Skip to content


O. P. Aggarwal, Income-tax Officer, C-ward, Jullundur Vs. the State and Others. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberReported Criminal Revision No. 35 of 1964
Reported in[1966]59ITR158(P& H)
AppellantO. P. Aggarwal, Income-tax Officer, C-ward, Jullundur
RespondentThe State and Others.
Cases ReferredState of Punjab v. Mohar Singh Pratab Singh. It
Excerpt:
.....relating to any assessee in respect of any assessment made either 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 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. accordingly, the validity of the order of the magistrate has to be considered in the light of the provisions contained in the income-tax act, 1961, prior to the amendments effected by the finance act, 1964. that, however, would not solve the problem because even if that order is found to be bad or in excess of the powers of the..........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) no public servant shall disclose any particulars contained in any such statement, return, documents, evidence, affidavit, deposition or record.(3) nothing in this section shall apply to the disclosure -(i) of any such particulars for the purposes of a prosecution for any offence under the indian penal code (45 of 1860) in respect of any such statement, return, accounts, documents, evidence, affidavit or deposition,.....
Judgment:
ORDER

GURDEV SINGH J. - This petition for revision raises the question of the priviledge attaching to the records of assessments made by the income-tax authorities. Shambu Das brought a complaint under section 406, Indian Penal Code, against Jiwa Ram Chopra in the court of the Magistrate, First Class, Jullundur. In the course of the trial the complainant applied to the court for summoning 'the income-tax file of Hindu undivided family firm, Messrs. Kishan Chand Nanak Chand, Cloth Merchants, Lal Bazar, Jullundur City' for the income-tax year 1947-48, through the Income-tax Officer, C-Ward. Jullundur. This was stated to be necessary in order to bring on record the affidavit filed by Shrimati Gomti Devi, mother of Jiwa Ram accused, in the course of the assessment proceedings and the final order passed by the income-tax authorities. Accepting this application the learned Magistrate issued an order to the present petitioner, Om Prakash Aggarwal, the Income-tax Officer concerned, to produce the relevant file. On the 19th November, 1963, the petitioner Income-tax Officer sent a letter to the court through his inspector claiming privilege under section 137 of the Income tax Act, 1961, pointing out that in accordance with that provision the assessment records were to be treated as confidential and no court was entitled to require any public servant to produce these records or to give evidence therefrom. The learned trial judge refused to accept this contention and holding that no such claim of previlidge could be made if the records were required for the purposes of a prosecution under the Indian Penal Code, directed the Income-tax Officer to produce the same on the 28th November, 1963.

On the adjourned hearing, the petitioner, Shri Om Prakash Aggarwal, himself went to the court with the requisitioned file in a sealed cover and made an application claiming privilege under section 137 of the Income-tax Act 1961. In support of this application Income-tax officer, Jullundur v. State, Charu Chandra Kundu v. Gurupada Ghosh and Commissioner of Income-tax v. Laxmichand Narayandas were cited before the trial court. The learned Magistrate, however, distinguished these cases on the ground that they were based on consideration of section 54 of the Income-tax Act, 1922, and not of any provision of the Act of 1961. Being still of the opinion that no exemption could be claimed under sub-section (3) of section 137 of the Income-tax Act, 1961, she ruled that no priviledge attached to the records summoned from the petitioner-Income-tax Officer, especially when copies of the three documents, which were sought to be proved at the trial, had already been granted by the income-tax authorities. Being not satisfied with this order, the petitioner went up in revision to the court of session at Jullundur and the learned Additional Sessions Judge has now referred the case to this court under section 438 of the Code of Criminal Procedure with the recommendation that the order of the Magistrate requiring the petitioner to produce the assessment record in question be quashed as it was not warranted by the provisions of section 137 of the Income-tax Act, 1961.

Section 137 of the Income-tax Act, 1961, on which reliance is placed on behalf of the petitioner, so far as it is relevant for our purposes, runs as follows :

'137. (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 Chapter XXII, or in any record of any assessment proceeding, or any proceeding relating to 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) No public servant shall disclose any particulars contained in any such statement, return, documents, evidence, affidavit, deposition or record.

