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Sankaranarayana Bhatta Vs. Ganapathi Bhatta and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case Number C.R.P. No. 4366 of 1976
Reported in(1978)6CTR(Ker)9
AppellantSankaranarayana Bhatta
RespondentGanapathi Bhatta and ors.
Cases ReferredI.T.C. vs. Laxmichand.
Excerpt:
- .....upon an erroneous interpretation of the section.3. s. 54(1) which corresponds to s. 54(1) of the indian income tax act provides (to mention only the relevant parts) that all particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of the act or in any record of an assessment proceeding shall be treated as confidential and notwithstanding anything contained in the travancore or cochin evidence act, be entitled to require any public servant to produce it any such returns, accounts, documents or record or any part of such record or to give evidence before it in respect thereof. (in the indian income tax act the words 'in the indian evidence act, 1872' occur in place of the words 'in the travancore or cochin evidence act' which.....
Judgment:
ORDER

G. Balgangadharan Nair, J. - Petitioner-plaintiff filed a suit for a permanent injunction restraining the respondents defendants who are his father and two brothers from trespassing upon the suit property or disturbing his possession, claiming that he was in possession by virtue of a partition deed of November 1, 1969. The respondents resisted the suit setting up the plea that the partition deed of 1969 was not binding and that they were all in joint possession pursuant to an unregistered agreement of September 5, 1967, in which the petitioner had admitted such possession that this would be disclosed by the returns and objections which he had filed before the Agricultural Income Tax Authorities. In the attempt to prove this plea the 2nd defendant-1st respondent made an application I.A. No. 861 of 1976 to summon the concerned Agricultural Income Tax Officer, and the Appellate Assistant Commissioner, Agricultural and Sales Tax, to cause the production of File No. P. 37 of 1968-69 from the former and File No. P. 37 of 1969-70 and 71 from the latter, including the returns and objections to the pre-assessment notices filed by the petitioner. The petitioner opposed the application mainly on the ground that it contravened S. 54 of the Agricultural Income Tax Act. The Court below has partly allowed the application by permitting the 1st respondent to summon the appeal memorandum from the Appellate Assistant Commissioner and the objection to the pre-assessment notices from the Agricultural Income-tax Officer, both filed by the petitioner.

2. The ground on which the court below rejected the petitioners objection and allowed application was that S. 54 of the Agricultural Income Tax Act conferred only a privilege on the Department and not on the assessee and that it was highly doubtful whether the appeal memorandum and the objection to the pre-assessment notice would form part of the proceedings to which S. 54 would apply. Counsel for the petitioner contested the view of the court below on S. 54 and its doubt about the nature of the documents summoned as based upon an erroneous interpretation of the section.

3. S. 54(1) which corresponds to S. 54(1) of the Indian Income Tax Act provides (to mention only the relevant parts) that all particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of the Act or in any record of an assessment proceeding shall be treated as confidential and notwithstanding anything contained in the Travancore or Cochin Evidence Act, be entitled to require any public servant to produce it any such returns, accounts, documents or record or any part of such record or to give evidence before it in respect thereof. (In the Indian Income Tax Act the words 'in the Indian Evidence Act, 1872' occur in place of the words 'in the Travancore or Cochin Evidence Act' which occur in the Agricultural Income Tax Act). Sub-S. (2) of S. 54 of the Agricultural Income Tax Act which corresponds to sub-S. (2) of S. 54 of the Indian Income-tax Act is a penal section and penalises the public servant who discloses any of the particulars prohibited by sub-S. (1).

4. Now the two documents allowed to be summoned are the objection statement to the pre-assessment notice and the memorandum of appeal and there is no doubt that they fall within the class of records enumerated in S. 54 (1). As to the effect of the sub-section, it is in two parts-the first part enacts that the records and particulars specified in them shall be treated as confidential and the second part, save as provided in the Act, debars the court from requiring any public servant to produce to records or any part of them in court. Therefore besides directing the records to be treated as confidential the sub-section imposes a ban upon the public servant against producing them or any part of them in court. And the only point to be considered is whether this ban, despite its absolute nature, confers only a right on the public servant to claim privilege as held by the court below. In support of their rival contentions about the scope of this embargo counsel for the parties quoted several cases before me but it is needless to refer to all of them as the point is covered by the decisions of the Supreme Court on the corresponding section of the Indian Income Tax Act.

