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Sabrose Finance Corporation Vs. Haryana State and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Revision No. 20 of 1984
Judge
Reported in(1985)46CTR(P& H)57; [1985]154ITR890(P& H)
ActsIncome Tax Act, 1961 - Sections 138 and 138(2)
AppellantSabrose Finance Corporation
RespondentHaryana State and ors.
Appellant Advocate M.L. Sarin, Adv.
Respondent Advocate N.C. Jain, Sr. Adv.,; S.S. Jain, Adv. and; Amar Dhiya
Excerpt:
.....available for invoking the remedy shall have to be strictly construed. that is because any provision by way of limitation is in the nature of a restraint on the remedy provided under the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply communication of a copy of the written order itself, a party who knows about the making of an order cannot ignore the same and allow grass to grow under its feet and do nothing except waiting for a formal communication of the order or to choose a..........was requested to send those files. the ito while sending the requisitioned files in sealed covers, claimed privilege in terms of section 138(2) of the i.t. act, 1961, and regretted that the information contained in those files could not be disclosed.2. the contending parties mooted the question before the court below as to whether the privilege had rightly been claimed by the itos. precedents one way or the other were cited. the court took the view that the privilege claimed by the income-tax department must be upheld. the aggrieved petitioner has approached this court.3. as is plain, a privilege has specifically been claimed under section 138(2) of the aforesaid act which is in the following terms:'section 138(2) notwithstanding anything contained in sub-ection (1) or any other law for.....
Judgment:

Punchhi, J.

1. The petitioner herein, Smt. Viran Wali, an alleged partner of M/s. Sabrose Financial Corporation, is a contending party in a reference under Section 30 of the Land Acquisition Act, 1894, pending before the Additional District Judge, Gurgaon. To further her case, she required production of tax assessment files pertaining to some back assessment years relating to M/s. Sabrose Financial Corporation and for that purpose, a direction by the court to the concerned ITO. This was opposed by another contending party, Kesar Singh, styling himself to be the sole proprietor of M/s. Sabrose Financial Corporation, who is the contesting respondent herein. The two applications filed by the petitioner for the purpose were allowed by the court and the concerned ITO was requested to send those files. The ITO while sending the requisitioned files in sealed covers, claimed privilege in terms of Section 138(2) of the I.T. Act, 1961, and regretted that the information contained in those files could not be disclosed.

2. The contending parties mooted the question before the court below as to whether the privilege had rightly been claimed by the ITOs. Precedents one way or the other were cited. The court took the view that the privilege claimed by the Income-tax Department must be upheld. The aggrieved petitioner has approached this court.

3. As is plain, a privilege has specifically been claimed under Section 138(2) of the aforesaid Act which is in the following terms:

'Section 138(2) Notwithstanding anything contained in Sub-ection (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.'

4. A plain reading of that provision makes it clear that the Central Government may, 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. The Central Government alone is the judge in that regard and is to regulate the provision of privilege by manifesting its intention in the Official Gazette, the regulating basis for the purpose being that it must keep regard of the practices and usages customary or any other relevant factors while making such order. In other words, the provision envisages the Central Governmentto be alive to the needs of the time which may require furnishing or withholding of any information or document pertaining to a particular class of assessees or from a particular class of authorities. Unless and until such an order is made, no such absolute privilege as claimed by the ITO can be conceded to him on the mere existence of the afore-quoted provision. The ITO would have to further justify his stance by disclosing the particulars of the notified order of the Central Government whereunder privilege is claimed. There is no such omnibus power with him to withhold information or document. The impugned order prima facie does not disclose that the court was made wiser about it. Here as well, this court has not been made wiser in that direction despite notice being issued to the concerned ITO for the purpose. The parties' counsel were, of course, left groping in the dark. Thus, there is no option but to remit the matter back to the court directing it to get in communication with the ITO(s) asking them under what specific order of the Central Government have they claimed privilege under Section 138(2) of the Act. On receipt of such information, the court would be required to reconsider the matter afresh in accordance with law.

5. From what has been said above, this revision petition is allowed, the impugned order is set aside and the matter is sent back to the Additional District Judge to proceed further in accordance with law and in the light of the above observations.

6. The parties through their counsel are directed to put in appearance before the court on June 1, 1984.


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