(3) Nothing in this section shall apply to the disclosure -

(i) of any such particulars for the purposes of a prosecution for any offence under the Indian Penal Code (45 of 1860) in respect of any such statement, return, accounts, documents, evidence, affidavit or deposition, or for the purpose of a prosecution for any offence under this Act ; or'

A bare reading of clause (i) of sub-section (3) of this section, on which the learned Magistrate has relied is enough to show that her finding that no priviledge attaches to the various documents produced before the income-tax authorities if the documents are required in connection with prosecution for any offence under the Penal Code is untenable. The exception contained in that sub-section does not apply to prosecution for all offences under the Indian Penal Code but only to such offences under that Code which are 'in respect of any such statement, return, acounts, documents, evidence, affidavit or deposition', and any offence under the Income-tax Act of 1961. This fact is not disputed before me, but on behalf of the respondent, Shambu Dass, it is contendd that the protection claimed under section 137 of the Income-tax Act, 1961, is no longer available to the petitioner and at present no priviledge attaches to the documents for the production of which the impugned order was made by the learned Magistrate. Reference in this connection is made to sections 32 and 33 of the Finance Act No. 5 of 1964, whereby section 137 of the Income-tax Act, has been ommitted and section 138 existing therein has been replaced by the following provision :

'138. Disclosure of information respecting assessees. (1) 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 (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 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 Governmentmay, having regard to the practices and usages contomary 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.'

When the impugned order for the production of documents was made by the learned Magistrate, the Finance Act No. 5 of 1964 was not in existence. Accordingly, the validity of the order of the Magistrate has to be considered in the light of the provisions contained in the Income-tax Act, 1961, prior to the amendments effected by the Finance Act, 1964. That, however, would not solve the problem because even if that order is found to be bad or in excess of the powers of the Magistrate, there would be nothing to prevent her from making a fresh order at this stage requiring production of the income-tax records in quesiton if it is not hit by the provisions of section 138 of the Income-tax Act, 1961, as it now exists after the amendment effected by the Finance Act No. 5 of 1964. Thus, it is with reference to this new provision introduced by the Finance Act of 1964 that the question of priviledge has to be considered.

The position at present is that the only provision with regard to the disclosure of information by the income-tax authorities regarding assessees is that contained in sub-section (1) of section 138 of the Income-tax Act, 1961, as amended in 1964. Though in the Indian Income-tax Act, 1922, as well as in the Income-tax Act, 1961, as it stood before its amendment by the Finance Act, penalty was provided for unauthorised disclosure of information regarding assessees, at present the Income-tax Act does not contain any such provision. Sub-section (1) of section 138, as it exists after the amendment of the year 1964, seems to make the Commissioner of Income-tax the sole authority for determining whether any information relating to any assessee in resoect of any assessment should or should not be supplied and if it is to be supplied, to what extent. Of course, under sub-section (2) of the newly introduced section 138, the Central Government is empowered to issue notification prohibiting the supply of certain information contained in assessment record, yet it is common case of the parties that no such notification has yet been issued. In this state of affairs, the petitioners learned counsel has contended that the proper procedure for the respondent would be to make the necessary application for information to the Income-tax Commissioner concerned and even if the court desires to have the assessment records ot a part thereof before it for purposes of evidence, a communication has to be addressed to the Income-tax Commissioner and unless he grants permission for the production of certain records or furnishing of information at the hearing of the case no evidence in respect of the records can be taken.

The respondents learned counsel, on the other hand, has pointed out that the authority of the Commissioner to supply or withhold information under sub-section (1) of section 138, as it stands amended by the Finance Act, 1964, is confined only to assessments made on or after the 1st day of April, 1960, and this provision cannot apply to the records of the assessments completed before the 1st day of April, 1960. The literal construction of the relevant provision does seem to bear out this argument but, as urged by the learned counsel for the petitioner, there does not appear to be any cogent reason for thinking that the modified priviledge, which the legislature has introduced by section 33 of the Finance Act, 1964, ammending section 138, should have been intended to apply only to the assessments made on or after the 1st day of April, 1960, and leave the income-tax records and assessment proceedings relevant to the earlier period unprotected and open to public sscrutiny except for the limited priviledge which can be claimed under the general provisions contained in sections 123 and 124 of the Indian Evidence Act.

The question raised is one of considerable difficulty and importance not only to the general public but due to the income-tax authorities as well. As a decision on this question is likely to have wide reperscussions and any order passed on the revisional side will not be open to appeal, I consider it desirable that the matter be placed before a larger Bench for an authoritative decision. I, accordingly, direct that this case be laid before my Lord the Chief Justice for necessary orders.

The quewstion

D D D documents, evidence, affidavit of any such statement, return

S. B. CAPOOR J. - This is a reported criminal revision and has been referred to a Division Bench by Gurdev Singh J. because he considered that the legal points raised involved the construction to be placed on the various provisions of the Indian Income-tax Act, 1922 (Act No. 11 of 1922), the Income-tax Act, 1961 (Act No. 43 of 1961) and the Finance Act, 1964 (Act No. 5 of 1964). The reporting officer is the Additional Sessions Judge, Jullundur, and the petitioner before him was Shri. O. P. Aggarwal, Income-tax Officer, C-Ward, Jullundur. The petition arose out of a criminal case Shambu Das v. Jiwa Ram Chopra, under section 406 of the Indian Penal Code pending in the court of the Additional District Magistrate, Jullundur. Shambu Das is respondent No. 2 and Jiwa Ram is respondent No. 3 to the present petition, while the State is respondent No. 1.

