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Tarachand Koyal Vs. Maheswar Choudhury - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtOrissa High Court
Decided On
Case NumberCivil Revision No. 148 of 1973
Judge
Reported in[1974]96ITR133(Orissa)
ActsIncome Tax Act, 1922 - Sections 54; Income Tax Act, 1961 - Sections 137
AppellantTarachand Koyal
RespondentMaheswar Choudhury
Appellant AdvocateR.C. Misra and ;A.K. Tripathy, Advs.
Respondent AdvocateR.N. Sinha and ;S.N. Sinha, Advs.
Cases ReferredVe. V. Sivagami Achi v. Vr. Ve. Vr. Ramanathan Chettiar. The Bench
Excerpt:
.....the information asked for in respect of that assessment only and his decision in this behalf shall be final and shall not be called in question in any court of law. ramanathan chettiar disapproved the view taken by the two learned judges in the cases reported in ramakrishna mudaliar v. 19. i am satisfied that the learned trial judge went wrong when he issued the direction in question......party, on the other hand, relies upon two decisions of the madras high court--one, a single judge decision and the other, a decision of a division bench. i shall now deal with these cases.11. in the case of ramakrishna mudaliar v. mrs. rajabu fathima bukari, [1965] 58 t.t.r. 288, 295, 296, 297 (mad.) a learned single judge on an examination of the position of law, stated :' the principle of this enactment (section 6 of the general clauses act) would apply even to a case of repeal of one of the sections of the act of 1961, namely, the omission of section 137 by the finance act of 1964. the supreme court has indicated in state of punjab v. mohar singh, a.i.r. 1955 s.c. 84 thatunless a contrary intention appears in the repealing statute, the consequences of section 6 of the general.....
Judgment:

R.N. Misra, J.

1. The plaintiff-opposite party has sued for recovery of arrears of rent and other ancillary relief's against the defendant-petitioner. In the suit an application was made to call for the assessment-records including the trading account, profit and loss statements, balance-sheets, etc., of the defendant from the Income-tax Officer for the assessment years 1954-55 to 1964-65 and for certain reports relating to registration records of the defendant and some other concerns. The defendant objected to the prayer for production of accounts on the ground that both under the Income-tax Act as also under the Orissa Sales Tax Act, there is a bar against the disclosure of information and as such the court was not competent to issue orders calling for the records.

2. The learned trial judge has rejected the application so far as the sales tax documents are concerned. That matter has become final since the plaintiff has not moved against that order. The learned trial judge has, however, allowed the prayer of the plaintiff in relation to the income-tax documents. The defendant has, therefore, come in revision before this court and asks that direction to be quashed as it is contrary to law and no jurisdiction vests in the learned trial judge to make the impugned order in view of the provisions of the Income-tax Act.

3. Under Section 54 of the Income-tax Act of 1922, the prohibition against disclosure of information was provided thus:

'(1) All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act, or in any evidence given, or affidavit or deposition made, in the course of any proceedings under this Act other than proceedings under this Chapter, 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.'

4. Sub-section (2) made disclosure criminally punishable and Sub-section (3) provided certain exceptions. The corresponding provision in the 1961 Act was to be found in Section 137(1), This section was omitted from the statute by the Finance Act of 1964 with effect from April 1, 1964.

5. Under the 1961 Act, disclosure of information respecting assesses was provided for in Section 138 in the following terms :

' (I) 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 either under this Act or the Indian Income-tax Act, 1922, on or after the 1st day of April, I960, the Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for in respect of that assessment only and his decision 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 documents shall be furnished or produced by a public servant in respect of such matters relating to such class of assesses or except to such authorities as may be specified in the order '

6. This section after amendment by Finance Act of 1964 reads thus :

'138(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 ; or

(ii) such officer, authority or body performing functions under any other law as the Central Government may, if in its opinion it is necessary so to do in the public interest, specify by notification in the Official Gazette in this behalf, any such information relating to any assessee in respect of any assessment made under this Act or the Indian Income-tax Act, 1922, as may, in the opinion of the Board and other income-tax authority, be necessary for the purpose of enabling the officer, authority or body to perform his or its functions under that law.'

(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, 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 cause to be furnished the information asked for in respect of that assessment only and his decision in this behalf shall be final and shall not be called in question in any court of law.

7. Sub-section (2) of this section virtually remained the same.

8. The learned trial judge, in dealing with this aspect of the matter, has said:

' In regard to the first application, it is submitted from the plaintiff's side that the documents sought to be called for from the Income-tax Officer are relevant in so far as they would reveal the relevant fact that the defendant had paid rent for the suit house. It has been settled in the case, Digambar Bhuyan v. Nityananda Sahoo, [1974] 94 I.T.R, 454 (Orissa.) that such documents may be called for from the Income-tax Officer. On the strength of that ruling I am of the opinion that, in the interest of justice, the plaintiff's prayer should be allowed. Accordingly his petition dated February 2, 1973, is allowed. Call for the documents from the Income-tax Officer as prayed for.'