5. In Charu Chandra Kundu vs. Gurupada Ghosh the appellant who was the defendant in a suit for money applied to the trial court for a summons to direct the Income Tax Commissioner to produce the original file and depositions given by the respondent-plaintiff in the assessment proceedings of the income of the appellant, on the ground that the statement given by the respondent would prove his defence of discharge of the amount. The Income Tax Commissioner informed the court that having regard to the prohibition of S. 54 he was unable to produced the records summoned. The appellant then applied to the court that the objection of the Commissioner of Income Tax be overruled, contending that the prohibition applied only to the evidence or deposition etc made by an assessee himself and not made by other witnesses and that as the prohibition was enacted in the interest of the assessee only, the assessee can waive the protection and privilege and that the appellant who was the assessee was waiving it. Despite this stand of the appellant, the trial court upheld the objection of the Income tax Commissioner and his view was confirmed by the High court in revision. On appeal the Supreme Court analysed the terms of S. 54 and pointed out (paragraph 5) :

'It is manifest that disclosure of information given to public servants in the course of income-tax proceedings has by a comprehensive provision been prohibited ... There being an express interdict against the Court requiring production of the document, the Subordinate Judge was right in declining to accede to the request of the appellant.'

Rejecting the contention that S. 54 is enacted only for the protection of the assessee and that if the assessee waives the privilege enacted for his protection, the prohibition will be inoperative, their Lordships held (paragraph 6) :

'But there is no such exception, express or implied, in the language used by the legislature. The prohibition imposed against the Court by S. 54 is absolute; its operation is not obliterated by any waiver by the assessee in whose assessment the evidence is tendered, document produced or record prepared.'

The appeal was thus dismissed. This decision was followed in I.T.C. vs. Laxmichand.

On the mandatory terms of the section and in the light of these decisions the application of the 1st respondent has therefore to be refused.

6. Counsel for the 1st respondent however contended that his application is maintainable, as the non-obstante clause in S. 54(1) of the Agricultural Income Tax Act excepts only 'the Travancore or Cochin Evidence Act' and not the Indian Evidence Act which has replaced them and which is section of the Indian Income Tax Act. The Agricultural Income Tax Act, 1950 was enacted by the Travancore-Cochin Legislature at a time when the Travancore and Cochin Evidence Acts were in force and even after they were replaced in 1951 and the Agricultural Income Tax Act 1950 was extended to the entire State of Kerala by Act 8 of 1957, the reference to the Evidence Acts of Travancore and Cochin still continues in S. 54(1). Counsel argues that as neither of these enactments is in force he is entitled to sustain the application under the Indian Evidence Act which is not expected by S. 54(1). I am unable to accept this contention. For one thing the prohibition is comprehensive and absolute and admits of no exception, save as provided in the Act. For another AIR. 1962 SC. 1121 itself gives the answer to this contention. In that case an application was made to the Magistrate before whom a complaint was pending, to summon the Income Tax Authorities to produce certain letters with them. The Income Tax Commission objected to the production on the strength of S. 54(1) of the Income Tax Act but the objection was overruled by the Magistrate and by the High Court. On appeal the Supreme Court upheld the objection relying on AIR 1962 SC. 1119. The respondent sought to support the order of the Magistrate by arguing that it was made under S. 94, Code of Criminal Procedure which is not hit by the prohibition in S. 54(1) as the non-obstante clause relates only to the Indian Evidence Act and not to the Code of Criminal Procedure. The Supreme Court rejected the argument and held : (para 7) :

'The non obstante clause cannot restrict the embargo placed on the court under S. 54 of the Income-tax Act : the said clause only operates to make it clear that the said general ban prevails notwithstanding anything to the contrary in the Indian Evidence Act. That apart S. 54 of the Income-tax Act contains in effect an unconditional prohibition against a public servant producing any such document, and that prohibition does not exclude any criminal process from its operation.

7. The non obstante clause thus cannot restrict the embargo placed on the court and as S. 54(1) contains an unconditional prohibition against production of documents, the respondents appeal to the Indian Evidence Act cannot be upheld, just as their Lordships refused to accept a similar contention based on the Code of Criminal Procedure. This argument therefore fails.

8. In this view I do not proceed to examine the effect of replacement of the Travancore and Cochin Evidence Acts with the Indian Evidence Act by Act 3 of 1951 and consider whether the reference in S. 54(1) to Travancore and Cochin Evidence Acts would not in law become reference to the Indian Evidence Act, though prima facie I am inclined to think that it would.

The order of the court below is reversed and I.A. No. 861 of 1976 is dismissed. The revision is thus allowed but in the circumstances without costs.


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