KRISHNASWAMI NAYUDU, J. - This revision petition raises a question of the applicability of section 54 of the Indian Income-tax Act. The petitioner is the Union of India represented by the Income-tax Officer, Nagapattinam, who instituted the suit, O. S. No. 82 of 1951, on behalf of the general body of creditors of defendants Nos. 1 and 2 for a declaration that the sale deed dated 9th May, 1947, executed by defendants Nos. 1 and 2 in favour of defendant No. 3, the father-in-law of defendant No. 1, of the suit properties is null and void and not binding on the plaintiff as being sham or in fraud of creditors and made with an intention to defeat or delay the creditors of defendants Nos. 1 and 2. Defendants Nos. 1 and 2 were brothers and were carrying on business in partnership. For the financial year 1942-43, defendants Nos. 1 and 2 as partners were assessed to income-tax, etc., in the sum of Rs. 36,833-5-0. The assessment was completed by March, 1947, and a notice of demand was served on them on 1st April, 1947, calling upon them to pay the tax in two installments. The assessees appealed to the Appellate Assistant Commissioner of Income-tax and pending the appeal they applied to the Income-tax Officer by a letter dated 25th April, 1947, for time. This application was rejected and the assessees applied to the inspecting Assistant Commissioner for a similar relief. The inspecting Assistant Commissioner passed an order that if the assessees paid a sum of Rs. 10,000 forthwith and gave an undertaking not to create any charge over or alienate their properties in British India until the Income-tax dues were paid, time would be granted till the disposal of the appeal. Further time was asked for complying with the condition as to payment and on 15th May, 1947, the first defendant applied for extension of time to pay the amounts undertaking that himself and the other partner will not create any charge over or alienate the properties. An undertaking signed by defendants Nos. 1 and 2 was filed before the Inspecting Assistant Commissioner. The assessees paid only a sum of Rs. 5,000 and failed to pay the balance. In the meanwhile on 9th May, 1947, they brought into existence the sale deed in question in favour of defendant 3. The plaintiffs case is that the suit properties formed the bulk of the properties belonging to the assessees and except for a few small items they have practically alienated their, entire estate with a view to defeat and delay the creditors including the Government. When the suit was taken up for trial and when the plaintiff intended to use as evidence certain documents on his side, objection was taken as to their admissibility in evidence, the objection being founded on section 54 of the Indian Income-tax Act.
The documents which the plaintiff sought to use in support of his case are demand notices for the tax due for 1942-43, applications by the first defendant or his authorised agent for time for payment of the tax for 1942-43, the communication by the first defendant to the Income-tax authority promising to file an undertaking and asking for time, the undertaking itself filed by defendants Nos. 1 and 2, the letter of the first defendant asking for still further time and the appeal petition filed by the first defendant against the order of assessment. The contention is that these documents formed part of the record of the assessment proceeding which under section 54 of the Income-tax Act should be treated as confidential and therefore could not be produced in evidence in the suit. Section 54 (1) says :
'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 proceeding under this Act other than proceedings under this Chapter, 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, 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.'
Under clause (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.
Clause (3) provides for exemption under certain conditions, where the confidential nature of the documents cannot be insisted upon. One such condition provided under clause (3) (d) is as regards the furnishing of any such particulars to civil Court in any suit to which Government is a party, which relates to any matter arising out of any proceeding under the Act.
Mr. Rama Rao Sahib contends that the confidential nature of the documents in with reference to their being disclosed to third parties but as between the assessee and the Income-tax department there is no question of any secrecy arising out of this section. Undoubtedly whatever evidence is given or statement made is already in the possession of the Income-tax authorities, that is, those are particulars which are known to the assessee and which have been placed before the Income-tax authorities and ordinarily knowledge of such particulars could be confined to the two parties, namely, the Income-tax department and the assessee, and what is prohibited and also penalised under section 54 is the production by any public servant of any such return, accounts, documents or record or any part of any such record, and no public servant can be compelled to give evidence before any Court in respect of such matters. So far as the effect of section 54 (1) is concerned a Full Bench of this Court has considered in Rama Rao v. Venkata Ramayya. In that case the question was whether a profit and loss statement and a statement showing the details of net income, filed by an assessee in support of his return of income furnished under section 22 of the Indian Income-tax Act, are public documents with reference to section 74 of the Evidence Act, of which certified copies would be admissible under section 65 (e) of the Evidence Act. That decision overruled the contrary view taken in Mythili v. Janaki that these are not public documents. In the course of the judgment the learned Chief Justice observed that while section 54 prohibits the disclosure, except on specified occasions, of matters connected with an assessment to income-tax and prohibits a Court from requiring a public servant to produce the documents mentioned in the section or to give evidence in respect of them it does not follow that the Court may not admit in evidence a document which falls within section 54 (1). Then the question whether the documents in question in that case were public documents was considered. In Suraj Narain v. Jhabbu Lal it was held that all that section 54 of the Indian Income-tax Act provides for is, that the documents specified shall be treated as confidential, and that no Court shall require a public servant to produce them. The language of the section cannot be stretched to mean that an assessee cannot himself disclose the contents of the documents referred to therein. So in so far as the assessee who was party to the proceedings is concerned he cannot be prevented from disclosing the documents if he requires their use in any civil Court since the provision for its secrecy in section 54 is for his benefit and interest and it is open to him to waive that right. The view taken in the above case was based on the principle that the assessee has always the option to waive his right to insist upon its being kept confidential. If section 54 (1) only prohibits their disclosure to third parties any disclosure by production of the record in a proceeding between the Income-tax authorities and the assessee would only amount to disclosing to the party who has already knowledge of the contents of the records and of the proceedings and the Income-tax authorities cannot therefore be prevented from making use of them if they required the same for the purpose of further implementing the provisions of the Indian Income-tax Act.