9. The decision of this court referred to above was in relation to calling for documents for the accounting years 1964-65 to 1969-70, The entire period was, therefore, subsequent to the deletion of Section 137 from the Act with effect from April 1, 1964. In fact this aspect of the matter has also been indicated in paragraph 3 of the judgment. The documents which have been called for in this case relate to a period to which either Section 54 of the 1922 Act or Section 137 of the 1961 Act would apply. In disposing of the dispute in this case, no support is available from the decision in Digambar Bhuyan's case.

10. What is the effect of repeal of Section 137 of the 1961 Act has got to be first decided. Mr. Misra for the petitioner relies upon two decisions of the Madras High Court, one of the Delhi High Court, and another of the Punjab High Court in support of his contention that even if Section 137 of the 1961 Act is repealed, the protection available under Section 54 of the 1922 Act or Section 137 of the 1961 Act would still be available in regard to documents produced for the assessment years relating to the period previous to the repeal. No contrary intention is indicated in the repealing provision (section 32 of the Finance Act of 1964) and, therefore, under Section 6 of the General Clauses Act, protection would still extend notwithstanding the repeal. Mr. Sinha for the opposite party, on the other hand, relies upon two decisions of the Madras High Court--one, a single judge decision and the other, a decision of a Division Bench. I shall now deal with these cases.

11. In the case of Ramakrishna Mudaliar v. Mrs. Rajabu Fathima Bukari, [1965] 58 T.T.R. 288, 295, 296, 297 (Mad.) a learned single judge on an examination of the position of law, stated :

' The principle of this enactment (section 6 of the General Clauses Act) would apply even to a case of repeal of one of the sections of the Act of 1961, namely, the omission of Section 137 by the Finance Act of 1964. The Supreme Court has indicated in State of Punjab v. Mohar Singh, A.I.R. 1955 S.C. 84 thatunless a contrary intention appears in the repealing statute, the consequences of Section 6 of the General Clauses Act will apply, and that it is not necessary that the repealing of new Act should expressly keep alive old rights and liabilities. They say that the line of enquiry should be, not whether the new Act expressly keeps alive old rights and liabilities, but whether it manifests an intention to destroy them. Leaving aside for a moment the question whether there is anything in the Finance Act of 1964 disclosing a different intention, it is clear that under Section 6(c) of the General Clauses Act, the inadmissibility of the evidence of Sri Marar will continue, notwithstanding the omission of Section 137 of the Income-tax Act of 1961 by the Finance Act of 1964. The matter can be looked at, first, from the point of view of the Income-tax Officer himself, and secondly, from the point of view of the Commissioner of Income-tax. From the point of view of the Income-tax Officer, he was under an obligation not to give evidence in court relating to the initials in question, and the circumstances under which they were affixed. This obligation accrued or was incurred under Section 54 of the Indian Income-tax Act of 1922 on August 17, 1957, itself in respect of the initials, because that was the Act that was in force then and that obligation continued when the Act of 1922 was repealed and the Act of 1961 was enacted. This obligation of the Income-tax Officer was correlated to the corresponding right of the assessee concerned, namely, Buhari Hotel, to forbid the Income-tax Officer giving evidence about such initials. We have seen from the observations of the Supreme Court in Charu Chandra Kundu's case, [19611 43 I.T.R. 83 (S.C.) 1 that the prohibition imposed against the court from taking the evidence of the Income-tax Officer was absolute and could not be obliterated by any waiver of the assessee. This obligation of the Income-tax Officer not to give evidence was there even apart from the corresponding right of the assessee to forbid him to give evidence. The prohibition was enacted in public interest to enable a full and true disclosure to be made by the assessee. That was why it was not available by the assessee.

The matter could also be considered as a right of the Income-tax Officer to claim immunity from appearing in court and being asked to give evidence about it, and submit himself to cross-examination. The Income-tax Officer could claim that this right continued, notwithstanding the omission of Section 137 of the Income-tax Act of 1961, by virtue of Section 6(c) of the General Clauses Act. '

12. Referring to the provision in section 138 of the Act, the learned judge continued :

' Actually, there does not appear to have been any notification under Section 138(2) in respect of the matter with which we are dealing. But thatapart, in view of the decision of the Supreme Court in State of Punjab v. Mohar Singh, it is clear that, even in a case where there is notification under Section 138(2), it will not mean that the prohibition against the production of the records by the Income-tax Officer is confined to the documents specified in such a notification. According to the criterion of the Supreme Court in State of Punjab v. Mohar Singh, the limited prohibition contained in the notification under Section 138(2) cannot be taken as destroying the prohibition under the old law, namely, Section 137 of the Act of 1961. Rather the correct view would be that, in addition to the old law, the notification under Section 138(2) also contains a prohibition in respect of particular documents specified. As for Section 138(1), that too cannot 'be taken as in any way destroying the prohibition contained in Section 137 of the Income-tax Act of 1961. Section 138(1) deals only with what the Commissioner may do when a party applies to him, and does not touch the sphere covered by Section 137(1) of the Act of 1961, which lays down the prohibition of evidence or documents being tendered in court by the officer. '

13. When the matter came up for examination in the case of Chinnammal v. Kuwidhini, [1966] 61 I.T.R. 597 (Mad.) the learned judge approved the earlier decision referred to above and was not prepared to agree with the view taken by Sadasivam J. in the case of Income-tax Officer v. P. Ramaratnam, [1965] 58 I.T.R. 297 (Mad.) to which I shall refer when I deal with Mr. Sinha's submissions.