In the criminal case at the instance of Shambu Das, complainant, the Additional District Magistrate summoned the income-tax file of Hindu undivided family firm, Messrs. Kishan Chand Nanak Chand, cloth merchants of Jullundur City, for the income-tax year 1947-48, decided on the 14th February, 1957, and the summons had issued to the income-tax Officer, C-Ward, Jullundur. The purpose of obtaining the file, as would appear from the Additional District Magistrates order, dated the 19th November, 1963, was that the complainant wanted to prove the affidavits made by Smt. Gomti Devi, mother of the complainant, and by Jiwa Ram accused and the final order passed by the income-tax authorities in that file. At the hearing of the case an inspector of the income-tax department produced a letter from the petitioner claiming protection under section 137 of the Income-tax Act, 1961. On this application the final order passed by the Additional District Magistrate is dated the 28th of November, 1963, in which the objection to the production of the documents in the summoned file was repelled by her. It was observed that clause (i) of sub-section (3) of section 137 of the Income-tax Act, 1961 (this section correspond to section 54 of the Indian Income-tax Act, 1922) does not provide for the protection of any particulars contained in any statement made, return furnished by the assessee or in any evidence given, or affidavit or deposition made by him, if these particulars were required for the purpose of a prosecution for any offence under the Indian Penal Code in respect of any such statement, return, accounts, documents, evidence, affidavit, etc., or for the purpose of a prosecution for any offence under the Income-tax Act.

Now, as observed by the learned single judge and as conceded as the bar by Shri K. C. Sood, the learned counsel for Shambu Das, complainant (who alone appeared to contest the revision petition), clause (i) of sub-section (3) of section 137 of the Income-tax Act, 1961 (and ipso facto clause (a) of sub-section (3) of section 54 of the Indian Income-tax Act, 1922), is not attracted to this case, because the documents which are sought to be proved from the summoned file are not for the purpose of a prosecution for any offence under the Indian Penal Code referred to in section 137(3)(i) or for any offence under Income-tax law. The other ground upon which the Additional District Magistrate proceeded, viz., that the income-tax authorities had already issued copies of these documents, would not be relevant if, as contended by Shri D. N. Awasthy, the learned counsel for the petitioner, the protection from and prohibition of disclosure, as conferred by section 54 of the Indian Income-tax Act, 1922, still subsist, so far as the document in the summoned file are concerned. The objection made by Mr. Sood, viz., that in his objections to the production of the documents the Income-tax Officer had referred to section 137 of the Income-tax Act, 1961, and not section 54 of the Indian Income-tax Act, 1922, would also be immaterial if the legal position is found to be that it is the latter provision which still continues to govern the documents, statements, etc., in the summoned file.

For the consideration of the legal questions involved, it is desirable to refer briefly to the various changes made in the relevant provisions of the Income-tax law from time to time. Section 54 of the Indian Income-tax Act of 1922, so far as relevant, was as follows :

'54. (1) All particulars contained in any statement made, return furnished or accounts or documents produced under the provision 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 (Chapter VIII), 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 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) specifies certain exceptions to the law as laid down in sub-sections (1) and (2) and need not be reproduced, because admittedly none of the exceptions is material in this case. The assessment in question, which related to the year 1947-48, was completed in the year 1957, and there 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. By section 9 of the Taxation Laws (Amendment) Act, 1960 (Act No. 28 of 1960), a new section 59B was introduced in the principal Act, which was to the following effect :

'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 justifying its refusal, furnish or cause to be furnished the information asked for.'

The next amendment of law which has to be considered is that effected by section 137 of the Income-tax Act, 1961 (Act No. 43 of 1961), and in some respects the protection given by section 54 of the Indian Income-tax Act, 1922 (Act No. 11 of 1922), was enlarged, because in section 137 what was implicit in the 1922 Act was expressly stated, that no public servant shall disclose even voluntarily any particulars contained in documents declared by the section to be confidential.

Section 138 is the same terms as is section 59B of the Indian Income-tax Act, 1922, and repeats that it is only to assessments made either under that Act or under the Income-tax Act, 1961, on or after the 1st day of April, 1960, that this section could be resorted to. By sub-section (1) of section 297 of the Income-tax Act, 1961, the Indian Income-tax Act, 1922, was repealed but there were various saving clauses of which (a) and (c) may be reproduced :

'(a) Where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed;'

Lastly, there is the Finance Act No. 5 of 1964, by section 32 of which section 137 of the Income-tax Act, 1961, has been omitted. By section 33, section 138 of that Act has been substituted. Sub-section (1) of section 138 is the same as section 138 of the Income-tax Act, 1961, and sub-section (2) has been added which is not material to our purpose and need not be re-produced.

