(1) Petition by the Income-tax Officer, Central Circle I, Madras, to revise the order of the Fifth Presidency Magistrate, overruling his objections and directing him to produce the documents summoned by the court. The documents were summoned at the instance of the accused in the case who actually produced them. The accused are prosecuted for offences of criminal breach of trust, criminal conspiracy etc. They were employees under Dinathanthi and their case is that on account of their producing the documents and giving information to the Income-tax authorities the present criminal case has been filed against them. Thus the accused in the case rely on the documents to prove the motive for the prosecution being launched against them.
(2) Section 137 of the Income-tax Act 1961, as it stood would have been an obstacle in the way of the court issuing summons for the production of the documents. But the said section has been omitted under the finance Act of 1964, which has however amended S. 138. The learned advocate for the petitioner however relied on S. 6 of the General Clauses Act 1897, in support of his contention that as the documents were produced before 1-4-1964, his right and privilege not to produce the documents by virtue of S. 137 of the Income-tax Act of 1961 before amendment by the Finance Act of 1964, would not be affected by virtue of the repeal of S. 137 of the Income-tax Act of 1961 by the Finance Act of 1964.
(3) Before proceeding to consider the said contention, it is necessary to consider whether even S. 137 of the Income-tax Act 1961, as it originally stood, would enable the petitioner to refuse to produce the documents. The learned advocate for the petitioner mistakenly stated at the commencement that the documents were required for the purpose of prosecution, but if it were so, the case could have been disposed of on the short ground that S. 137(3)(i) would apply and the Court was entitled to summon the documents. But the learned advocate for the respondents-accused brought to my notice that the documents were not required for the prosecution, but, as stated already, required only to prove the motive put forward by the defence as to why the prosecution was launched against them. There is, therefore, no scope for invoking the exception in S. 137(3)(i) of the Income-tax Act, 1961 as it then stood.
(3a) The learned advocate for the respondents relied on S. 137, clause (5) of the Income-tax Act, 1961, prior to the repeal. Clause (5) of S. 137 runs as follows:
'Nothing in this section shall be construed as prohibiting the voluntary disclosure of any particulars referred to in sub-section (1) by the person by whom the statement was made, the return furnished, the accounts or documents produced, the evidence given or the affidavit or deposition made, as the case may be.'
The documents in this case were all produced by the respondents, and they are, therefore, entitled to rely on this clause. The learned advocate for the petitioner relied on the decision in Charu Chandra Kundu v. Gurupada Ghosh : 43ITR83(SC) where it was held that having regard to S. 54 of the Income-tax Act, XI of 1922, the court has no power to direct the Income-tax Authorities to discover documents and statements in assessment proceedings. It was argued by the advocate for the appellant in that case that S. 54 of the Income-tax Act of 1922 was enacted only for the protection of the assessee, and if the assessee waives the privilege enacted for his protection, the prohibition contained therein will be inoperative. But this contention was repelled in that case on the ground that there is no such exception, express or implied, in the language of S. 54 of the Income-tax Act of 1922 and that the prohibition imposed against the court by the said section is absolute. But as pointed out at page 612 of the Law and Practice of Income-tax by Kanga and Palkhivala, V Edn., the above decision must now be read subject to the provisions of sub-section (5) which permits the voluntary disclosure of any particulars referred to in sub-section (1) by the person by whom the statement, affidavit of deposition was made, the evidence given, the return furnished or the accounts or documents produced, as the case may be. It is pointed out in that book that there was no provision in S. 54 of the 1922 Act corresponding to sub-section 5 of S. 137 of the Income-tax Act of 1961. It should be noted that even the assessees have no objection to the production of the documents by the petitioner.
(4) I shall proceed to consider the contention raised by the learned advocate for the petitioner on the strength of S. 6 of the General Clauses Act. The Bench decision in Kondiah Thevar v. Third Income-tax Officer, : 49ITR665(Mad) relied on by both sides is a decision clearly against the petitioner. It was held in that decision that the protection regarding rights accrued under an old Act given by S. 6 of the General Clauses Act is not unqualified as the said S. 6 states that the repeal of an Act shall not affect any right or privilege accrued or acquired under an enactment so repealed unless a different intention appears. The Bench had to decide the amendment by which S. 137(3)(xxi) was introduced and it held that such contrary intention is apparent in the enactment of S. 137(3)(xxi) and so notwithstanding that the statement was made in proceedings under the old Act, its disclosure is permitted under the new Act. Though S. 137 of the Income-tax Act of 1961 is repealed by the Finance Act of 1964, there is modified restriction by virtue of S. 138, clause (2) introduced by the same Act.
(5) For the foregoing reasons, the order of the Fifth Presidency Magistrate directing the petitioner to produce the documents is correct and there is no ground to interfere in revision. The criminal revision case is therefore dismissed.
(6) Revision dismissed.