the assessment records of an assessee prepared before April 1, 1964, under the provisions of the 1961 Act can be disclosed by the income-tax authorities or any public servant nor can the records of those assessments be produced in a court of law or before any officer of the Government except to the extent permitted by sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 free to claim privilege under sections 123 and 124 of the Indian Evidence Act, 1872, which will be determined by the court. 5. It is open to the Central Government to grant protection to any class of assessees, etc., under section 138(2) of the 1961 Act by an order notified in the Official Gazette, from disclosure of any information derived from their assessment records or production thereof before a court, or any other officer or authority." Some of these propositions enunciated by the Full Bench of the Punjab High Court relying upon the provisions of section 297(1) of the Act of 1961 are debatable questions. We do not express any opinion in respect of them, as they do not arise for decision in this case. In the instant case, we are not concerned with the case of return filed when the Act of 1922 was in force and in such an assessment proceeding, some documents came to be produced before the income-tax authority after the repeal of section 137 from the Act of 1961. We only decide that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the General Clauses Act. The learned judge took note of the fact that actually, as far as he was informed, there was no notified order under section 138(2). The learned judge went further and thought that the matter covered by section 137 would fall within the ambit of section 6(c) of the General Clauses Act. He observed that the Income-tax Officer incurred an obligation when documents were filed before him and that obligation continued until repeal of that section, and that this obligation of the Income-tax Officer was to be correlated to the corresponding right of the assessee concerned to forbid the Income-tax Officer from giving evidence in relation to the documents filed before him." Even the Division Bench observes at page 41: "In our opinion, Venkataraman J. was right when he said that section 138(2) does not contain any intention so as to eliminate the application of section 6. It is possible that partial or total prohibition against disclosure of stated particulars in specified documents filed before the Income-tax Officer under section 138(2) may be consistent or compatible with section 137(1) of the Income-tax Act, 1961." It is significant to note at this sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of its jurisdiction nor the prohibition against any public servant from disclosing the particulars may by itself amount to an obligation incurred. We are inclined to think that not every obligation, however abstract, necessarily involves a corresponding right also in the abstract. The bar on courts really relates to the power of the court and the prohibition against any public officer disclosing such particulars is no more than forbidding him from divulging the particulars. To our minds, neither the bar nor the prohibition can be regarded at all as an obligation, in any case as an obligation incurred within the meaning of section 6(c) of the Greneral Clauses Act. Where the court contravenes the bar, no particular person including the assessee, in whose assessment proceedings the particulars have been placed before the particular Income-tax Officer, has a cause of action against it. All that any one like the assessee may do in such a case would be to bring it to the notice of the court that it has contravened." It has referred to two English decisions in Hamilton Gell v. White and Abbot v. Minister for Lands and reached the conclusion that the instant case was not a case wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferred on him. In our opinion, the view taken by the Division Bench of the Madras High Court has been rightly dissented from by the other High Courts. We do not find anything in section 138 or in any other relevant sections in the Act of 1961 which shows that such rights were sought to be destroyed. In our opinion, section 6(c) of the General Clauses Act, 1897, is applicable. The Division Bench of the Madras High Court, in our opinion, is not right in reaching the conclusion that it is inapplicable. From the aforesaid discussion, the propositions that emerge are that all such documents filed or produced before the income-tax authorities in assessment proceedings under the Act of 1922 or the Act of 1961 on or before 31st March, 1964, prior to the omission of section 137 from the Act of 1961, received protection and the income-tax authorities or a public servant cannot be compelled by the court to produce them. So far as the documents that are produced subsequent to March 31, 1964, i.e., after the omission of section 137 from the Act of 1961, do not receive any such protection and there is no such prohibition and the court can summon the income-tax authority to produce such docum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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