14. In the case of Daulat Ram v. Som Nath, [1968J 68 I.T.R. 779 (Delhi.) d a learned single judge of the Delhi High Court approved the view taken in Ramakyishna Mudaliar v. Rajabu Fathima Bukari 5 and did not agree with the view of Sadasivam J.

15. A Bench of the Punjab High Court in the case of 0, P. Aggarwal, Income-tax Officer v. State6 dealt with the same question and concluded thus:

' The question that remains is whether the consequences as laid down in Section 6 of the General Clauses Act arise despite the repeal of the Act of 1922 by the Income-tax Act, 1961. The general principles as to the applicability of Section 6 have been settled by the Supreme Court in State of Punjab v. Mohar Singh. It has been laid down that whenever there is a repeal of an enactment the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears. In the case of a simple repeal there is scarcely any room for expression of a contrary opinion. But when the repeal is followed by fresh legislation on the same subject the court would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether they indicate a different intention. The line of enquiry would be, not whether the new Act expressly keeps alive old rights and liabilities, but whether it manifests an intention to destroy them. The court cannot, therefore, subscribe to the broad proposition that Section 6 of the General Clauses Act is ruled out when there is repeal of an enactment 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 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.

Keeping in view the above test, it must be held that there is nothingin 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, which was the date on which theIncome-tax Act, 1961, came into force. On the other hand the indicationsare that the legislature has been careful to keep that protection alive andsubsisting with regard to assessments completed before that date such asthe present one which was, as mentioned above, completed on the 14thFebruary, 1957.' .

16. What was stated by the Division Bench in regard to the repeal of the 1922 Act by the 1961 Act would equally apply to the omission of Section 137 from the 1961 Act by Section 32 of the Finance Act of 1964. On the basis of the principles indicated in the Punjab decision, 0. P. Aggarwal, Income-tax Officer v. State, [1966] 59 I.T.R. 158 (Punj.) it would follow that there was no intention manifested by the repealing provision or even the amendment brought to Section 138 of the Act would not disclose a contrary intention. Section,6(c) of the General Clauses Act is, therefore, attracted to the situation.

17. Mr. Sinha, on the other hand, relies upon the decision of Sadasivam J. (already referred to) and a Bench decision of the Madras High Court in the case of Ve. V. Sivagami Achi v. Vr. Ve. Vr. Ramanathan Chettiar, [1967] 64 I.T.R. 36 (Mad.), It is true that the Division Bench in Ve. V, Sivagami Achi v. Vr. Ve. Vr. Ramanathan Chettiar disapproved the view taken by the two learned judges in the cases reported in Ramakrishna Mudaliar v. Raj aim Fathima Bukari and Chinnammal v. fat-midhini. The decision in Chinnammal v. Kumidhini was delivered by Veeraswami J., sitting as a single judge, and it is he who also delivered the judgment of the Division Bench in Ve. V. Sivagami Achi v. Vr. Ve. Vr. Ramanathan Chettiar. The Bench decision of the Madras High Court certainly supports the stand of Mr. Sinha, but I am not in a position to persuade myself to accept the dictum laid down therein. The impact of Section 6(c) of the General Clauses Act has not been fully kept in mind and, therefore, I am afraid, the conclusion reached has not been correct. On the other hand, the view expressed in the other two single judge decisions of the Madras High Court and the single judge decision of the Delhi High Court and the Bench decision of the Punjab High Court seems to be proper. I would accordingly hold that in regard to the documents called for relating to the assessment years 1954-55 to 1964-65, the provisions of Section 54 of the 1922 Act and the provisions of Section 137 of the 1961 Act were applicable. In view of the bar provided in the respective provisions of the statutes the impugned order could not have been made.

18. Though it does not arise for consideration, I am of the view that in Digambar Bhuyan's case, the provisions in Section 138 of the Act have been relied upon to justify the order of the court in summoning records. That section does not authorise the court to do anything ; on the other hand, discretion has been vested in appropriate income-tax authorities to make disclosure of information. Since that question does not arise for determination, it need not be further dilated upon.

19. I am satisfied that the learned trial judge went wrong when he issued the direction in question. Mr. Sinha raised objection that no jurisdiction vested in this court under Section 115 of the Code of Civil Procedure to interfere in the matter. I do not agree with him. The learned trial judge has exercised a jurisdiction which did not vest in him in view of the bar contained in the statutes and the impugned order was, therefore, liable to be quashed.

20. I would accordingly allow the civil revision, set aside the direction of the learned trial judge regarding summoning of documents from the Income-tax Officer, but make no order as to costs.


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