Mr. D. N. Awasthys arguments are as follows :

It is a cardinal principle of the income-tax law that each assessment year is a separate self-contained period. Each 'previous year' is a distinct unit of time for the purposes of assessment (see Kikabhai Premchand v. Commissioner of Income-tax). The law which will govern assessments in a particular year is that which was prevalent at the time and it is only when there is a specific statutory provision having retrospective effect that a different law or procedure can be applied. This is clearly borne out by the various amendments made from time to time as mentioned above. Thus, the Taxation Laws (Amendment) Act, 1960, was by sub-section (2) of section 1, deemed to have come into force on the 1st day of April, 1960, and was not applicable to any earlier period. The exception to section 54 of the Act of 1922 as made in section 59B which was inserted by the Taxation Laws (Amendment) Act, 1960, also could be resorted to only in respect of assessments made on or after the 1st day of April, 1960, and this very date was, as mentioned above, repeated in section 138 of the Income-tax Act, 1961, as also in sub-section (1) of section 138 as inserted by the Finance Act, 1964. The Finance Act came into force on the 1st day of April, 1964, and it is conceded by Mr. Awasthy that on account of the deletion of section 137 by this Act the privilege of secrecy to the records of any assessment made after the 1st day of April, 1964, would not be applicable, but his position is that so far as records of assessment made prior to the 1st of April, 1962, are concerned, section 54 of the Indian Income-tax Act, 1922, would apply, and between that date and the 1st day of April, 1964, sections 137 and 138 of the Income-tax Act, 1961, would apply. This contention appears to be borne out by the scheme of the statute as given above.

On the other hand on behalf of the contesting respondent it is maintained that inasmuch as sub-section (1) of section 297 of the Income-tax Act, 1961, repealed the Indian Income-tax Act, 1922, the protection as conferred by section 54 of the former Act was no longer available. To meet this argument Mr. Awasthy has relied on section 6 of the General Clauses Act (X of 1897) and has in particular referred to clause (c) thereof, according to which the repeal of any Central Act of Regulation shall not - unless a different intention appears - affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed. It was contended by him that keeping in view the object for which the statute imposed the veil of secrecy on assessment records, the protection from disclosure must be regarded as the right or privilege of the assessee in terms of clause (c) of section 6 of the General Clauses Act, and Mr. K. C. Sood, on behalf of the contesting respondents, conceded that if section 6 applies to the case, the protection of assessment record from disclosure would be a right or privilege of the assessee under clause (c) thereof.

The question that remains is whether the consequences as laid down in section 6 of the General Clauses 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 Pratab Singh. It has been laid down that when ever 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, thereof, 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 provision 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, if must be held 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, which was the date on which the Income-tax Act, 1961, came into force. On the other hand the indications are that the legislature has been careful to keep that protection alive and subsisting with regard to assessments completed before that date such as the present one which was, as mentioned above, completed one the 14th February, 1957.

Mr. Sood argued that contrary indications were furnished by clause (e) of sub-section (2) of section 297 which is as follows :

'(e) Subject to the provisions of clause (g) and clause (j) of this sub-section, section 23A of the repealed Act shall continue to have effect in relation to the assessment of any company or its shareholders for the assessment year ending on the 31st day of March, 1962, or any earlier year, and the provisions of the repealed Act shall apply to all matters arising out of such assessment as fully and effectually as if this Act had not been passed.'

His contention was that if section 54 of the repealed Act was to be kept alive, then there should also have been a specific provision for that purpose. Clause (e), however, was put in on account of the special provision of section 23A, which gave the authorities power to assess companies to super-tax on undistributed income in certain cases and as provided in clause (e) this power also could be exercised only for assessment year ending on the 31st day of March, 1962 (that is, a day earlier to the coming into force of the Income-tax Act, 1961), or any earlier year. Clause (e) of sub-section (2) of section 297 cannot, therefore, be invoked to counter Mr. Awasthys argument.

I am, therefore, of the view that the protection conferred by section 54 of the Act of 1922 was available to the petitioner Income-tax Officer so far as summoned file was concerned and the trial court in error in holding to the contrary. I would, therefore, accept the recommendations made by the learned Additional Sessions Judge, Jullundur, and set aside the orders of the trial court dated the 19th November, 1963, and the 28th November, 1963. The records are to be returned.

J. S. BEDI J. - I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //