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Chandrasekhara Mandian Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberC.R.P. No. 265 of 1971
Judge
Reported in[1973]87ITR564(Ker)
ActsIncome Tax Act, 1922 - Sections 54; Income Tax Act, 1961 - Sections 137 and 138; Finance Act, 1964 - Sections 32 and 33; General Clauses Act, 1897 - Sections 6
AppellantChandrasekhara Mandian
Respondentincome-tax Officer
Appellant Advocate T.L.V. Iyer, Adv.
Respondent Advocate C.M. Devan, Adv.
Cases ReferredDaulat Ram v. Som Nath
Excerpt:
direct taxation - return - section 54 of income tax act, 1922, sections 137 and 138 of income tax act, 1961 and section 6 of general clauses act, 1897 - whether privilege under section 54 available in respect of returns in question - provisions of repealed act continue to be in force in respect of right or liability incurred already unless contrary intention can be gathered from new enactment - nothing in repealing act indicating intention to destroy rights created by section 54 which would otherwise be preserved by section 6 (c) of general clauses act after repeal of section 54 - no intention to destroy rights under section 54 of old act by enacting section 137of new act - held, privilege under section 54 available in respect of returns in question. - .....to be made, then, unless a different intention appears, the repeal shall not......(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed.'5. the question, therefore, is whether there is anything in the repealing act or in the subsequent enactments indicating any intention to destroy the rights, privileges or obligations created by section 54 which would otherwise be preserved by section 6(c) of the general clauses act after the repeal of section 54. the old act was repealed by the new act. by sub-section (1) of section 297 of the new act, the old act was repealed but there were various saving clauses of which clauses (a) and (c) are :' (a) where a return of income has been filed before the commencement of this act by any.....
Judgment:

K. Sadasivan, J.

1. Defendant is the revision-petitioner. The revision arises from an order rejecting the defendant's prayer to direct the 1st respondent-Income-tax Officer to produce the returns filed by the plaintiff in the Income-tax Officer, C-Ward, Palghat, during the period 57-69(sic). The Income-tax Officer claimed privilege, as according to him records relating to the years 1957 to March 31, 1964, are entitled to protection under Section 54 of the Income-tax Act, 1922, and Section 137 of the Income-tax Act, 1961. In the year 1957-68 (sic) no returns were filed by the plaintiff. The first return filed by the assessee related to the period April 1, 1958, .to March 31, 1959. The documents, however, were produced in sealed covers for the perusal of the court. The learned subordinate judge upholding the privilege claimed by the Income-tax Officer has rejected the petition.

2. On behalf of the petitioner, it is argued basing mainly on a Division Bench ruling of the Madras High Court in Sivagami Achi v. Ramanathan Chettiar, [1967]64 I.T.R. 36, 39; 80 L.W. 119 (Mad.), that the privilege is no longer available to the Income-tax Officer. There the court held :

'The Finance Act, 1964 (Act 5 of 1964), by Section 32 omitted Section 137 by a new section which contains two sub-sections. Section 43 of this Finance Act has suitably modified Section 280. It may be seen that as a result of the omission of Section 137 and the substitution of Section 138 by a new section, there is no longer any declaration of the particulars contemplated by the omitted Section 137(1) being treated as confidential, and no longer the bar placed by that sub-section on courts is maintained. The prohibition against any public servant disclosing certain particulars also has disappeared. The position, therefore, is that no particulars contained in any document whatever filed or produced during assessment proceedings are confidential and the bar on the court from summoning for such particulars is lifted. The omission of Section 137 is not followed by a re-enactment of that section in any form.

Section 138(2) does not contain any intention so as to eliminate the application of Section 6 (General Clauses Act.) 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. Further, in the absence of any notified order under Section 138(2), it is as if the subject-matter of Section 137(1) has not been re-enacted for purposes of application of Section 6 of the General Clauses Act.'

3. This view has been dissented from by the Allahabad High Court in Raghubir Saran v. O. P. Jain, Addl. Munsiff, Bidandshahr, [1969] 73 I.T.R. 482, 490 (All) and the Delhi High Court in Daulat Ram v. Som Nath, [1968] 68 I.T.R, 779 (Delhi). In Raghubir Saran v. O. P. Jain, Addl. Munsiff, Bulandshahr, the court held :

' The statement in question having been made at the time when Section 54 of the Indian Income-tax Act, 1922, was in force, the obligation on the part of the income-tax authorities to treat the same as confidential accrued the moment the statement was recorded and neither the repeal of the Income-tax Act, 1922, nor the enactment of the Income-tax Act, 1961, nor the omission of Section 137 from the Act of 1961 having obliterated the obligation imposed by Section 54, the learned Munsiff was not right in insisting upon the production of the documents in question. The prohibition in Section 54 of the Indian Income-tax Act, 1922, is absolute so far as it goes. The repealing Act does not disclose any intention of the legislature to destroy the effect of Section 54, By enacting Section 137 in the new Act, the legislature's clear intention was to preserve intact the object of Section 54 of the old Act. The mere omission of a section does not necessarily lead to the conclusion that it was the intention of the legislature to do away with the rights and obligations created under or by the omitted section. Section 138 also is not incompatible or inconsistent with the effect of Section 137 being continued notwithstanding its omission. The legislature, therefore, did not indicate its intention to destroy the effect of Section 54 of the old Act by deleting Section 137 from or amending Section 138 of the new Act. Section 54 of the old Act and Section 137 of the new Act were intended to create a right and a privilege in favour of the assessee and other persons concerned and it was for the preservation of that right or privilege that an absolute obligation was imposed upon the income-tax authorities never to divulge to anybody including a court any information from the assessment records.'

4. The effect of Section 54, it must be noted, has been preserved after its repeal by Section 6(c) of the General Clauses Act of 1897. That provision reads:

'6. Where this Act, or any Central Act or regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not......

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed.'

5. The question, therefore, is whether there is anything in the repealing Act or in the subsequent enactments indicating any intention to destroy the rights, privileges or obligations created by Section 54 which would otherwise be preserved by Section 6(c) of the General Clauses Act after the repeal of Section 54. The old Act was repealed by the new Act. By Sub-section (1) of Section 297 of the new Act, the old Act was repealed but there were various saving clauses of which Clauses (a) and (c) are :

' (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 ;......

(c) any proceeding pending on the commencement of this Act before any income-tax authority, the Appellate Tribunal or any court, by way of appeal, reference or revision, shall be continued and disposed of as if this Act had not been passed.'

6. The repealing Act does not disclose any intention of the legislature todestroy the effect of Section 54 of the old Act. On the other hand, theintention, as is evident from the enactment of Section 137 in the new Act,was to preserve intact the object of Section 54 of the old Act. In 1964,however, Section 137 itself was deleted by Section 32 of the Finance Act,1964 ; but it is important to remember that by Section 33 of the FinanceAct, Section 138 was substituted by the new Section 138, which containstwo sub-sections, of which Sub-section No. 1 is practically the sameas the old Section 138. Sub-section No. 2, however, entrusts theCentral Government with the power to direct by a notified order thatno information or document shall be furnished or produced by a publicservant in respect of such matters relating to such class of assessees orexcept to such authorities as may be specified in the order. No notification, however, has so far been issued under Section 138. From the aboveit is clear that the legislature had no intention to destroy the rights,privileges, obligations or liabilities accrued or incurred under Section 54 ofthe old Act, by enacting Section 137 of the new Act. Section 138 also isnot incompatible or inconsistent with the effect of Section 137 beingcontinued notwithstanding its omission.

7. To me it appears that the above decision lays down the correct law in respect of the matter. The general rule is that the provisions of the repealed Act will continue to be in force in respect of the right, privilege, obligation or liability acquired, accrued or incurred already, unless a contrary intention can be gathered from the new enactment. As already seen, so far as the present matter is concerned, no such contrary intention is gatherable.

'There is nothing in the Income-tax Act, 1961, which manifests an intention that the protection from, and prohibition of, disclosure of assessment records afforded by Section 54 of the Income-tax Act, 1922, would not be applicable to assessments which had been completed before the 1st day of April, 1962, on which the Act of 1961 came into force.' (Vide O. P. Aggarwal, Income-tax Officer, C-Ward, Jullundur v. State, [1966] 59 I.T.R. 158 (Punj.)).

8. In the above case, the court held that the ' Income-tax Officer was entitled to the protection conferred by Section 54 of the Act of 1922 so far as the summoned file was concerned '. On the same lines is the decision in Daulat Ram v. Som Nath, wherein the Delhi High Court held:

'Subsequent legislation did not reveal an intention to destroy the privilege which had accrued in respect of documents filed at a time when Section 54 was in force. The privilege under Section 54 of the Act of 1922 was allowed to continue by Section 137 of the Act of 1961 and even after Section 137 was repealed by the Finance Act of 1964, the Commissioner of Income-tax was made under Section 138 the sole authority to decide whether it was in the public interest to furnish the information asked for.'

9. On the above authorities, I must hold that the privilege under Section 54 of the Income-tax Act, 1922, was available inrespect of the returns in question and the court below is right in thinking that the Income-tax Officer is protected. The revision petition is, therefore, dismissed.


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