The present is a case where the assessees have failed to pay the tax due and the Income-tax authorities have taken steps under the Act for recovery of the amount. The assessees obtained time and an order for payment in installments and before the expiry of the time granted the assessees sold the properties against which the Income-tax authorities have a right to proceed for collection of their dues. Since the department has been deprived of the assets of the assessee against which they have got a right to proceed by processes provided in the Act or, otherwise, their use of these documents in pursuance of the right to recover the tax could not be said to relate to something which is not connected with the enforcement of their order of assessment or for the recovery thereof, it is always open to the Income-tax department to use the particulars contained in such documents or record or part of the record or proceedings, and the confidential nature of the document therefore cannot be used against them. In seeking to pursue their remedies and for implementing the same by appropriate proceedings as in the present case they had necessarily to institute the suit for virtually recovering the properties against which they have got a right to proceed. In that view I consider that section 54 (1) would not be a bar to the reception of these documents in Court as evidence in this case. The learned District Judge while observing that the prohibition in section is made for the protection or benefit of the assessee and it is open to the assessee to waive that protection, however did not think that either the Income-tax authority can be permitted to produce and use the original document, since a third party, who somehow manages to get a certified copy of a document, can be allowed to use that document against the assessees. I am unable to understand this observation of the learned Judge as to a third party managing to get a certified copy of a document. A certified copy cannot be granted by a Court unless it be to the parties or to those who are interested in the proceedings. Since the suit is between the Government and the assessee, no other person can be held to be entitled to a certified copy of any document filed in the suit excepting the parties or those who may in the opinion of the Court be considered to be persons interested in the suit. There is therefore no question of a third party getting a certified copy of a document and the confidential nature of the documents cannot therefore be violated by their being filed in a proceeding between the Government and the assessee.
Another argument advanced by Mr. Rama Rao Sahib, based on section 54 (3) (d), is that the present suit is a matter arising out of a proceeding under this Act. This is not a suit which could be held to arise under this Act. But the question is whether this could be held to arise under this Act. But the question is whether this could be said to be a suit which arose out of a proceeding under this Act. The suit being one under section 53 of the Transfer of Property Act, prima facie is not a proceeding which is provided for in the Income-tax Act. But at the same time it cannot be suggested that the suit is entirely foreign to a proceeding already taken under the Act. The suit has been instituted by reason of the assessees failing to comply with the notice of demand and further failing to keep up the undertaking given by them not to alienate the properties which they impliedly agreed to make available for the recovery of the income-tax dues. It cannot therefore be said that the suit is not a matter arising out of a proceeding under the Act in the sense that it does not pertain to any proceeding or which could not ordinarily be expected, in the natural course of events, to arise out of a proceeding taken under the Act. In my view section 54 (3) (d) cannot be confined to a proceeding arising directly out of the Act but can be understood to refer to any suit or proceeding or any other matter which may pertain to a proceeding under the Act on in the natural course of events follow a proceeding taken under the Act, though not directly provided under the Act. Mr. Subbaraya Aiyar for the assessees referred to a decision in Joslowitz v. Burstein  1 K. B. 408 and sought to seek support from the construction of a similar language in the Increase of Rent and Mortgage Interest (Restrictions) Act for his contention that unless the present suit could be said to be a suit provided for under the Act, it could not be held to come within the scope of a matter arising out of a proceeding under the Act. In that case under a tenancy agreement the defendant who became the tenant of a dwelling house belonging to the plaintiff agreed not to assign, sub-let or part with possession of the demised premises without consent in writing of the landlord. There was a proviso for re-entry on breach by the tenant of any of his obligations. The tenant sub-let part of the demised premises to one sub-tenant and the remainder to another sub-tenant, in each case without the written consent of the landlord. The landlord after serving upon the tenant a notice under the Law of Property Act, 1925, requiring the tenant to remedy the breach, brought the action in the High Court, claiming possession of the demised premises and recovered judgment. The point was then taken for the defendant that this action was a claim or other proceeding arising out of the Rent Restriction Acts, and that the under section 17 (2) of the Act of 1920 the plaintiff was not entitled to recover any costs as she might have brought the action in the County Court instead of the High Court. While holding that the action was not a claim or other proceeding arising out of the Rent Restriction Acts and there was no defence based on those Acts, the learned Judge observed that it was a perfectly simple case of a common law action to recover possession of premises and mason profits at the rent reserved by the original tenancy agreement and the suit was not one in which any one wanted to take advantage or benefit derived from the Rent Restriction Acts; and the statute was not pleaded and there was no suggestion that there was any right in the defendant to be protected by the statute and nobody had suggested that the statute has anything at all to do with the case. The facts of the present case are entirely different. The Act has everything to do with the present suit. But for the Act the plaintiff has no locus stands to institute the suit. This is a suit which has intimate connection with the proceedings which had already been taken under the Act. If the contention of the assessees has to be accepted the result would be that the plaintiff would be deprived of establishing his case, the main evidence in support of his plaint being the record of the proceedings before and after the assessment. In short, the attempt is to deprive the plaintiff from placing before the Court the evidence in support of its case. I am of opinion that the documents which the plaintiff sought to file are not affected by section 54 of the Act in so far as their disclosure in the present suit is concerned.
This revision is allowed with costs. Advocates fee Rs. 100.