The point raised in this petition under articles 226 and 227 of the Constitution is whether a certain entry in a document is privileged under section 54 of the Income-tax Act.
Behari Lal and Sita Ram are respondents Nos. 3 and 4 in the present writ petition. There was a proceeding between Behari Lal and Sita Ram under section 145 of the Code of Criminal Procedure with respect to a certain room. The Magistrate, who was dealing with the criminal case, made a reference to the civil court under section 146 of the Code of Criminal Procedure. The reference came up for disposal before the learned Munsif, Hamirpur. Sita Rams case is that he had received rent for the room in dispute from a certain firm. In order to substantiate that part of his case, Sita Ram summoned the record of assessment of the firm from the Income-tax Officer, Banda Circle, Kanpur. It was urged on Behari Lals behalf that the document was privileged. That contention was overruled by the learned Munsif on May 5, 1961. He directed that the particular entry on the question of payment of rent to Sita Ram must be produced before the court. The Income-tax Officer lodged a protest that the document was privileged under section 54 of the Income-tax Act. The court was requested to reconsider the matter. On October 20, 1961, the learned Munsif passed a fresh order to the effect that his previous order dated May 5, 1961, must be carried out.
Against the Munsifs decision, the Income-tax Officer filed a criminal revision before the Sessions Judge, Hamirpur. The learned Sessions Judge dismissed the criminal revision on January 8, 1962. Against that order of the learned Sessions Judge, the present petitioner filed a criminal revision before this court. This court rejected the criminal revision on October 31, 1962. Thereupon the Income-tax Officer filed the present writ petition before this court on December 3, 1963.
It will be noticed that the petitioner is primarily aggrieved by the Munsifs direction ordering the petitioner to produce the particular entry before the court. The successive orders of the learned Munsif are dated May 5, 1961, and October 21, 1961. The present writ petition was filed before this court on December 3, 1962, more than one year after the Munsifs final order. There was much delay in filing the writ petition before this court. It is said on behalf of the petitioner that, in the meanwhile, the petitioner was engaged in following other remedies. It is not clear why the petitioner approached the Sessions Judge at all. Obviously, the Munsif of Hamirpur is a civil court. The learned Sessions Judge could not grant the petitioner any relief in this case.
Now I turn to the merits of the petition. The petitioner relies upon section 54 of the Income-tax. The material portion of section 54 of the Income-tax Act is in these term :
'54. All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act... in the course of any proceedings under this Act... or in any record of any assessment proceeding... shall be treated as confidential, and... 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.'
Mr. R.R. Misra appearing for Sita Ram, respondent No. 4, contended that, although the document in question is in the custody of the Income-tax Officer, the entry in question had nothing to do with the assessment proceeding. Reliance was placed upon Official Assignee of Bombay v. Mustafa Murtaza. In that case it was held by Bhagwati J. that it is futile to urge that once a book of account or a set of books of account are physically produced before the Income-tax Officer by the assessee, the whole contents of these books of account are produced by the assessee before the Income-tax Officer under the provisions of the Act. It is only those accounts and entries in the books of account which are in the course of the investigation produced in the sense that they are communicated by the assessee to the Income-tax Officer and brought to his notice that would really come within the ban of section 54 of the Act. The other entries in the books of account which are no doubt contained in the books of account but which have no reference whatever to the investigation of a particular case by the Income-tax Officer would not come within this ban.
According to Mr. Misras contention, the payment of rent by the firm to Sita Ram had nothing to do with the assessment of income-tax against the firm. I am not sure whether the particular entry was altogether irrelevant for purposes of assessment of income-tax. For purposes of the present case, we may assume that the particular entry had nothing to do with the assessment of income-tax against the firm. It does not, however, follow that the entry falls outside the protection of section 54, Income-tax Act.
In Charu Chandra Kundu v. Gurupada Ghosh there was a suit by the respondent for a money decree against the appellant. The appellant applied to the court for the issue of a summons against the income-tax authorities to produce a statement made by the respondent, and recorded in the proceedings for assessment of the income of the appellant to prove that the debt due to the respondent was discharged. It was held that the prohibition imposed against the court by section 54 of the Income-tax Act was absolute; so the income-tax authorities could not be compelled to produce the statement.
Similarly, in Commissioner of Income-tax v. Laxmichand Narayandas it was held that section 54 of the Income-tax Act contains in effect an unconditional prohibition against a public servant producing any document which forms part of the record of an assessment proceeding. Section 54 imposes a general ban on all courts. An income-tax authority cannot be called upon to produce any record of an assessment proceeding. Both these decisions are by the Supreme Court.
The summonses received by the Income-tax Officer from the Munsifs court were shown to me. It appears that the summonses were for the balance-sheet submitted by the firm to the Income-tax Officer along with the income-tax return. In his application dated September 21, 1961, the Income-tax Officer protested that he was being compelled to produce the balance-sheet submitted by the firm. Mr. Misra contended that respondent No. 4 is not anxious to peruse the balance-sheet of the firm. Sita Ram would be content with the single entry about payment of rent. I do not know in which particular document the relevant entry appears. It is, however, clear that the entry in question is in some document submitted by the firm to the Income-tax Officer for purposes of assessment of income-tax. The document is, therefore, privileged under section 54 of the Income-tax Act.
If the stand taken by respondent No. 4 is correct, he would receive considerable support from the decision of the Bombay High Court in the case of Official Assignee of Bombay v. Mustafa Murtaza. But in view of the Supreme Court decisions in the cases of Charu Chandra Kundu v. Gurupada Ghosh and Commissioner of Income-tax v. Laxmichand Narayandas the law laid down by the Bombay High Court in the case of Official Assignee of Bombay v. Mustafa Murtaza cannot be accepted as good law. The petitioner is right in his contention that he cannot be compelled to produce the relevant entry from the file of the assessment proceeding.
In view of the delay in filing the writ petition, the parties may be directed to bear their own costs.
The petition is allowed. The orders of respondent No. 1 dated May 5, 1961, and October 21, 1961, and the order of respondent No. 2 dated January 8, 1962, are quashed. Respondent No. 1 is directed not to compel the petitioner to produce any entry from the file of the assessment proceeding of the firm in question. Parties shall bear their own costs in this court.